OJorttfU ICam i>rl|aol Htbratg Cornell University Library KF1163.R51 A selection of cases on the law of insur 3 1924 019 359 458 Cornell University Law Library THE GIFT OF Date iitjuL^.., y^...pf(^^.. A SELECTION OF CASES ON THE LAW OF INSUEANCE ESPECIALLY FIRE, LIFE, ACCIDENT, MARINE AND EMPLOYERS' LIABILITY WITH AN APPENDIX OF FORMS, ETC. BY GEORGE RICHARDS, M. A. OF THE NEW TORK BAH, FORMERLY LECTURER ON INStTRANCB LAW IN THE SCHOOL OF LAW OP COLUMBIA UNIVERSITY AND THE NEW YORK LAW SCHOOL THE BANKS LAW PUBLISHING CO. NEW YORK 1910 Copyright, 1910 By Geobgb Richards PREFACE This is a true case book. From the officially reported cases, as here reprinted, the student is expected to deduce for himself the precise rulings of the courts, which together constitute a compre- hensive summary of the law of insurance. The brief headnotes indicate the topics or questions involved, but give no clue to the decisions of the courts. The statements of fact, also, have, in most instances, been rewritten. As an aid to an interesting discussion and profitable development of certain doctrines, a case on either side of the border line is reproduced. In Part I general principles are considered; and, in Part II, the more significant clauses of the policies, in the sequence in which they occur in the several instruments. Definitions, explanations, subsidiary points, numerous condensed cases and citations of selected authorities to date are given in finer print. Some such supplementary treatment by way of amphfication or explanation is almost a necessity. Many of the decisions in in- surance law are highly exceptional or arbitrary in their character. A few cases, culled here and there from thirty thousand, if unqualified, are too apt to be occasions of stumbhng as well as of support. We are satisfied to train our students to reason, provided only they reason in terms of sound law. Otherwise they must fall short of attaining success in their professional career. If the class is to study the case of Home Mutual Ins. Co. v. Tompkies, or similar ruling, they must also compare with it the case of Brighton Beach Racing Assn. v. Home Ins. Co., for not even an expert might confidently infer that the courts would draw the dividing line between the two. To por- tray with measurable accuracy the law of insurable interest or of waiver or of general average requires either hundreds of pages of IV PKEFACE cases as reported in extenso, or a few suggestive cases together with a complementary statement. If, aided by my long and varied experience as a counselor in the law of insurance, I have succeeded in providing the right help for the use of those who are striving to master the elementary principles of a difficult branch of the law, my extended labors in the prepara- tion of this book will find an ample recompense. G. R. September, 1910. TABLE OF CONTENTS PART I Genebal Principles of Insurance Law CHAPTER I PAGE Introductory 3 Nature of Ins^urance and Insurance Companies CHAPTER II General Principles of Insurance Law 18 Nature and Characteristics of the Contract, Including Insurable Interest, Contribution, Subrogation, Assignability, Rights of Beneficiaries and Creditors, etc. CHAPTER HI General Principles — Continued 70 Consummation, and Construction of the Contract CHAPTER IV General Principles — Continued 87 Representations and Concealments CHAPTER V General Principles— Continued 99 Warranties CHAPTER VI General Principles — Continued 132 Nature of Waiver and Estoppel CHAPTER VII General Principles — Continued 139 Doctrine of Waiver and Estoppel Further Illustrated V VI CONTENTS CHAPTER VIII FAOB Genehai, Principles — Continued 147 Waiver and Estoppel by Agents CHAPTER IX General Principles — Continued 178 Marine Insurance — Seaworthiness, Deviation, Illegality, Total Loss, Measure of Recovery, etc. CHAPTER X General Average — Marine 198 PART II Meaning and Legal Effect of the Clauses of the Policies Statutory Forms op Fire Insurance Policies 207 CHAPTER XI Clauses op the Standard Fire Policy 213 Loss by Fire, Description of Property and Interest, Measure of Re- covery, Option to Rebuild, Divisibility of Contract, Fraud, etc. CHAPTER XII Clauses of the Standard Fire Policy — Continued 228 Other Insurance, Cessation of Operations, Increase of Hazard, Uncon- ditional Ownership, Waiver by Omitting to Make Inquiry, etc. CHAPTER XIII Clauses of the Standard Fire Policy — Continued 239 Alienation, Prohibited Articles, Vacancy, Excepted Causes, etc. CHAPTER XIV Clauses of the Standard Fire Policy — Continued 259 Cancellation, Mortgagee Clauses, etc. CHAPTER XV Clauses op the Standard Fire Policy — Concluded 267 Service of Proofs, Magistrate's Certificate, Examination Under Oath, A ppraisal, Contribution, Limitation of Time to Sue, etc. CONTENTS VU CHAPTER XVI PAGE Life Insurance Policy 275 CHAPTER XVII Life Insurance Policy — Concluded 288 CHAPTER XVIII Accident Insurance Policy 311 CHAPTER XIX Marine Insurance Policy 335 CHAPTER XX Marine Insurance Policy — Concluded 342 CHAPTER XXI Guarantee, and Liability Insurance 358 Appendix 361 Forms, and Material Relating to Adjustments Index 373 TABLE OF CASES [In addition to the oases reprinted in the text this table includes with n prefixed to the page number the cases condensed or cited in the notes.] Page Accident Ins. Co. u. Bennett n. 307 V. Crandal 297, n. 313 Aohard v. Ring n. 203 Adair v. Southern Mut. Ins. Co. n. 129, n. 332 Adams v. N. Y. Bowery Ins. Co. n. 269, n. 271 jEtna Life Ins. Co. v. Fallow n. 155, n. 176 V. Fitzgerald n. 314 V. France n. 286, n. 287 V. Parker n. 57 Aitchison v. Lohre n. 356 Alabama Gold L. Ins. Co. v. Johnston 109 Albert v. Mut. L. Ins. Co n. 131 Alexander v. Germam'a F. Ins. Co. n. 123 V. Parker n. 68, n. 285 V. Sun Mut. Ins. Co n. 356 Allen V. Dutchess Co. Ins. Co n. 273 ». Hartford L. Ins. Co n. 40 V. Mil. Mech. Ins. Co n. 269 Allgeyer v. Louisiana n. 17 Alsop V. Commercial Ins. Co n. 88 American Ace. Co. v. Reigart n. 314 American Cent. Ins. Co. ». Bass . . .n. 271 American Surety Co. v. Pauly n. 359 American Union L. Ins. Co. v. Judge n. 93 Ames-Brooks Co. v. jEtna Ins. Co. . .n. 71 Amick ». Butler n. 40 Anderson v. Fitzgerald n. 109 V, Life Ins. Co. of Va n. 68 Angier et al. v. Western Assur. Co. . . 230 Arcangelo v. Thompson n. 350 Arkansas Ins. Co. ». Luther n. 107 Arlington Mfg. Co. ». Colonial Ins. Co n. 218 V. Norwich Union F. Ins. Co. .n. 218 Armenia Ins. Co. ». Paul n. 92 Armour ». Transatlantic F. Ins. Co. . n. 93 Armstrong ». Agri. Ins. Co. n. 143, n. 145, n. 265 Arnold v. Pac. Mut. Ins. Co n. 186 Asfar & Co. v. Blundell et al 194 Ashenfelder v. Emp. Liab. Assur. Corp n. 331 Atkinson v. Gt. Western Ins. Co. . .n. 345 Atlantic Mut. L. Ins. Co. v. Gannon . n. 69 Auctil V. Ins. Co n. 310 V. Mfg.'s Life Ins. Co 139 Ayres v. Order of United Workmen . . n. 8 Bacon v. U. S. Mut. Ace. Assoc 319 Bailey v. Interstate Gas. Co. n. 313, n. 325 Page Bainbridge v. Neilson n. 196 Baker ». Mfrs. Ins. Co n. 344 Baldwin v. Phoenix Ins. Co n. 71 Bancroft v. Home Ben. Assn n. 287 Bank of Tarboro v. Fidelity & Dep. Co n. 359 Barnard v. Adams n. 204 Barnes v. Association n. 94 V. Heckla F. Ins. Co n.21 V. Heckla Ins. Co n. 272, n. 273 D. L. L. &G. L. Ins. Co n. 40 1). People n. 14 Barry Lumb. Co. !). Citizens' Ins. Co n. 273 Barry u. U. S. Mut. Aec. Assn n. 319 Bartling v. Ger. Mut. Ins. Co n. 241 Bartram v. Hopkins n. 69 Bateman v. Lumbermen's Ins. Co. .n. 272 II. Travelers' Ins. Co n. 332 Bates V. Brit. -Am. Ins. Co n. 271 V. Equi. Ins. Co n. 265 Baumgarth u. Firemen's Fund Ins. Co n. 271 Baxter v. New Eng. Ins. Co 49 Beebe r. Ohio F. Ins. Co n. 166 Beekman v. Ins. Assn n. 58 Behrens v. Germania P. Ins. Co 224 Belcher v. Capital F. Ins. Co n. 232 Bell V. Kinneer n. 285 Benesh v. Mill Owners' Ins. Co n. 245 Benjamin v. Mut. R. Fund Assn. . . .n. 291 Benninghoff v. Agri. Ins. Co n. 244 Bernays v. U. S. Mut. Ace. Assn. . .n. 287 Bernhard ». Rochester Ger. Ins. Co. n. 177, n. 270 Berry ». Am. Central Ins. Co n. 20 II. Ins. Co n. 142 Bertrand v. Franklin L. Ins. Co. . . .n. 120 Berwind v. Greenwich Ins. Co n. 182 Beyer v. St. Paul F. & M. Ins. Co. . . n. 218 Bierman v. Ins. Co n. 160 Bigelow D. Ins. Co n. 299, n. 300 Biggar v. Rock Life Assur. Co n. 160 Billmyer v. Ins. Co n. 271 Birkley v. Presgrave . . n. 203 Bishop V. Pentland n. 42 Black s. Travelers' Ins. Co n. 287 Blackburn v. Haslam n. 89 V. Vigors n. 89 Blackhurst v. Cockell 113 Blaokstone u. Alemannia F. Ins. Co. n. 273 V. Standard, etc., Ins. Co n. 313 IX TABLE OF CASES Page Blasser t>. Ins. Co n. 66 Blood V. Howard F. Ins. Co n. 123 Blower ». Gt. W. E. Co n. 354 Boak Fish Co. v. Manchester F. Assur. Co n. 217 Board of Education v. Alliance Ins. Co n. 258 Bobbitt V. L. & L. & G. Ins. Co n. 109 Borrodaile v. Hunter n. 299 Boruzweski v. Ins. Co n. 144 Boston Ins. Co. v. Globe Fire Ins. Co. n. 40 Boudrett v. Heutigg n. 195 Boughman v. Camden Mfg. Co. . . . n. 244 Bouillon V. Lupton n. 187 Boulton V. Houlder Bros n. 145 Bound Brook Fire Ins. Co. i>. Nelson n. 45 Box V. Lanier n. 307 Boyd V. Insurance Co 142 !). Miss. Home Ins. Co n. 218 V. Thuringia Ins. Co.. .n. 264, n. 265 Boyden v. Mass. Masonic L. Assn. . n. 286 Bradie v. Maryland Ins. Co n. 195 Bradley v. Ins. Co n. 307 V. Mut. Ben. L. Ins. Co n. 307 Bradshaw v. Mut. Life Ins. Co n. 69 V. Agri. Ins. Co n. 269 Breeyear v. Rockingham Far. M. F. I. Co , n. 265 Brickell v. Atlas Assur. Co n. 244 Brighton Beach Race Asso. v. Home Ins. Co 241 Brink v. Hanover F. Ins. Co n. 137 V. Guar. Mut. Ace. Assn n. 287 Brit.-Am. Ins. Co. u. Wilson n. 71 Britton v. Supreme Council n. 285 B. Roth Tool Co. V. New Amsterdam Gas. Co n. 359 Brown ». St. Nicholas Ins. Co. n. 256, n. 350 Browning v. Home Ins. Co n. 123 Bryce v. Lorrilard F. Ins. Co n. 218 Buck V. Chesapeake Ins. Co n. 89 V. Phoenix Ins. Co n. 113 Burbage v. Windley n. 32 Burgess v. Equi. Mar. Ins. Co. n. 183, n. 186 Burkhard «. Travelers' Ins. Co 328 Burleigh v. Gebhard F. Ins. Co 115 Burt V. Union Cent. L. Ins. Co n. 307 Busk V, Royal Exc. Assur. Co n. 42 Butero v. Travelers' Ace. Ins. Co. . . n. 326 Butler V. Grand Lodge n. 290 V. Michigan Mut. L. Ins. Co. . n. 160 V. Wildman n. 203 Cady V. Fidelity & Gas. Co. u. 359, n. 303 Cahen v. Ins. Co n. 273 California Ins. Co. u. Union Com- press Co n. 26, n. 42, n. 272 Calkins v. Angell n. 291 Campbell v. Fid. & Cas. Co n. 332 D. Supreme Conclave n. 68 Canada Sug. Ref . Co. v. Ins. Co n. 196 Carmon v. Farmers' Mut. Ins. Co. . n. 244 Capital City Mut. F. Ins. Co. v. Boggs n. 291 Capital Fire Ins. Co. v. King 99 V. Montgomery n. 161 Carey v. Home Ins. Co n. 21 Page Cargill V. Millers' Ins. Co n. 217 Carlston v. St. Paul F. & Mar. Ins. Co n. 270 Carpenter v. Centennial Mut. L. Assn n. 107 ». Ins. Co n. 264 V. Prov. Wash. Ins. Co. n. 40, n. 44 V. U. S. Life Ins. Co n. 29 CarroUton Fur. Co. v. Am. Credit Co n. 90 Carson v. Jersey City F. Ins. Co ... n. 126 • V. Mar. Ins. Co n. 197 V. Vicksburg Bank n. 285 Carter v. Boehm n. 88, n. 89 Casler v. Conn. Mut. L. Ins. Co n. 287 Cassimus v. Scottish U. & N. Ins. Co n. 142 Castellain v. Preston n. 18, 45, n. 62 Castner v. Farmers' Mut. Ins. Co. . n. 145 Central Nat. Bk. v. Hume n. 29, n. 68, n. 69 Chadsey v. Guion n. 190 Chainless Cycle Co. v. Security Ins. Co n. 269 Chandler v. Ins. Co n.'272 Chapman v. Pole 222 V. Rockford Ins. Co. . . n. 219, n. 270 Chase v. Hamilton Ins. Co n. 123 Cheevis v. J. H. Anders, Admr 36 Chicago R. Co. ». Pullman Car Co. . . n. 53 Chippewa L. Co. v. Phoenix Ins. Co. n. 269 Chismore v. Anchor F. Ins. Co n. 165 Christensou v. Fidelity Ins. Co n. 265 Cincinnati Ins. Co. v. Duffield n. 356, n. 196 Citizens' Ins. Co. v. Doll n. 245 City of N. Y. ti. Brooklyn F. Ins. Co. n. 21 City of St. Joseph v. Ry. Co n. 359 Claflin 11. Commonwealth Ins. Co. . n. 269 Clapp V. Mass. Ben. Assoc n. 286 Clark V. Ins. Co n. 91, n. 93 V. Union Mut. Ins. Co n. 90 Clarke v. Equi. L. Assur. Soc n. 299 Cleaver v. Mut. Reserve Fund Assn. n. 68 Clement v. Ins. Co n. 310 Cleveland Oil Co. v. Norwich Ins. Co n. 71 Cline ». Western Assur. Co n. 40 Clinton s. Norfolk Mut. F. Ins, Co. n. 40, n. 241 Clover V. Greenwich Ins. Co n. 219 Cluff V. Mut. Ben. L. Ins. Co n 307 Coe V. Wash. F. & M. Ins. Co 78 Cogswell II. Chubb 104 Cohen v. Mut. L. Ins. Co n. 107 Cohn 1). Virginia F. & M. Ins. Co. ... n. 23 Coles V. N. Y. Cas. Co n 322, n. 326 Collins V. Bankers' Ace. Ins. Co. . . . n. 331 V. Met. L. Ins. Co n. 307 V. St. Paul F. & Mar. Ins. Co. . , 232 CoUinaville Say. Soc. v. Boston Ins. ^9° "265 Columbian Ins. Co. v. Ashby 199 V. Catlett n. 187 • V. Lawrence n 88 Commercial F. Ins. Co. v. Allen. . n. 219 V. Morris n. 71 Commercial Mut. Ins. v. Union Mut. _,In8- Co n. 272 Commonwealth v. Eq. Ben. Assn. . . . n. 7 D. Prov. Bicycle Assn n. 7 TABLE OF CASES XI Page Commonwealth v. Roswell n. 17 Concordia F. Ins. Co. v. Heffron. . . n 71 Conn. V. Ins. Co. v. Buchanan . . . . n. 138 V. Carnahan n. 269 V. Cohen n. 270 V. Tilley n. 253 Conn. Mut. Life Ins. Co. v. Schaefer n. 40 Consl. Real Est. Co. v. Cashow. . . .n. 273 Continental Cas. Co. v. Colvin. . . .n. 318 V. Jennings n. 332 V. Wade n. 318 Continental F. Ins. Co. v. Brooks n. 161, n- 176 Continental Ins. Co. v. Garrett . . . . n. 270 V. Munns n. 66, n. 245 V. Whittaker n. 269 Convis T, Ins. Co n. 58 Conway n. Supreme Council C. K. A. n. 69 Cooper V. Mass. Mut. L. Ins. Co. . . n. 299 Corkey c. Security Ins. Co n. 272 Corley v. Travelers' Protec. Assn. . . n. 327 Cornwall v. Frat. Ace. Assn n. 332 Cory B. Boylston F. & M. Ins. Co. .n. 354 Cottingham v. Ins. Co n. 244 Cottons. Fid. & Cas. Co n. 287 Cotton States L. Ins. Co. t. Scurry n. 155 Couch V. Farmers' Ins. Co n. 252 Covenant Mut. L. Assn. v. Kent- ner n. 292 Coyle V. Ken. Grangers' Mut. Ben. L. Soc n. 291 Cozine v. Grimes n. 69 Cravens v. N. Y. L. Ins. Co n. 291 Creed t. Sun Fire OflSce n. 21 Crickelair r. Ins. Co n. 1 13 Cromie v. Ky., etc., Ins. Co n. 272 Cronin v. Supreme Council n. 292 V. Vermont Life Ins. Co 30 Crook V. N. Y. L. Ins. Co n. 290 Cross V. Nat. F. Ins. Co n. 91 Crotty V. Union Mut. Ins. Co n. 40 Cummings ». Cheshire Co. Mut. F. Ins. Co n. 218 Cummins v- German-Am. Ins. Co..n. 219 Cushman v. U. S. Life Ins. Co. n. 109, 280 D'Aguilar i. Tobin n. 187 Daniels n. Equi. F. Ins. Co n. 232 V. Hudson River F. Ins. Co. n. 91, n. 95 Darrell v. Tibbits n. 55 Davidson v. Bumand n. 42 V. German Ins. Co n. 264 V. Hawkeye Ins. Co n. 244 Davis V. Ins. Co n. 258 V. New Eng. F. Ins. Co n. 40 t. Supreme Council n. 68 Day V. Conn. G. Life Ins. Co n. 286 Dederer v. Delaware Ins. Co n. 345 De Frece v. Nat. Life Ins. Co n. 137 De Grove v. Met. Ins. Co n. 83 De Hart v. Compania, etc n. 204 Delaware Ins. Co. v. Greer n. 265 Deming v. Merchants' Cotton, etc., Co n.42 Denniston v. Lillie n. yd Des Moines Ice Co. v. Niagara F. Ins. Co n.232 Dettratt v. Kestner n. 291 Page Devitt V. Prov. Wash. Ins. Co. . 186, n. 190 Dewces v. Manhattan Ins. Co 167 Dick V. Franklin Fire Ins. Co n. 45 Dilleber v. Home L. Ins. Co n. 126 Dixon V. Sasler n. 42, 178 Dobson 0. Hartford F. Ins. Co n. 137 DoIIoff V. Phoenix Ins. Co 226 Donald ». C, B. & Q. R. Co n. 7 Donley v. Glens Falls Ins. Co n. 130 Donnell v. Donnell n. 244 Donohue v. Ins. Co n. 96 Dow !). Faneuil Hall Ins. Co n. 258 Doyle V. Am. F. Ins. Co n. 20 V. Hill n. 290 Dunton v. Westchester F. Ins. Co. . n. 86 Duprea v. Hibernia Ins. Co 233 Dwight V. Germania L. Ins. Co. . . .n. 287 Eager v. Atlas Ins. Co n. 197 Eames v. Ins. Co n. 71 Earl D. Shaw n. 66 Earle v. Rowcroft n. 345 Early 1>. Standard Co n. 326 East V. New Orleans Ins. Assoc. . . . n. 265 Ebert v. Assoc n. 292 V. Mut. R. Fund Assn n. 292 Eddy V. London Assur. Co . . n. 265, n. 271 V. London Assur. Corp n. 230 Edgefield Mfg. Co. v. Maryland Cas. Co 358 Egan V. Brit. F. & Mar. Ins. Co n. 196 V. Ins. Co n. 42, n. 356 EUerbe v. Barney n. 291 Ellinger v. Mut. L. Ins. Co n. 299 Elliott V. Farmers' Ins. Co n. 155 Ellison V. Straw n. 69 Enterprise Lumber Co. v. Mundy ... n. 14 Equitable Ace. Ins. Co. v. Osborn. .n. 314 Equitable L. Ins. Co. v. Hazelwood n. 160 Equitable Life Assur. Soc. v. Brown n. 69 V. Perkins n. 290 V. Winne n. 5 Ermentrout v. Am. Ins. Co n. 265 V. Girard F. & M. Ins. Co n. 258 Estate of Breitung 66 Brown n. 69 Evans v. Crawford Co., etc., Ins. Co. n. 107 Everson v. Equitable L. Assur. Co. . . n. 5 V. Genl. F. & L. Assur. Corp . . n. 359 Excelsior Fire Ins. Co. d. Ins. Co.. . .n. 21 Excelsior Ins. Co. ». Royal Ins. Co. . . n. 45 Exchange Bank v. Loh n. 36 Faneuil Hall Ins. Co. u. L. A L. & G. Ins. Co n. 273 Farmer v. Mass. Mut. Ace. Assn. . . n. 325 Farmers' Feed Co. v. Scottish U. . Losch. . .n. 113 Page Lehman »; Clark n. 291 Leight V. Ins. Co. n. 21 Lcinkauf v. Caiman n. 245 Lenagh v. Com. Union Abb. Co n. 21 Leonard v. Orient Ins. Co n. 258 Lesure Lumb. Co. v. Mut. Ins. Co. n. 271 Letherer v. U. S. Health & Ace. Ins. Co n. 318 Lett V. Guard. F. Ins. Co n. 244 Lidgett V. Secretan 338 Life Ins. Co. v. O'Neill n. 18 Light V. Mut. Fire Ins. Co n, 139 L. & L. & G. Ins. Co. v. Kearney. . ,n. 269 Lipman v. Niagara F. Ins. Co 80 Liverpool & Gt. West. S. Co. v. Phoenix Co n. 57 Liverpool & L. & G. F. Ins. Co. v. Heckman n. 219 Liverpool S. Co. v. Phcenix Ins. Co. n. 86 Lloyd ». Fleming n. 20 Loefflcr v. Modern Woodmen n. 13 Loesch V. Union Cas. & Sur. Co. . . .n. 319 Lohre v. Aitchison n. 197 London Assur. Co. i). Companhia de n. 197, n. 357 ji. Mansel n. 91 London Assur. Corp. u. Thompson n. 84, n. 272 London . Dodge Co n. 20 Scaramanga v. Stamp n. 187 Scarth T. Sec. Mut. L. Ins. Co n. 299 Schloss Bros. i. Stevens n. 5 Schmaelzle v. Lon. & Lan. Ins. Co. n. 272 Schmidt t>. Life Assn .n. 68 Schoenich v. Am. Ins. Co n. 269 Schofield V. Met. L. Ins. Co n. 120 School Diat. i. Dauchy n. 107 Schrepfer v. Rockford Ins. Co n. 269 Schwarzchild . Travelers' Ins. Co. n. 18 Trippe v. Prov. Fund Soc n. 350 Tucker v. Ins. C^o n. 332 Tuttle V. Travelers' Ins. Co 326 Tyler v. Ideal Ben. Assn n. 287 Tyree v. Virginia F. & M. Ins. Co. . . .n. 21 Tyrie v. Fletcher 63 Uhrig V. Williamsburgh City F. Ins. Co n. 270 Underwood, Ex'r, v, Greenwich Ins. Co n. 145 Union Assur. Soc. v. Nails n. 91 Union Cent. L. Ins. Co. v. Buxer. . .n. 68 !). Fox n. 310 V. Hollowell n. 299 Union Frat. League v. Walton n. 40 Union Ins. Co, v. Smith n. 42, n. 182 Union Mutual Ins. Co. v. Mowry. . . 140 V. Wilkinson 151 United Brethren Mut. Aid Soc. v. McDonald n. 40 V. White n. 286 United States v. Am. Tobacco Co. n. 21, n. 55 United Underwriters' Ins. Co. v. Powell n. 4 Ursula Bright v. Amsinck n. 356 U. S. Casualty Co. v. Kaccr n. ^8 U. S. Mut. Ace. Assn. v. Barry. . . .n. 313 V. Mueller n. 292 Uziclli !). Boston Mar. Ins. Co n. 356 Vale V. PhcEnix Ins. Co 87 Vandalia Mut. Co. F. Ins. Co. v. Beasley n. 292 Vankirk v. The Citizens' Ins. Co. ... 91 Van Tassel v. Greenwich Ins. Co. of N. Y 257 Van Valkenburgh v. Amer. Pop. L. Ins. Co n. 287 Van Zandt v. Mut. Ben. Ins. Co. . . . n. 299 Vernon Ins. Co. v. Maitlen n. 270 Viele 1). Germania Ins. Co n. 138 Vincent v. German Ins. Co. n. 270, n. 271 Virgin v. Marwick n. 285 Virginia-Carolina Chem. Co. v. Ins. Co n. 245 Wadsworth v. Pac. Ins. Co n. 189 Waldum v. Homstad n. 69 Walker v. Giddings n. 5 V. Maitland n. 42 Wall «. Piatt n. 57 Waring v. Xnd. F. Ins. Co n. 27 Warner v. Modern Woodmen n. 285 Warnock v. Davis n. 40 Washburn, etc., Co. v. Merchants', etc., Ins. Co n. 272 Washburn & Moen Mfg. Co. v. Re- liance Mar. Ins. Co 189, n. 3.56 Washington Cent. Bank v. Hume. ,n. 285 Washington Fire Ins. Co. v. Kelly. . .n. 57 Washington Gas Co. v. Dist. of Columbia q. 3qo Washington Mills Mfg. Co. V. Wey- mouth Ins. Co n. 90 Waters v. Mer. Ins. Co ! ! ! ! ! !n. 350 TABLE OK CASES XIX Page Waukan Milling Co. v. Citizens' Mut. F. Ins. Co n. 176 Wavertree Sailing S. Co. v. Love. . .n. 204 Way V. ModigUani u. 186 Waynesboro Mut. F. Ins. Co. v. Creaton n. 218 Weber v. Supreme Tent n. 10 Weed v. Hamburg-Bremen Ins. Co. n. 142 Wellman v. Morse u. 203 Wells I'. Calnan n. 47 Welch r. Ins. Co n. 310 Welsh v. London Assur. Corp n. 145 West V. Farmers' Mut. Ins. Co n. 217 West Branch L. Exch. v. ' Amer. Cent. Ins. Co n. 230 ». Columbian Ins. Co n. 186 Westchester F. Ins. Co. v. Ocean View Pleasure Her Co. et al 106 Westenhaver v. Ger.-Am. Ins. Co. . n. 270 Western Assur. Co. v. Decker n. 270 ». Doole n. 196 T. Hall n. 270 V. Mohlman n. 258 Western Ins. Co. t. Southwestern Transp. Co n. 42, n. 197 Westfield Cigar Co. v. Ins. Co. of No. Am n. 218 Wheaton v. China Mut. Ins. Co n. 204 V. Ins. Co n. 94 Wheeland v. Atwood n. 36 Wheeler v. Ins. Co n. 264 White V. Prudential Ins. Co n. 303 Whitfield V. ^tna L. Ins. Co n. 131 Whiting V. Birkhardt u. 265 Whorf V. Equi. Mar. Ins. Co n. 345 Wiggin V. Suffolk Ins. Co n. 42 Wilber v. Supreme Lodge n. 285 V. WilUamsburgh City F. Ins. Co n. 161 Page Wilder v. Continental Cas. Co n. 161 Wildey Cas. Co. v. Sheppard n. 145, n. 146 WUd-Rice Lumber Co. v. Royal Ins. Co n. 212 Wilkinson v. Conn. Mut. L. Ins. Co. 283 Williams v. Shee 182 V. U. S. Mut. Ace. Assn n. 332 Wilson !). Assur. Co n. 176 V. Hakes n. 245 0. Mutual Ins. Co n. 245 Wingate v. Foster u. 183 Winne v. Niagara F. Ins. Co 84 Wolfstern v. Penn. R. Vol. Rel. Dept. u. 7 Wolverine Lumber Co. v. Palatine Ins. Co n. 217 Wood V. Hartford F. Ins. Co n. 109 V. Hartford Ins. Co n. 109 Woodmen's Ace. Assn. v. Hamilton n. 68 Woods V. Olson n. 203 Woodside v. Globe Mar. Ins. Co. . . n. 346 Woolverton v. Fid. & Cas. Co n. 359 Worachek v. New Denmark Mut. Home F. Ins. Co 220 Worthington v. Charter Oak L. Ins. Co n. 107 Wright V. Minn. Mut. L. Ins. Co.. .n. 292 V. Mut. Ben. L. Assn n. 139 V. Mut. Ben. Assoc, of Amer. . . 308 V. Supreme Comd n. 292 Wyandotte Brewing Co. v. Hartford F. Ins. Co n. 241 Wynkoop v. Niagara F. Ins. Co. . . .n. 219 Wytheville Ins. Co. v. Stultz n. 91 Yoch V. Home Mut. Ins. Co 248 Zearfoss v. Switchmen's Union. . . u. 303 . PARTI GENERAL PRINCIPLES OF INSURANCE LAW CASES ON INSURANCE PART I GENERAL PRINCIPLES OF INSURANCE LAW CHAPTER I Introductory Nature of Insurance and Insurance Companies STATE V. HOGAN Supreme Court of North Dakota, 1899. 8 N. Dak. 301 What is a contract of insurancef '■ HoGAN was arrested for transacting the business of insurance without a certificate of authority as required by State statute, violation of which was made a misdemeanor. While in the custody of the sheriff, he petitioned for a writ of habeas corpus, alleging illegal restraint. The State demurred. Hogan was an agent for the Realty Revenue Guaranty Company, organ- ized "to guaranty certain rental and produce income from lands and tene- ments." On behalf of his company he negotiated a contract with one Fergu- son. By this contract, in consideration of a payment by Ferguson of $55.00, the company agreed to purchase his entire crop of wheat and other grain at S5.00 per acre, grown during the season of 1899. It was further agreed that Ferguson was in no manner bound to sell said crop to the said company, except at his own option. Bartholomew, J. Is or is not the Realty Revenue Guaranty Company, in fact or in effect, an insurance company? If it be, then clearly the peti- A contract, if one of insurance, is subject to certain special doctrines of the com- mon law. Moreover, in every State there is a body of statutory law governing the conduct of insurance companies and likewise many statutory provisions affecting the insurance contract. 3 I 4 STATE V. HOGAN [CHAP. I tioner was properly held; otherwise, he should be discharged. Our statute (sec. 4441, Rev. Codes) defines insurance as follows: "Insurance is a con- tract whereby one undertakes to indemnify another against loss, damage or liabiUty arising from an unknown or contingent event." ' Necessarily in defining insurance in a single sentence, only the most general terms can be used, and any general definition must be extended to cover the ever-changing phases in which the subject is presented to the public.^ ' Other definitions are given in People v. Rose, 174 111. 310, 51 N. E. 246, 44 L. R. A. 124. ' Nature of Insubancb. — Insurance may be described as a system for dis- tributing losses. Its principal branches are fire, life (including also accident) and marine insurance. A general fund is obtained by imposing a comparatively small contribution or premium upon the many insured who are exposed to the common hazard, out of which the few who actually suffer may be indemnified. This descrip- tion is measurably true, even of life insurance, if we regard premature death as the hazard insured against. Kinds of Policies. — The contracts, called policies, are very diversified in form and contents. Thus the term " open policy " is sometimes employed to indicate a general form of insurance frequently used where the insured is likely to effect many successive insurances from the same company. Imperial Shale Brick Co. v. Jewett, 169 N. Y. 143, 62 N. E. 167; Snowden v. Guion, 101 N. Y. 458, 5 N. E. 322 (marine). For example, it may cover such goods, at such amounts of insurance, in such store- houses and places, and at such rates of premiums, as from time to time shall be agreed upon and indorsed on the policy or in a book attached thereto, the purpose being to obviate the necessity of executing a fresh policy for every transaction. A floating policy also is a general form of insurance, intended to cover property which cannot well be described specifically because of its fluctuating quality and location; as, for example, merchandise in freight trains, warehouses or lighters. The amount of goods covered by such a policy is ascertainable at the moment of loss only, Golde V. Whipple, 7 App. Div. 48, 39 N. Y. Supp. 964. An excess policy, usually a floater, attaches only to property or to an excess of value not covered by the specific insurance. United Underwriters' Ins. Co. v. Powell, 94 Ga. 359, 21 S. E. 565. Insur- ance is said to be in the blanket form, as contrasted with specific, when different buildings or different classes of property are insured in an aggregate amount without apportionment; for example, a policy of $5,000 on a factory plant in its entirety, including buildings, machinery and stock. While a policy of $5,000 on one of the buildings alone is called specific. A rent policy is an insurance on rents, usually, but not of necessity, in favor of the landlord. A use and occupancy policy is adapted to indemnify one in occupation of mill, factory, hotel, store, or other business premises, for loss of commercial use or earning capacity during the period after a fire and before reinstatement. The phrase "use and occupancy" being somewhat indefinite and such a policy being almost always valued, it is diflScult to ascertain or define with precision the subject-matter of this class of insurance, Michael v. Prussian Nat. Ins. Co., 171 N. Y. 25, 63 N. E. 810. The contract may be said in general to be intended to furnish indemnity for loss of estimated earnings or some part thereof which would have ac- crued from the business except for the fire. It is analogous to rent insurance or in- surance on profits, and must be carefully distinguished from insurance on buildings, or their contents. The regular old-style life policy is payable on the death of the person insured, and the payment of premiums continues annually throughout life. The limited payment policy is payable at the death of the person insured, but the payment of premiums ceases after a certain limited period, say ten, fifteen or twenty years. An endowment policy is payable at the expiration of the endowment period or upon the eariier de- cease of the insured. A regular life policy is in the nature of an investment by the CHAP. l] STATE V. HOGAN 5 What was the object of this contract and what was its legal effect? The petitioner says it was an option contract of sale of a crop. We cannot con- ceive that the farmer's primary object was to sell his crop. Ordinarily a man does not pay a premium for the privilege of selling his produce. Nor insured usually for the benefit of his family, or some member of it, while an endow- ment policy is intended as a contingent investment for his own benefit, being payable to himself if alive at the expiration of the period named, Walker v. Giddings, 103 Mich. 344, 61 N. W. 512. A term policy is one taken for a limited number of years, the policy being payable only in case of the death of the insured within that period. If he is alive at the end of the term, the insurance ceases altogether. A joint-life policy is one payable on the earliest death of two or more persons insured. A survivorship policy is one payable on the death of the survivor of two or more persons. A tontine policy is one in which it is agreed that certain accumulations or profits of the business shall be apportioned among those of the insured of a certain class sxirviving, at certain intervals; for example, every ten, fifteen or twenty years. Equi- table L. Assur. Soc. d. Winne (Ky., 1910), 126 S. \Y. 153; N. Y. Life Ins. Co. v. Miller, 22 Ky. L. Rep. 230, 56 S. W. 975. The lapsed policies of the class forfeit their resei-ve and dividends to the survivors. A tontine dividend is the distribution of such profits among the survivors who are entitled to it after the given period. A semi-tontine policy is one in which it is agreed that the dividends only shall be apportioned among the survivors of the class, Everson v. Equitable Life Assur. Co., 68 Fed. 258; Langdon I. Northwestern Mut. L. Ins. Co. (1910), 199 N. Y. 188. In marine insurance a time policy is one in which the duration of the risk is defined at the beginning and at the end, by fixed dates, as, for example, from noon of Janu- ary 1, 1907, until noon of January 1, 1908. A voyage policy is one in which, irrespective of time, the duration of the risk is established by geographical termini ; as, for example, from New York to Liverpool. To meet modern demands of commerce a marine policy is sometimes altered to include certain specified risks or aU kinds of risks by land and by water between certain termini, Schloss Bros. v. Stevens (1906), 2 K. B. 665. Reinsokance. — A feature of insurance business which has developed into great magnitude is the practice of reinsurance. Where a company finds itself in embarrassed RLTCumstances, or for any reason desires to hmit its liabihty in certain classes of risks, or in certain localities, or under a particular policy, it secures, if possible, reinsurance from one or more companies, Ins. Co. of N. A. v. Hibernia Ins. Co., 140 XJ. S. 565, 11 S. Ct. 909, 35 L. Ed. 517. The entire business of an insurance company is not infrequently absorbed in this way by some stronger competitor. The owner of an important risk, for example, a warehouseman or common carrier, often prefers to deal exclusively with one insurance company of high standing, rather than with many companies. This course of procedure greatly simplifies for a railway company and other classes of assured the serious business of adjusting numerous losses. Accord- ingly, one policy may be obtained by the assured from the company of his choice, to the full amount required, sometimes millions of dollars. But every prudent insurance company must limit its liability upon any one risk, and limits are also imposed by statute. The company issuing the original poUcy, called the straight or direct insur- ance, must therefore assume the burden of dividing up the excess of liability, if large, among many other companies, and this it does by taking out from them in its turn poUcies of reinsurance, each for some share of this liability. The term "reinsurance" must not be confounded with the phrase "renewal of insurance," which means the continuance of insurance between the same parties for a. further term. Thus the Illinois court says: "A renewal of a policy is in effect a new contract of insurance, and, unless otherwise expressed, on the same terms and conditions as were contained in the original policy," Hartford Fire Ins. Co. v. Walsh, 54 lU. 164, 167. Reinsurance must also be .distinguished from "double insurance," which refers to two or more existing policies on the same interest, Prov. Wash. F. Ins. Co. u. Atlanta, etc., Ins. Co., 166 Fed. 548. 6 STATE V. HOGAN [CHAP, I was it the primary purpose of the company to purchase the crop. From the very terms of the contract it is certain that it must lose money upon all the grain it buys under the contract. Moreover, grain is bought and sold by the bushel, and not by the acre. We think the contract was the identical con- tract which the articles of incorporation authorize the company to enter into. It was a contract by which the guarantor undertook to guaranty or assure to the farmer a certain revenue from his land. How did the parties proceed to execute such a contract? It was well known to both parties that an acre of land in this State, farmed as the farmer contracts to farm it in this case will produce a crop of a value far in excess of five dollars, and the value can be reduced to or below that figure only by the happening of one or more contingencies hereinbefore mentioned. But such contingencies may happen, and to be absolutely assured that his land will yield him at least five dollars per acre, the farmer is willing to pay something; and the corporation expect- ing to do business over a wide scope of country, believes that it can with profit to itseK assure the farmer a crop worth five dollars per acre for the compensation which the farmer is willing to pay therefor. But what is this in substance except a contract to indemnify the farmer against loss arising from the happening of a contingent event, and that is our statutory defini- tion of insurance. The farmer was seeking and paying for protection, and the corporation was seeking to make a profit by extending this protection for the consideration paid by the farmer. True, it is not all loss that is in- sured against. The contingencies named may reduce the value of a crop from twenty dollars per acre until, in the judgment of the owner, it barely exceeds five dollars per acre, and there is no liability under the contract. It is the loss below five dollars per acre that is insured against. The effect of the contract is very like that of a valued policy of insurance.' When the contingency happens that creates a liability under the pohcy, then the full amount of the policy must be paid, but the insured is entitled to all the salvage. It is doubtless true that there has been a studied effort to keep this cor- poration outside the operation of our insurance laws; ^ but the purpose and effects of its contracts are too clear to admit of doubt. They exactly meet the requirements of an insurance contract, and the corporation for which petitioner acted as agent is an insurance company. The act charged in the ' A valued policy is one which specifies an agreed value of the subject-matter in- sured; for example, a policy of S5,000 on "the ship Argus, valued at 810,000." In case of total loss of property, such a valuation, if not dishonest, furnishes the basis of adjustment, Patapsco Ins. Co. ti. Biscoe, 7 Gill & J. 293, 28 Am. Dec. 219- Snowden V. Guion, 101 N. Y. 458, 5 N. E. 322. An unvalued, sometimes called an open policy, IS one in which the value of the subject insured is not specified, but is left to be ascer- tained in case of loss, Ins. Co. ». Butler, 38 Ohio St. 128. Policies on Uves are akin to valued policies. Policies on ships are usually valued. Fire policies on contents of buildings are usually unvalued and, in the absence of valued policy laws, so are fire policies on buildings. 2 Every State has its insurance department to which insurance companies au- thorized to do business within the State must render stated reports under oath, and which also has a visitorial power over the insurance compames. CHAP. l] STATE V. HOGAN 7 complaint is a crime under our statutes, and there is reasonable and probable cause to believe the petitioner guilty of committing the act. He is therefore properly held. The writ issued in this case is discharged, and petitioner remanded to custody of the sheriff of Foster County. All concur.^ ' An American Lloyd's is an insurance company, State v. Stone, 118 Mo. 388, 24 S. W. 164, 25 L. R. A. 243, 40 Am. St. R. 388. A scheme for mutual protection against fire losses by a lumbermen's association was held to be insurance, Whitfield, C. J., dissenting. State v. Alley (Miss., 1910), 51 So. 467 (many cases cited). An association issuing a contract to its members in consideration of a specified annual payment to re- pair or replace bicycles injured or destroyed by accident, or stolen, was held not to be an insurance company. Commonwealth v. Provident Bicycle Assn., 178 Pa. St. 636, 36 Atl. 197, 36 L. R. A. 589. The relief department of railway companies organized to collect and manage a common fund from the wages of the employes and to make payments from it upon the death or injury of members, is held under the statutes of certain States not to be an insurance company, Donald ». C, B. & Q. R. Co., 93 la. 284, 61 N. W. 971, 33 L. R. A. 496; State v. Pittsburg, etc., Ry. Co., 68 Ohio St. 9, 67 N. E. 93, 64 L. R. A. 405, 96 Am. St. R. 635. An opposite conclusion is arrived at under the phraseology of other statutes, Wolfstern v. Penn. R. Vol. Relief Department (N. J., 1909), 74 Atl. 533. Fraternal beneficiary associations. Orders, Knights and similar organizations are in most States classed as insurance companies. Modern Woodmen v. Coleman, 68 Neb. 660 (1903), 94 N. W. 814, 96 N. W. 154; but not .so in all States, Commonwealth v. Eq. Ben. Assn., 137 Pa. St. 412, 18 Atl. 1112 (benevolent associations) . The constitution, by-laws and certificate of such societies together constitute the contract, People t>. Grand Lodge, 156 N. Y. 533, 51 N. E. 299. A Federal court says, "They did not issue policies of insurance, strictly speaking, but the benefit certificate is a contract of insurance none the less," Supreme Lodge v. Wellenvoss, 119 Fed. 671, 674, 56 C. C. A. 287. Such fraternal beneficiary organizations usually have a dual nature. In the first place, they are social clubs with a lodge system. Supreme Com- mandery v. Hughes, 114 Ky. 175, 70 S. W. 405; and, in the second place, they furnish life insurance or similar benefits. To procure a fund with which to pay death or loss claims, assessments are levied upon the members, Lawler ». Murphy, 58 Conn. 294, 20 Atl. 457, 8 L. R. A. 113. Some of the regular lite insurance companies issue what is known as industrial insurance for the benefit more especially of the working classes, the policies being for comparatively small amounts, usually with weekly premiums, Reiss B. Prudential Life Ins. Co., 176 N. Y: 178, 180, 68 N. E. 252, 98 Am. St. R. 656. 8 AYRES V. ORDER OF UNITED WORKMEN [cHAP. I AYRES V. ORDER OF UNITED WORKMEN CoDBT OF Appeals of New York, 1907. 188 N. Y. 280 Subsequent changes in the by-laws as affecting the terms of the insurance contract. Action on a certificate of a beneficiary society. Defense: that the insured member engaged in the business of selling liq- uors in violation of a by-law adopted subsequent to the issuance of his cer- tificate. In March, 1885, the defendant issued a certificate to Emory D. Fuller, entitling him "to all the privileges of membership and to participate in the beneficiary fund of the Order to the amount of $2,000." The certificate further stated that it was "issued upon the express condition that he shall in every particular comply with all the laws, rules and requirements." In his application for membership Mr. Fuller agreed "to strictly comply with the constitution, laws and regulations which are, or may hereafter be enacted." The application gave his occupation as "moulder." The cer- tificate was payable to Walter H. Ayres, the plaintiff. When Mr. Fuller joined the order there was no restriction as to occupation and any member might engage in selling liquor either at wholesale or retail. Between 1898 and 1902 the defendant adopted the following by-law: "Any member of the Order who shall, after March 1st, 1897, have entered into the business or occupation of selling, by retail, intoxicating liquor as a beverage, shall stand suspended from any and all rights to participate in the beneficiary fund of the Order and his certificate shall become null and void." January 1st, 1904, Fuller began to carry on a hotel at Weedsport, New York, in connection with a copartner, and the firm employed a bartender who sold intoxicating liquors in the usual way over the bar. Said hotel business was continued by the firm under licenses issued pursuant to State and Federal statutes until June 28th, 1904, when Mr. Fuller died. Vann, J. This case cannot be distmguished in principle from a long line of cases decided by this court. It is well established by these authorities "that a general power reserved either by statute or by the constitution of a society to amend its by-laws does not authorize an amendment .impairing the vested rights of members." An amendment of by-laws which form part of a contract is an amendment of the contract itself, and when such a power is reserved in general terms the parties do not mean, as the courts hold, that the contract is subject to change in any essential particular at the election of the one in whose favor the reser- vation is made. It would be not reasonable and hence not within their con- templation, at least in the absence of stipulations clearly specifying the sub- jects to be affected, that one party should have the right to make a radical CHAP. l] AYEES V. ORDER OF UNITED WORKMEN 9 change in the contract, or one that would reduce its pecuniary value to the other. A contract which authorizes one party to change it in any respect that he chooses would in effect be binding upon the other party only and would leave him at the mercy of the former, and we have said that human language is not strong enough to place a person in that situation. (Industrial & General Trust, Lunited, v. Tod, 180 N. Y. 215, 225.) While the defendant may doubtless so amend its by-laws, for instance, as to make reasonable changes in the methods of administration, the manner of conducting its business and the like, no change can be made which will de- prive a member of a substantial right conferred expressly or impliedly by the contract itseK. That is beyond the power of the legislature as well as the association, for the obhgation of every contract is protected from State interference by the Federal Constitution. (Art. I, §10.) The defendant promised by the contract which it made with the assured to pay to the beneficiary designated by him upon his death the sum of S2,000. The obligation of that contract was not limited by the occupation of the assured, for in the absence of any restriction made by the parties he had an absolute right to engage in any lawful business that he might select. After this contract had been ia force for more than twelve years and he had paid all the assessments as they became due and had complied with all the rules and regulations of the defendant, an attempt was made to restrict him in the choice of an avocation by amending the by-laws to that effect without his consent. When he had been insured for over nineteen years and had reached an age when other insurance could not be procured without a decided increase in cost, and perhaps not at all, he engaged in a new business re- quiring less strength and activity and died within a few months thereafter. He continued to pay his dues after he made the change, and, as the trial court expressly found, the duly authorized officer of the defendant knew when he received such dues that the insured "was engaged in the hotel business." The amended by-law, if enforced according to its terms, would deprive him of a right which he acquired by contract nearly twenty years before, and which he had preserved by paying to the defendant substantial sums of money every year during that period. The reservation of a general power to amend the by-laws, without resMving the specific right to so amend them as to restrict the occupation, did not permit an amendment in that respect, and the attempt made without the consent of the assured was be- yond the power of the defendant and absolutely void as to him. The effort was not to reduce the amount of insurance, but to destroy it altogether, unless the assured would conform to a by-law passed in violation of a vested right, for the privilege, allowed because not forbidden, of engag- ing in any lawful business was a vested right. It was an immediate right, open to enjoyment at all times during the existence of the contract, which the insured paid for when he joined the association, as well as every time he met an assessment. It was a natural right, of which he could not be de- prived without his consent, and he never consented. It was a right which had pecuniary value, for it left the door open to change of employment by 10 PAIN V. SOC. ST. JEAN BAPTISTE [CHAP. I which more money could be made. The assured was not obliged to continue at manual labor all his life, but when he had acquired capital enough to go into business and employ others to work for him, he had the right to do so, and the right was obviously of such value as to constitute a vested right, within the meaning of that term as known to the law. We think that the amendment as made was without effect upon the con- tract, and that the promise of the defendant to pay the sum of $2,000, was in full force at the death of the assured. While a different rule prevails in some States, the law in the State where the defendant was organized does not permit, as to existing contracts, such an amendment of its by-laws as it now pleads to defeat this action. The judgment appealed from should be affirmed, with costs. CuLLEN, Ch. J., Gray, Werner, Willard Bartlett and Hiscock, JJ., concur; Chase, J., not sitting. Judgment affirmed.^ PAIN V. SOCIETE ST. JEAN BAPTISTE Supreme Judicial Court of Massachusetts, 1899. 172 Mass. 319 Subsequent changes in the by-laws as affecting the terms of the insurance contract. Action on a certificate of a beneficiary society. Defense based upon the subsequent amendment of the by-laws. Hammond, J. The defendant society is a beneficiary organization, char- tered in 1884, under Pub. Sts., c. 115, and ever since its incorporation the plaintiff has been a member in good standing. In June, 1890, the plaintiff by reason of sickness became unable to work, and has so continued to the present time, and during that time he has received benefits at the rate of $5.00 per week for thirteen weeks of each year, down to July 7, 1896; and since the latter date he has received benefits at the rate of only $1.00 per > Peterson v. Gibson, 191 lU. 365, 61 N. E. 127, 54 L. R. A. 836, 85 Am. St. R. 263; Starling v. Supreme Council, 108 Mich. 440, 66 N. W. 340, 62 Am. St. R. 709 (defini- tion of "total disability" changed by subsequent by-law); Hall v. Western Trav. Ace. Assn., 69 Neb. 601, 96 N. W. 170. The Iowa court gives an elaborate presen- tation of authorities bearing on different aspects of this subject. Fort v. Iowa Legion (la., 1909), 123 N. W. 224. It has repeatedly been held that it is not permissible for the company to change the amount payable from $5,000 to $2,000, Supreme Council v. Jordan, 117 Ga. 808, 45 S. E. 33; Porter v. American Legion, 183 Mass. 326, 67 N. E. 238; Langdon V. Supreme Council, 174 N. Y. 266, 66 N. E. 932. It is clear that the contract cannot be changed by subsequent amendment of constitution or by-laws in those cases where no such right is expressly reserved, Weber v. Supreme Tent, 172 N Y 490 65 N E 258, 92 Am. St. R. 753. ' ' CHAP. l] PAIN V. SOC. ST. JEAN BAPTISTE II week for thirteen weeks of each year. This suit is brought to recover the additional $4.00 per week for a period of nine weeks. Whether the plaintiff can recover depends upon the construction and ef- fect of the amendment of the by-laws which was passed on July 7, 1896. If it is applicable to hun, he cannot recover, if not, he can. The by-law of 1893, which, so far as the plaintiff is concerned, was not materially different from that of 1889, imder which the plaintiff was receiv- ing aid at the time of the amendment in question, was as follows: "Every member who shall belong to the society for twelve consecutive months, who has paid his dues, contributions, fines or other sums assessed by vote or by- law of the society, shall have a right to $5.00 per week if he becomes unable to work, in consequence of sickness or accident, during a period not exceed- ing thirteen weeks in each year, beginning from the date of the first appUca- tion for benefits." And the amendment of July 7, 1896, was as follows: "Provided that when a member has received thirty-nine weeks of sick bene- fits, or one himdred ninety-five dollars, for the same or a different period of disability, then he shaU not hereafter receive more than one doUar per week, instead of five dollars, for thirteen weeks of each year, if his sickness shall so long continue; and that during a period of five years, aggregating sixty-five dollars of benefits. Each year reckons from the date of the first application for benefits. If after that period of five years he is still imable to work, he is then entitled to five dollars per week for thirteen weeks of each year for three years, as at first. This partial suspension of benefits is established so as to allow as much as possible all the members to share more equitably in the disability funds." The plaintiff concedes that the amendment was duly passed, but in his brief contends, in the first place, that "the defendant society cannot by such an amendment, under the circumstances of this case, so change its obligation to the plaintiff," because his "originally contingent right to receive benefits as stated became vested upon the happening of the contingency, i. e., his dis- ability to work, June 7, 1890, and from that time no act of the society, by amendment to its by-laws, could divest him of that right"; and in the second place, that even if his rights "were not vested and could be taken away by amendment of the by-laws, such amendment could have no retroactive force," and that "to hold that payments of benefits made before the adoption of the amendment can be applied to benefits accruing under the amendment will make such amendment retroactive in force, and will place the plaintiff in a worse position than the other members of the society at the time of the adop- tion of the amendment." The plaintiff's contention, more briefly expressed, is that the defendant had no power to amend its by-laws so as to affect his rights to future bene- fits under a disability then existing, and even if it has such power this amend- ment fairly construed does not affect such rights. The rights of the plamtiff are determined by the nature of the contract between him and the society, as interpreted by the by-laws imder which it was made and in the light of the surrounding circumstances. The general purpose of the society was to give 12 PAIN V. SOC. ST. JEAN BAPTISTB [CHAP. I pecuniary aid to its sick or disabled, and in case of the death of a member to provide for the relief of his family. The fmid for this purpose was to be raised by monthly dues, and, in case of death, by an assessment upon the survivors. Of course the amount of benefits which the society, with due regard to the interest of the sick as well as that of the other members, could properly pay depended upon many circumstances, such as the number of its members, the actual or relative nuniber of the sick, the promptness with which dues were paid, and others of similar nature; and, as these various circumstances might and probably would change from time to time, it might be regarded, not only as prudent, but as necessary for the successful management of the society, that there should exist the power to make such corresponding changes in the by-laws as the circumstances for the time being seem to require. The power to amend the by-laws was reserved, and there is no limit to the reservation. After certain preliminary proceedings, its by-laws could be amended at any time and in any reasonable way. AU this the plaintiff well knew from the first, and he was present at the meeting of July 7, 1896, and spoke against the adoption of the amendment. There being a power of amendment reserved, the contract between the plaintiff and the society was liable to changes with regard to future bene- fits to which a disabled member might be entitled, as well as in other matters, and the plaintiff had agreed that these changes duly made in comphance with the rules of the society should be binding upon him, not as a new con- tract, but as a part of the old contract and under its provisions. But the plaintiff contends that there is an implied limitation to this power of amendment, that it cannot be made so as to deprive him of a vested right, and that his right to the benefit became fixed by his disability, and can never be changed during that disability. But how does the right become fixed? There is no such restriction contained in the words expressing the power of amendment. To thus restrict the power would be to divide the society into two classes, one comprising those like the plaintiff, who could not be af- fected by any reduction of future benefits, and the second comprising the well members, who would be affected by such reduction. And no matter how many of these preferred pensioners there might be, this society, whose right to graduate payment according to varying circumstances has been reserved so carefully, and, in language so general and comprehensive, and which is so plainly necessary to the purposes for which it was incorporated, is powerless to do what might be necessary even to its own existence. There can be no right to future benefits vested in one member more than in an- other. The right of a sick member to future benefits which becomes vested in the plaintiff at the time of the disability is not a right to receive so long as such disability continues the future benefits provided by the by-law exist- ing at the time the disabihty begins, but simply a right to receive them subject to such changes as may be made by the society, and it is no violation of such a vested right to make the changes at any time. Such a change is not a repudiation of the terms of the contract, but on the contrary is in accordance with them. CHAP. l] NUTTING V. MASSACHUSETTS 13 As was said in Smith v. Galloway (1898), 1 Q. B. 71, 77, "Where ... the original contract . . . provides for alteration of the rules, he is bound by any subsequent alteration that may be within the power of alteration, what- ever the extent of that alteration may be." Such an interpretation of the contract seems to be in accordance with the provision for amendments, and to be the only one reasonably calculated to subserve the interests of all, and to enable the society to accomplish the objects for which it was incor- porated. We are aware that the doctrine herein enunciated is inconsistent with some decisions in other States, but we are satisfied that it is sustained by the bet- ter reasoning and the weight of authority. Of course, no amendment could change the amount of any benefit which under any by-law has passed from a possible to that of a future benefit and has become a debt. The right becomes vested absolutely as the time expires for which the benefit is granted. As to the second contention of the plaintiff, it is sufiicient to say that we think the by-law applies to the case of the plaintiff. The language is broad enough to cover his case. The plaintiff had received more than "thirty- nine weeks of sick benefits," and it was provided that such a person shall "not hereafter receive more than one dollar per week." We have no doubt the construction put upon the amendment by the oflScers of the society was the one intended and justified by the language. Judgment affirmed.^ NUTTING V. MASSACHUSETTS Supreme Court of The United States, 1901. 183 U. S. 553 How far may the State constitutionally prevent the insured or his hrok&r from dealing with nonadmitted foreign companies.' This was an indictment on the statute of Massachusetts of 1894, c. 522, § 98, for negotiating and transacting insurance with a foreign insurance company not admitted to do business in Massachusetts. Agreed facts: The defendant was a licensed insurance broker in Boston, 1 Knights of Pythias v. Knight, 117 Ind. 489, 3 L. R. A. 409; Monger v. New Era Assn. (1909), 156 Mich. 645; Loeffler v. Modern Woodmen, 100 Wis. 79. A by-law subsequently enacted which changed the definition of "broken leg" was held reasonable and operative, Ruea v. Modern Brotherhood, 120 la. 692, 95 N. W. 207; and where by subsequent by-law the occupation of switchman was added to the extra hazards, the court held that the amendment was legitimate and bind- ing upon the members, Gilmore v. Knights of Columbus, 77 Conn. 58, 58 Atl. 223. ^ State statutes prohibit the transaction of business with nonauthorized insurance companies. The authorized or admitted companies whether domestic or foreign pay taxes, submit themselves to the laws of the State and to the supervision of the insurance department. 14 NUTTING V. MASSACHUSETTS [CHAP.I and at s6me tinle prior to November 18, 1898, solicited frpm one William McKie, a shipbuilder in Boston, and likewise a citizen of Massachusetts, the business of procuring insurance upon a vessel then in process of construc- tion in his Boston shipyard; and, as agent for Johnson & Higgins, average adjusters and insurance brokers, having an office in Boston in charge of the defendant, and their principal place of business in New York, secured the authority of McKie to the placing of a contract of insurance for £4,124 upon the vessel. Thereupon the defendant transmitted an order for the insurance to Johnson & Higgins in New York, and they at once ■\vrote to their Liver- pool agents, John D. Tyson & Co., to procure the aforesaid insurance. Ac- cordingly, Tyson & Co. procured a policy from the London Lloyds, to be delivered to Tyson & Co. in Liverpool, dated November 18, 1898, for a year from November 16, 1898, on the aforesaid vessel, for the sum of £4,124, the policy running in favor of Johnson & Higgins "on account of whom it may concern." Tyson & Co., at the time of receiving the policy, paid the pre- miums thereon for account of Johnson & Higgins, and received a commission upon the insurance from Lloyd's for themselves and for Johnson & Higgins. Tyson & Co. sent the policy to Johnson & Higgins in New York; they, after indorsing it, forwarded it by mail to the defendant in Boston; and he, on November 18, 1898, sent it by mail to McKie. The policy was procured from the London Lloyd's in the usual course of the business of the defendant, of Johnson & Higgins and of Tyson & Co. None of them were agents of the London Lloyd's, except in so far as the facts agreed constituted them agents. The London Lloyds were individual insurers, citizens of England, associated as principals in the business of insurance, under and by authority of the government of the United Kingdom of Great Britain and Ireland, and car- rying on the business in England on the Lloyd's plan,' by which each as- sociate underwriter becomes liable for a proportionate part of the whole amount insured by a policy. The London Lloyd's has not complied with any of the requirements imposed by the laws of Massachusetts upon foreign insurance companies, and had not been admitted to do insurance business in the Commonwealth, according to law. The defendant requested the court to instruct the jury that so much of the Massachusetts statute as purported to make illegal such acts as were done by the defendant was contrary to the Fourteenth Amendment of the • Lloyd's was originally a coffeehouse in London, a celebrated resort of marine un- derwriters. Though the society of Lloyd's is now incorporated, nevertheless its members underwrite policies as individuals, though sometimes in groups, and the underwriting transacted there has extended to many branches of insurance. It is the most famous headquarters in the world for maritime underwriting and for the collection and diffu- sion of maritime information. Many unincorporated associations have been formed in this country, known as American Lloyd's, with individual underwriters, modeled in a measure in imitation of English Lloyd's, each of the underwriters on a policy being liable only to the extent of the amount subscribed by him, Barnes i>. People, 168 111. 425, 48 N. E. 91; Imperial Shale Brick Co. v. Jewett, 43 App. Div. 586, 60 N. Y. Supp. 35. If the policy so provide, the insured must bring test suit against the agent before suing the underwriters. Enterprise Lumber Co. v. Mundy, 62 N J L 16 42 Atl. 1063, 55 L. R. A. 193. • . . , CHAP. l] NUTTING V. MASSACHUSETTS 15 Constitution of the United States, and as such was unconstitutional and void. The request was refused; and the court instructed the jury that upon the facts above stated they would be warranted in finding the defendant guilty. To all of this the defendant duly excepted, and being found guilty, his ex- ceptions were overruled by the Supreme Judicial Court of Massachusetts. 175 Mass. 154. He was thereupon sentenced in the Superior Court, and sued out this writ of error. Mr. Justice Gray deUvered the opinion of the court. A State has the undoubted power to prohibit foreign insurance companies from making con- tracts of insurance, marine or other, within its limits, except upon such con- ditions as the State may prescribe, not interfering with interstate commerce. A contract of marine insurance is not an instrumentaUty of commerce, but a mere incident of commercial intercourse. The State, having the power to impose conditions on the transaction of business by foreign insurance com- panies within its limits, has the equal right to prohibit the transaction of such business by agents of such companies, or by insurance brokers, who are to some extent the representatives of both parties. Hooper v. California, 155 U. S. 648; AUgeyer v. Louisiana, 165 U. S. 578. The statute of Massachusetts of 1894, c. 522, on which this indictment is founded, besides requiring foreign insurance companies, as conditions prec- edent to doing business in the State, to appoint agents within the State, and to deposit a certain sum in trust for their policy holders and creditors, pro- vides, in § 3, that "it shall be unlawful for any person as insurance agent or insurance broker to make, negotiate, solicit or in any manner aid in the transaction of" insurance on or concerning any property, interest or lives in Massachusetts, except as authorized by the act; and in § 98, that any person "who shall act in any manner in the negotiation or transaction of unlawful insurance" (evidently intending insurance declared unlawful by § 3) "with a foreign insurance company not admitted to do business in this Commonwealth," shall be punished by fine. The acts of negotiation or transaction by the defendant in Massachusetts, admitted in the facts agreed by the parties, are that he soUcited from McKie the business of procuring insurance upon his vessel in Boston, and, as agent of Johnson & Higgins of New York, having an office in Boston, secured the authority of McKie to the placing of a contract of insurance for a certain sum in poimds sterling upon the vessel, and transmitted an order for that insurance to Johnson & Higgins in New York; whereupon they, acting ac- cording to the usual course of business of the defendant, of themselves and of their agents in Liverpool, obtained from the London Lloyd's, who had not been admitted to do business in Massachusetts, a poUcy of insurance for that amount on the vessel; and the defendant afterwards, in Massachusetts, received from Johnson & Higgins that pohcy, and sent it by mail to McKie, which tends to show that the policy obtamed from the foreign insurance company was the insurance which he had originally solicited. These facts clearly convict the defendant of negotiating and transactmg in Massachu- 16 NUTTING V. MASSACHUSETTS [CHAP. I setts unlawful insurance with a foreign insurance company in violation of the statute, if that statute is constitutional. In Hooper v. California, 155 U. S. 648, Hooper, the agent in California of the same Johnson & Higgins of New York, obtained from them a policy of marine insurance of a Massachusetts insurance company on a vessel in California, owned by a citizen of California, to whom he delivered the policy in California. It was held that a statute of California, by which Hooper was guilty of procuring insurance for a resident of California from a foreign insurance company which had not given bond as required by the laws of California, was constitutional. In Allgeyer v. Louisiana, 165 U. S. 578, the insurance was not obtained through an agent or broker, but by the assured himself; and the point de- cided was that a statute of a State punishing the owner of property for ob- taining insurance thereon in another State was unconstitutional. In that case the decision in Hooper's case was expressly recognized and distinguished; and Mr. Justice Peckman, speaking for the court, and repeating the words of Mr. Justice White in Hooper's case, observed: "It is said that the right of a citizen to contract for insurance for himself is guaranteed by the Fourteenth Amendment, and that, therefore, he cannot be deprived by the State of the capacity to so contract through an agent. The Fourteenth Amendment, however, does not guarantee the citizen the right to make within his State, either directly or indirectly, a contract, the making whereof is constitution- ally forbidden by the State. The proposition that, because a citizen might make such a contract for himself beyond the confines of his State, therefore he might authorize an agent to violate in his behalf the laws of his State within her own limits, involves a clear non sequitur, and ignores the vital distinction between acts done within and acts done beyond a State's juris- diction." 155 U. S. 658, 659; 165 U. S. 587, 588. As was well said by the Supreme Judicial Court of Massachusetts, "WhUe the legislature cannot impair the freedom of McKie to elect with whom he will contract, it can prevent the foreign insurers from sheltering themselves under his freedom in order to solicit contracts which otherwise he would not have thought of making. It may prohibit not only agents of the insurers, but also brokers, from soliciting or intermeddling in such insurance, and for the same reasons." 175 Mass. 156. We are of opinion that the case at bar comes within Hooper v. California, and not within Allgeyer v. Louisiana; and that § 98 of the statute of Massa- chusetts, under which the plaintiff in error has been convicted, is not con- trary to the Constitution of the United States. Judgment affirmed. Mr. Justice Harlan, dissenting. In my opinion this case does not differ in principle from Allegeyer v. Louisiana, 165 U. S. 578; and so thinking I cannot concur in the opinion and judgment in this case.' ' To be effective, ought the prohibitory statute of the State to be directed against the insured or rather against his broker as regards insurance with foreign nonad- CHAP, l] NUTTING V. MASSACHUSETTS 17 mitted companies on risks located outside the State? Arc such statutes constitu- tional? Allgeyer v. Louisiana, 165 U. S. 578; Commonwealth v. Roswell, 173 Mass. 119, 53 N. E. 132. The underwriters at London Lloyd's are not authorized to do business in this coun- try. Their encroachments within the domain of our authorized companies, especially in connection with marine and fire risks, present a practical question of rapidly in- creasing proportions in New York State and elsewhere. 18 HAYES V. MILFORD MUTUAL FIRE INS. CO. [CHAP. II CHAPTER II General Principles of Insurance Law Nature and Characteristics of the Contract, including Insurable Interest, Contribution, Subrogation, Assignability, Rights of Beneficiaries and Creditors, etc. HAYES V. MILFORD MUTUAL FIRE INSURANCE COMPANY Supreme Judicial Court op Massachusetts, 1898. 170 Mass. 492 Insurable interest, property.^ Lathrop, J. The plaintiff, by virtue of a contract with the Atlas Mutual Insurance Company, made on February 27, 1895, was constituted its sole agent, and was to have charge of placing all risks on behalf of said company. He was to receive as compensation for his services "A sum equivalent to twenty per cent of all sums received from the assured for or on account of all the policies issued on behalf of the company; and also a sum equivalent to ten per cent of the net profits of the business of the company." It is agreed by the parties that the plaintiff did not determine the character of the risks taken by the Atlas Insurance Company, but this duty was per- formed by the secretary of the company, under a vote of the directors. While this contract was in force the defendant issued to the plaintiff the policy declared on. This was on a printed blank of a Massachusetts standard policy, with a rider attached. It insures "Lorenzo Burge, Hayes & Co." (the name under which the plaintiff did business) against loss or damage by fire or lightning to the amoimt of twenty-five hundred dollars, as per form ■Insurance is essentially a contract of indemnity, Castellain v. Preston, 11 Q. B. D. 380, 407. The main object sought to be accomplished must be protection to some pecuniary interest, either actual or presumed. Life Ins. Co. v. O'Neill, 106 Fed. 800, 803, 45 C. C. A. 641, 54 L. R. A. 225. Important considerations of public policy demand that compensation for a real loss rather than a purely speculative venture should be the aim of the insured, Trinity College ». Travelers' Ins. Co., 113 N. C. 224, 18 S. E. 175, 22 L. R. A. 291. The policy of the law is to preserve life, health and property, and not to encourage their impairment or destruction. Ruse v. Mut. Ben. Life Ins Co., 23 N. Y. 516. Consonant with this cardinal principle of indemnity are many distinctive features of the insurance contract such as the rule requiring an insurable interest, the doctrine of double insurance contribution and the right of subrogation accruing to the insurer on payment of a loss on property. CHAP. Il] HAYES V. MILFOED MUTUAL FIRE INS. CO. 19 attached to and made the descriptive part of this policy. Then follows the rider, signed by the secretary of the company, and reading as follows: "Lorenzo Burge, Hayes & Co. On their interest in profits under contract with the Atlas Mutual Insurance Company of Boston, provided the follow- ing conditions are complied with: First. The Atlas Mutual Insurance Com- pany must sustain losses by fire between midnight of September 30, 1895, and midnight of December 31, 1895, amounting to $25,000. Second. No claim for loss can be made against the MUford Mutual Fire Insurance Com- pany until the assured presents a statement from the secretary of the Atlas Mutual Insurance Company, under oath, stating that the Atlas Mutual Insurance Company has suffered loss in excess of $25,000 by and in conse- quence of fires occurring during the term above specified. The above two conditions having been complied with, the Milford Mutual Fire Insurance Company hereby agrees to pay to the assured 50% of its poUcy; then if it is shown in the same manner that the losses of said Atlas Mutual Insurance Company have amounted to $30,000 for the same period, the Milford Mu- tual Fire Insurance Company pays a total loss under its policy.'' The insurance was from September 30, 1895, at midnight, until Decem- ber 31, 1895, at midnight. The Atlas Insurance Company sustained losses by fire between midnight of September 30, 1895, and midnight of Decem- ber 31, 1895, in excess of $30,000. Before the date of the writ in this case the plaintiff presented to the defendant a statement under oath from the secretary of the Atlas Insurance Company, setting forth that that company had sustained losses by and in consequence of fires occurring between mid- night of September 30, 1895, and midnight of December 31, 1895, amount- ing to more than $30,000. 1. The first question which arises in the case is whether the plaintiff had an insurable interest in the property insured by the Atlas Insurance Com- pany; and we have no doubt that he had such an interest. By virtue of his contract with the Atlas Insurance Company, he was entitled to a certain portion of the net profits of that company during the period specified in the policy. As, in estimating the net profits, losses were to be deducted, the plaintiff would have been benefited by the continued existence of the prop- erty, insured by the Atlas Insurance Company, and would have been injured by its destruction. In Eastern Raiboad v. Relief Ins. Co., 98 Mass. 420, 423, it is said by Mr. Justice Gray: "By the law of insurance, any person has an insurable interest in property, by the existence of which he receives a benefit, or by the destruction of which he will suffer a loss, whethel- he has or has not any title in, or lien upon, or possession of the property itself." Many other cases might be cited to the same effect. 2. The next question is whether the description of the subject-matter of the insurance, namely, the tangible property covered by policies of the Atlas Insurance Company during the time specified, is sufficiently definite. The words "on their interest in profits" are to be taken in connection with the rest of the policy, and with the contract of the plaintiff, in determining 20 HAYES V. MILFORD MUTUAL FIRE INS. CO. [cHAP. II what is meant. Preceding the rider are the words "against loss or damage by fire or lightning." These words have reference to tangible property rather than to an intangible interest. The first and second conditions of the rider show the intention of the parties that the payment of the insurance should depend on the destruction or damage of tangible property by fire or light- ning. It also clearly appears in the contract between the plaintiff and the Atlas Insurance Company that a portion of the plaintiff's compensation for his services was dependent on the continued existence of property insured by that company. We are therefore of opinion that the subject-matter of the insurance was sufficiently described. Judgment of the Superior Court must be reversed. So ordered} 'The United States Supreme Court saya: "It is well settled that any person has an insurable interest in property by the existence of which he will gain an advantage or by the destruction of which he will suffer a loss whether he has or has not any title in, or lien upon or possession of the property itself," Harrison v. Fortlage, 161 U. S. 57, 65, 16 S. Ct. 488, 40 L. Ed. 616; Doyle ». Am. F. Ins. Co., 181 Mass. 139, 63 N. E. 394; Berry v. Am. Central Ins. Co., 132 N. Y. 49, 30 N. E. 254, 28 Am. St. R. 548. " Interest can hardly be defined exhaustively, and probably the criterion proposed by Lawrence, J., a century ago, cannot be improved upon: 'Interest,' he says, 'does not necessarily imply a right to the whole or a part of a thing, nor necessarily or ex- clusively that which may be the subject of privation; but the having some relation to or concern in the subject of insurance, which relation or concern, by the happening of the perils insured against, may be so affected as to produce a damage, detriment, or prejudice to the person insuring. ... To be interested in the preservation of a thing, is to be so circumstanced with respect to it as to have benefit from its existence, prej- udice from its destruction,' Lucena v. Crauford (1806), 2 B. & P. at p. 302, cited and approved by Lord Blackburn in Lloyd v. Fleming (1872), L. R. 7 Q. B. at p. 302." Chalmers & Owen, Mar. Ins. Act (1906) p. 12. Sir M. D. Chalmers drafted the famous British marine insurance code. The definition sometimes given that the inter- est must be an estate or right in or liability as to the thing which is the subject-matter of the insurance is rather misleading, fails to hannonize with many of the decisions, and is inconsistent with certain valid forms of policies. Thus, the New York court has repeatedly said, "An insurable interest may exist without any estate or interest in the corpus of the thing insured. It was enough that there be a pecuniary interest in the preservation and protection of the property, and that one might sustain a loss by its destruction," Rohrbach v. Germania F. Ins. Co., 62 N. Y. 47, 20 Am. Rep. 451, citing to like effect Springfield F. & M. Ins. Co. v. Allen, 43 N. Y. 389; Herkimer ». Rice, 27 N. Y. 163. This is the useful and practical test, though in very rare instances it may require some qualification. A stockholder has an insurable interest though no title in the corporate property, Riggs V. Commercial Mutual Ins. Co., 125 N. Y. 7, 25 N. E. 1058, 10 L. A. R. 684. Any legal or equitable estate in property will confer an insurable interest. A defea- sible interest is insurable, McCutchen v. Ingraham, 32 W. Va. 378, 9 S. E. 260; as also is a contingent, Feun v. New Orleans Mut. Ins. Co., 53 Ga. 578; or inchoate, Patapsco Ins. Co. V. Coulter, 3 Pet. (U. S.) 222, 7 L. Ed. 659 (profits) ; Sawyer v. Dodge Co., 37 Wis. 503 (future crops) ; or partial interest, Moitke v. Mut. Mich. Ins. Co., 113 Mich. 166, 71 N. W. 463. But it is said that a mere expectancy as by an heir in the prop- erty of the ancestor who is yet alive will afford no basis for an insurable interest, Lucena V. Crauford, 3 B. & P. 75; see, however. Home Ins. Co. v. Mendenhall, 164 111. 458 45 N. E. 1078, 36 L. R. A. 374. It is said that a mere trespasser or intruder on property CHAP. Il] farmers' MTJT. INS. CO. V. NEW HOL. TURN. CO. 21 FARMERS' MUTUAL INSURANCE CO. v. NEW HOLLAND TURN- PIKE CO. StFPKEME Court op Pennsylvania, 1888. 122 Pa. St. 37 Insurable interest, property. Action on plaintiff's policy of fire insurance on a bridge belonging to Lancaster Co., Pa., towards the cost of the construction of which the plain- tiff, the turnpike company, had voluntarily contributed, inasmuch as the bridge was a necessary link on the line of its public highway. Defense, lack of insurable interest. It was stated in the application, "This bridge is about four miles from Lancaster and about eight miles from New Holland and was erected at the expense partly of the County of Lancaster and partly of the Turnpike Co.; insured for the benefit of the Turnpike Co. in the name of its president at the sum of four thousand dollars." During the period required for the reconstruction of the bridge after the fire, its disuse caused a diminution of more than three thousand dollars in the plaintiff's highway toU receipts. For this amount the plaintiff sought a recovery imder the policy. has no insurable interest in it, Sweeny v. Franklin Ins. Co., 20 Pa. St. 337, and see Pope V. Glens Falls Ins. Co., 136 Ala. 670, 34 So. 29. But compare cases in which there was possession coupled with beneficial use. City of N. Y. v. Brooklyn F. Ins. Co., 41 Barb. 231, aff'd 4 Keyes, 465. An insurable interest is not disturbed by reason of the fact that sources of indemnification are available to the insured, independent of his policy. Thus, the owner of unused revenue stamps has an insurable interest in them, though they are redeemable from the government if lost, U. S. v. American Tobacco Co., 166 U. S. 468, 17 S. Ct. 619, 41 L. Ed. 1081; so also has a mortgagee, regardless of the amount of his other security. Excelsior Fire Ins. Co. v. Ins. Co., 55 N. Y. 343, 14 Am. Rep. 271. A lien upon property carries with it an insurable interest in the property, Ins. Co. v. Stinaon, 103 U. S. 25, 26 L. Ed. 473, but a simple contract creditor having no judgment and no hen has no insurable interest in the property of the debtor. Creed v. Sun Fire Ofiice, 101 Ala. 522, 14 South. 323, 23 L. R. A. 177, 46 Am. St. R. 134. And see Leight v. Ins. Co., 169 Pa. St. 310, 32 Atl, 439, 47 Am. St. R. 904. Possession of property coupled with use though without right or title may carry an insurable interest; thus, it is held that a husband and wife, either separately or jointly, have an insurable interest in the furniture and household effects, regardless of whose money paid for the articles, or to whom they may belong, Lenagh v. Commer- cial Union Ass. Co., 77 Neb. 649, 110 N. W. 740. As to whether a husband has an insurable interest in the separate estate of his wife see Tyree v. Virginia F. & M. Ins. Co., 55 W. Va. 63, 46 S. E. 706, 66 L. R. A. 657; Carey v. Home Ins. Co., 97 la. 619, 66 N. W. 920. Liability with respect to the property of another confers an insurable interest. Upon this principle an insurer may reinsure with another company, Barnes V. Heckla F. Ins. Co., 56 Minn. 38, 57 N. W. 314, 45 Am. St. R. 438. It must be ob- served that under the terms of most forms of fire policies any limited interest must be specified in order to comply with the requirement of an express warranty. 22 farmers' mut. ilsrs. co. v. new hol. turn. co. [chap, ii Mr. Justice Green: We cannot understand upon what principle evidence was admitted to prove loss of tolls on the turnpike road of the plaintiff. The contract in suit was a policy of fire insurance on a bridge. The bridge having been destroyed by fire, if there was liability on the part of the insur- ance company, the measure of that liability would be the value of the loss, which would consist of the injury to the bridge. If the bridge was totally destroyed, the loss would be the total amount of the insurance, but if only partially destroyed, it would be the value of the injury. In no circumstances can there be a legitimate measure of liability on a fire insurance policy which represents the loss of profits of a business which might be carried on at the structure destroyed if it were standing. Such is not the contract of the par- ties. Neither is there any liability as for rent of the premises destroyed or for any other advantage which may have been derived from its use. If a period of time elapses before the building is restored, or if it is never restored, the liability of the insurer is not for a loss of the use or rental of the building, but for the value of the loss with interest on the same untU pajonent is made. These fimdamental principles which are inherent in the contract of insur- ance were disregarded when the plaintiff was permitted to prove the loss of tolls for nonuser of the bridge while it was being rebuilt. For this reason we sustain the fourth assignment of error. The more important question, however, is, whether the turnpike company had any insurable interest in the bridge. It is a novel question, but perhaps not difficult of solution. The basis, upon which the insurable interest is claimed to exist, is the fact that the turnpike company contributed $5,500 to the cost of erecting the bridge, being one-third its total cost, 116,500. If this contribution was compulsory — that is, legally compulsory — it would perhaps have to be admitted that an interest in the bridge, legal or equitable, would necessarily flow from it. For it cannot be supposed that the law would obUge any person or corporation to contribute directly to the cost of erect- ing a structure, without conferring an interest in the structure which the law would recognize and enforce. While saying this, we do not of course refer to that kind of contribution which is accomplished by the payment of taxes. Such contribution is, of course, for public use, and confers no title or interest upon the taxpayer in structures which may be erected with pub- lic funds. But in this case there is no pretense of any compulsion upon the turnpike company. There is absolutely no testimony to prove why or upon what considera- tion, or for what purpose or reason, the turnpike company paid any part of the cost of erecting the bridge. It is not difficult to imagine a reason, since as the company's road crossed the stream over which the bridge was erected, it would be quite desirable for them to have a bridge over which persons using the road could travel. But while that might be a reason for the com- pany building a bridge of its own, it was still the fact that the bridge was a pubUc coimty bridge, free to all travel, built many years before by a private person who transferred it to the county, and hence the property of the county exclusively. Being thus a free, public bridge, there could not possibly be CHAP. Il] farmers' MUT. INS. CO. V. NEW HOL. TURN. CO. 23 any private estate or ownership in it. The turnpike company could charge no tolls for passing over it. They could exercise no rights of ownership over it. They could not obstruct it nor take it down, even if to rebuild it, without the consent of the county, and perhaps not even with such consent, as it was a part of the public highway. The only injury the plaintiff has sustained by the fire, is in being deprived of the use of the bridge, not as its own, but as a part of the public highway, during the period of the reconstruction of the bridge. But, for that injury the defendant was not responsible in any sense, and it never assumed an obli- gation to make compensation for it. What then remains to impose any liability upon the defendant? The bridge is restored without any expense to the plaintiff. Every right which the plaintiff enjoyed before the fire is enjoyed since, so far as the bridge is concerned, without any additional cost to the plaintiff. It may be remarked in passing that the right of the plaintiff in the bridge is only the public and common right of its patrons as citizens, to use the bridge as a part of the public highway. It is therefore not a right peculiar to the plaintiff in any sense. It may well be questioned, even if the plaintiff had an insurable interest in the bridge, whether any injury has been sustained to that interest, suffi- cient to impose any liability upon the defendant as an insurer. Suppose a recovery is permitted, and the plaintiff recovers the amount of the insurance money. As they are not obliged to expend the money in reconstruction, and yet reconstruction has been accomplished without cost to them, they simply get back and keep the money they voluntarily contributed in 1868 to the construction of the bridge. But if the bridge had not burned down, that money could not have been recovered. How then were they injured by the fire? They have the bridge as they had it before, without cost to them, and the diminution of their tolls during the period of reconstruction cannot be compensated in an action on the policy. For this reason, therefore, if for no other, we cannot discover any cause of action against this defendant. There was clearly no interest in the bridge belonging to the turnpike company, which could be recognized or enforced either at law or in equity. There could not be any right of property of any kind, nor of possession, nor of custody. Even the use of it was not a use by the plaintiff in its corporate capacity, but a mere right of passage over it which belonged to all citizens in common. The money which was contributed to its construction by the plaintiff, was a mere gratuity, which it was not bound to give and which it could never recover. In such circumstances there was no interest or property in the bridge as a structure and hence no insurable interest capable of protection and enforcement. Judgment reversed. ' Assume that instead of the policy in suit, the turnpike company had disclosed at the trial a valued policy for loss of the use of the bridge, what should have been the deci- sion of the court? Cohn ». Virginia F. & M. Ins. Co., 3 Hughes, 272, Fed. Cas. No. 2,970; Graham v. Fire Ins. Co., 48 S. C. 195, 26 S. E. 323, 59 Am. St. R. 707. 24 HAGfiDORN V. OLIVBRSON [cHAP. II HAGEDORN v. OLIVERSON CouBT OF King's Bench, 1814. 2 M. & S. 485 Insurance in a representative capacity. AsstJMPSiT on a policy of assurance tried before Lord EUenborough, C. J. A verdict was found for the plaintiff for £200, the amount of the defendant's subscription, subject to the opinion of the court on the following case: The policy was effected by the plaintiff, a London broker, August 2d, 1810, as well in his own name as for and in the name and names of all and every other person and persons to whom the same doth, may, or shall ap- pertain, etc., in the usual form, upon the ship Fiasco valued at £2,300, at and from Gluckstadt, and any port and ports in the river Elbe, to any port or ports in the United Kingdom, with liberty to carry simulated papers, etc., sail under any flag, etc. The declaration averred the interest to be in F. S. Schroeder, and a loss by capture. At the time of effecting the policy Schroeder was and is a subject of the King of Denmark, then and now at war with Great Britain. In order to legalize the voyage the plaintiff had pro- cured a license, on behalf of himself or other British or neutral merchants, permitting a vessel bearing any flag except the French to proceed with a cargo from within certain specified limits, within which Gluckstadt was, to any port of this kingdom north of Dover, etc. The ship was loaded at Gluck- stadt in July, 1810, with a cargo on British and neutral account, and sailed from thence under Danish colors for London on the 26th of that month, and was captured by enemies, carried into a port of Holland, and condemned. The policy was effected for the benefit of Schroeder, but no letter or order was proved from Schroeder before the loss, but a letter from him to the plaintiff, dated the 26th of July, 1812, before the commencement of this action, was produced, wherein he adopted theinsurance in the following terms: "I may now, I hope, expect that you have effected a final settlement with the underwriters per Fiesco, and request you to lay out the amount for me in coffee." No other evidence was given of the connection of Schroeder with this policy. The question for the opinion of the court is whether the plaintiff is entitled to recover: if the court shall be of that opinion, the verdict is to stand; if not, a nonsuit is to be entered. Lord Ellenborough, C. J. The difficulty in this case arises from the situation of Schroeder, because he might by refusing to adopt the policy in case, the ship had arrived have got clear of the premium, for if the plaintiff had brought an action against him to recover it, I do not see how he could have succeeded. That constitutes something of an anomaly, because in one event, namely, that of a loss, he might secure himself and nevertheless might have avoided the payment of the premium in the other event of the CHAP, n] HAGEDORN V. OLIVERSON 25 ship's arrival by declaring that he chose to stand his own insurer. But I do not think that consideration governs the case now before us between this plaintiff and the underwriter. The plaintiff had a right to effect an insurance on the chance of its being adopted for the benefit of all those to whom it might appertain, which are the words of the policy. He might insure for those who were actually interested and possibly for those who might be in- terested. Schroeder was interested, and might become privy to the benefit of this insurance by subsequent adoption, according to Lucena v. Craufurd, 2 B. & P. N. R. 269, and Routh v. Thompson, 13 East, 274. He has adopted it and now it is made a question whether he can become privy to the benefit of it. It appears to me upon those authorities that he may, and may make use of the name of the person at the head of the pohcy as the person who had given the order to effect the insurance which will satisfy the stat. 28 G. 3, c. 56. It seems to me, therefore, that this action is maintainable for the benefit of Schroeder who was interested at the time and has become privy by adoption. Le Blanc, J. The difficulty thrown in the way of the plaintiff has been this, that if Schroeder ia the event of the ship's arrival had chosen to repudiate instead of adopt the contract, he might have done so and there would have been no means of conung upon him for the premium. But this pohcy was effected for the benefit of aU persons interested and Schroeder was a person interested, and I take it that after the ship sailed on the voyage insmred, the plaintiff was boimd by the insurance and could not have recovered back the premium from the underwriter by averring that this was a pohcy without interest; the answer would have been Schroeder is interested, and he may elect to adopt the insurance. I therefore conceive the underwriter would have had a right to retain the premium. Then Routh v. Thompson is, I think, an authority to show that Schroeder being interested might subse- quently adopt the insurance made by the plaintiff. There the crown adopted it after a loss; and the distinction taken in that case that the party making the insurance was appointed by the captors who had no insurable interest and therefore that he stood in relation of agent on the part of the crown whose agents the captors were, does not, I think, make any difference. Here, the plaintiff was not unconnected with the insurance; he obtained a Ucense and made insurance for the benefit of the owners, though without communicat- ing with them. Schroeder who is an owner afterwards adopted it. That case is an authority to show that he might afterwards adopt it. This it must be remembered is a question between the plaintiff and the underwriter and not Schroeder and the underwriter; and unless we saw that the imderwriter would have been entitled to retain the premium we cannot say that the plaintiff is not entitled to his contract, unless it could be shown that this is a mere gaming policy. Bayley, J. I think this is a case in which the defendant ought to pay and the plaintiff ought to receive for a loss under the pohcy. A loss has happened 26 HAGEDORN V. OLIVERSON [CHAP. II upon which the defendant undertook to pay and if the premium could not have been recovered back from the defendant, there is not any circumstance here which should exonerate him from liability. I think the plaintiff never could have recovered back the premium from the underwriter, because of the uncertainty whether Schroeder would adopt the assurance, in respect of which the underwriter would have inciured the risk. While the contract was in fieri, there was not any disposition on the plaintiff's part to have the policy vacated, and if there had been, it would have been an answer to him, that Schroeder might have adopted it. Then comes the question whether Schroeder is entitled to take the benefit of this insurance. It is stated that it was effected for his benefit, therefore it was intended to cover his specific interest at the time. Schroeder had an interest at the time and although there was not any specific communication at the time, yet as Schroeder was con- nected in the concern it was reasonable for the plaintiff to expect that Schroe- der would adopt an act which could be done with no other view than for his benefit. Schroeder must be considered as under a moral, if not a legal, obli- gation, to adopt it although the ship arrived. Being under that obligation in all events, he thinks that he is warranted in adopting it even after a loss, and he has adopted it. The case of Routh v. Thompson shows that if a policy be effected with reference to the benefit of a person interested, an adoption of it by such person after the loss will be sufficient. Dampieb, J. The plaintiff placed himself in an awkward situation by advancing his money for the premiums upon the expectation that Schroeder would adopt his act, which Schroeder might have refused to do in the event of the ship's arrival ; and if he had, I do not see that the plaintiff could have recovered back the premiums. The question then is whether he had an in- terest in the policy. He was owner of the ship and the policy was effected for his benefit; that seems to me to give him an interest. If he had an in- terest his subsequent adoption will be good. Routh v. Thompson is a full and clear authority to that point; there the agency was only a constructive agency, and it does not appear to me to afford any distinction because the insurance did not come within the scope of his agency. Therefore, it seems to me to govern this case; there is no distinction in reason though there may be a difference. AH the averments in this declaration are certainly fully proved, and, therefore, the plaintiff is entitled. Jvdgment for the plaintiff} ' Where the insTired is intrusted with the goods of other persons, as in the case of a common carrier, warehouseman, commission merchant, wharfinger, agent, or factor, he may either insure his own interest or his own liability in respect to the property, or he may insure the property for the benefit of aU concerned, provided the policy properly describes the interests intended to be covered, Cal. Ins. Co. v. Union Comp. Co., 133 U. S. 387, 10 S. Ct. 365, 33 L. Ed. 730; Home Ins. Co. v. Baltimore Warehouse Co., 93 U. S. 527; Home Ins. Co. v. Peoria, etc., R. Co., 178 111. 64, 52 N. E. 862. In fire insurance a phrase often employed for this purpose is as follows: "on property their own or held in trust or on commission," Snow v. Carr, 61 Ala. 363; Hough v. People's CHAP. Il] LOOMIS V. EAGLE LIFE, ETC., INS. CO. 27 LOOMIS, ADMINISTRA.TOR, v. EAGLE LIFE AND HEALTH IN- SURANCE CO. Supreme Judicial Court op Massachusetts, 1856. 72 Mass. 396 Insurable interest, life. The policy dated February 2, 1849, was for seven years for the sum of S700 upon the life of Freedom Keith, a minor son of Bela M. Keith, the plalatiff's intestate, to whom this policy was made. Freedom was twenty , years old January 6, 1849. He worked with his father in a factory, the father receiving his wages towai'ds the family support. On February 17, 1849, Freedom sailed for California, having on the 8th of January previous made an agreement in writing with Aaron Cook, in con- sideration of the sum of $300 paid by Cook into the treasury of a trading and mining company of which Freedom was a member, to devote his serv- ices to said company during its continuance, and to pay half of his share of the profits to Cook; and his father assented to this agreement, and re- linquished any claim to his services, so far as Cook was concerned; and sup- plied Freedom with an outfit, out of his former earnings. Freedom died on board of the ship on December 1, 1849, soon after arriving in California. Shaw, C. J. We understand that the law of Connecticut (where the par- ties resided) is similar to that of Massachusetts, and that by the law of both States a father who supports, maintains and educates a son, under twenty- one years of age and not emancipated, is entitled to the earnings of such son, and may maintain an action for them. But, upon broader and larger grounds, we are of opinion that, independ- ently of the fact that the son was a minor, and the assured had a pecuniary interest in his earnings, the assured had an insurable interest sufficient to maintain this action. In discussing the question in this commonwealth, we are to consider it solely as a question at common law, unaffected by the St. of 14 G. 3, c. 48, passed about the time of the commencement of the Revolution, and never Fire Ins. Co., 36 Md. 398. The phrase, "for whom it may concern," is frequently used in the marine poUcy, Hagan v. Scottish Ins. Co., 186 XT. S. 423, 22 S. Ct. 862. The other persons for whose benefit the insurance is taken may adopt and ratify it, even after loss, although the insurance may have been taken out without their au- thority, Hooper v. Robinson, 98 U. S. 528; Larsen v. Thuringia Am. Ins. Co., 208 ni. 166, 70 N. E. 31; Ferguson ». Pekin Plow Co., 141 Mo. 161, 42 S. W. 711; Waring V. Ind. F. Ins. Co., 45 N. Y. 606, 6 Am. Rep. 146; Herkimer i>. Rice, 27 N. Y. 163, 179. In such a case the insured will hold any balance of recovery above his own interest as trustee for the other parties in the interest. Home Ins. Co. v. Baltimore Warehouse Co., 93 U. S. 527, 23 L. Ed. 868; Roberts u. Firemen's Ins. Co., 165 Pa. St. 55, 30 Atl. 450. 28 LOOMIS V. EAGLE LIFE, ETC., INS. CO. [CHAP. II adopted in this State. All therefore which it seems necessary to show, in order to take the case out of the objection of being a wager policy, is that the insured has some interest in the life of the cestui que vie; that his temporal affairs, his just hopes and well-grounded expectations of support, of pat- ronage, and advantage in life will be impaired; so that the real purpose is not a wager, but to secure such advantages, supposed to depend on the hfe of another; such, we suppose, would be sufficient to prevent it from being regarded as a mere wager. Whatever may be the nature of such interest, and whatever the amount insured, it can work no injury to the insurers, because the premium is proportioned to the amount, and whether the in- surance be to a large or small amoimt, the premium is computed to be a precise equivalent for the risk taken. Perhaps it would be difficult to lay down any general rule as to the nature and amount of interest which the assured must have. One thing may be taken as settled, that every man has an interest in his own life to any amount in which he chooses to value it, and may insure it accordingly. We cannot doubt that a parent has an interest in the life of a child, and vice versa, a child in the life of a parent; not merely on the ground of a pro- vision of law that parents and grandparents, children and grandchildren, are bound to support their Uneal kindred when they may stand in need of relief, but upon considerations of strong morals, and the force of natural affection between near kindred, operating often more efficaciously than those of positive law. We believe it is now conceded, that before that statute a policy on life was good at common law, and that the object of that statute was to pro- hibit wager policies. That it was not a declaratory act, but introduced a new law, was decided in the Irish court of Exchequer Chamber, in British Ins. Co. V. Magee, Cook & Alcock, 182, approved and confirmed by the case hereafter stated. In this state of the question, the case of Godsall v. Boldero, 9 East, 72, was decided, in 1807. It was a policy upon the life of Mr. Pitt, in favor of the plaintiffs, coachmakers, to whom he was largely indebted; after Mr. Pitt's death, by the gratuitous act of the nation, a fund was raised by act of parliament, and furnished to the executors, by whom the plaintiffs were paid their debt. That case was decided in favor of the defendants, on the specific ground that the policy was in effect a security for the payment of the debt only; that if the debt was fuUy paid by the executors, either from the assets of the deceased, or from fimds gratuitously furnished them, it put an end to all claim of loss on the pohcy. We now come to the case of Dalby v. India & London Life Assurance Co., decided in the Exchequer Chamber, 15 C. B. 365. By that case, Godsall v. Boldero is directly drawn in question and overruled. It decides that a policy of life insurance is not a contract of indemnity,^ but a contract in a certain ' It is, however, a contract of indemnity in one sense: namely, that an insurable interest must be shown in order to give validity to the contract, State v. Fed. Invest- ment Co., 48 Minn. 110, 111; Miller v. Eagle Life & H. Co., 2 E. D. Smith (N. Y.), 268, CHAP. Il] LOOMIS V. EAGLE LIFE, ETC., INS. CO, 29 event to pay a certain sum in consideration of an annual premium; that when a policy effected by a creditor on the life of his debtor is valid at the time it is entered into, the ceasing of that interest before the death does not in- validate the insurance under St. 14 G. 3, c. 48. Prima facie the plaintiff in the present case has an interest in the life of his son, the policy of insurance was a valid one, and the plaintiff is entitled to recover upon it. Exceptions overruled. 295. The U. S. Supreme Court by Chief Justice Puller says: "Life insurance is also a contract of indemnity," Cent. National Bank v. Hume, 128 U. S. 195, 205, 9 S. Ct. 41, 32 L. Ed. 370. Life insurance, however, partakes of the nature of an investment. Mutual Life Ins. Co. v. Allen, 138 Mass. 24, 52 Am. Rep. 245. Especially is this true of an endowment policy, Talcott v. Field, 34 Neb. 611, 615, 52 N. W. 400. The value of human life cannot be estimated. Every one, therefore, is presumed to have an in- surable interest in his own life, and to any amount. Fidelity Mut. Life Assn. v. Jeffords, 107 Fed. 402, 410, 46 C. C. A. 377; Provident Life Ins. Co. v. Baum, 29 Ind. 236. But when one takes out a policy on the life of another person, to sustain the contract he must show that he had some insurable interest in the life of that person. Among the innumerable decisions on this subject the following cases should be read: Farmers' 68 N. W. 182.' CHAP. V] KYTB V. COMMERCIAL UNION ASSUR. CO. 127 had a license authorizing him to sell intoxicating liquors, the fact that he made an illegal use of the premises in 1882 will not deprive the plaintiff of the right to maintain the action. His right under the policy, if it was sus- pended while the illegal use of the building was being made, would revive when he ceased to use the building illegally." The defendant requested the judge to charge, among other things: "If you find that, by the illegal sale of intoxicating liquors in this building by the plaintiff Kyte, or by others 'with his consent and knowledge, for a certain portion of the time for which these policies were issued, the risk was for that period increased — this poUcy is void as to the plaintiff Kyte's in- terest, and he cannot recover, although this increase was not permanent and did not cause the fire." This request was refused. The jury returned a verdict for the plaintiff, and the defendant alleged exceptions. C. Aiii^EN, J. These policies were in the form of the Massachusetts stand- ard poUcy, and each provided that, "This policy shall be void ... if, with- out such assent [namely, the assent in writing or in print of the company], the situation or circumstances affecting the risk shall, by or with the knowl- edge, advice, agency, or consent of the insured, be so altered as to cause an increase of such risks, ... or if gunpowder or other articles subject to legal restriction shall be kept in quantities or maimer different from those allowed or prescribed by law." Various other circumstances were enumerated which would also avoid the poUcy. At the beginning of the trial, the defendant waived every defense except increase of risk. The defense of the illegal keep- ing of intoxicating liquors, as a separate and distinct defense, was therefore waived. We have to consider, in the first place, whether the instructions requested by the defendant were given in substance. The plaintiff contends that they were. The learned judge before whom the case was tried adopted in sub- stance the third and fifth instructions asked for by the defendant, and thus instructed the jury, that if they should find, that during the time for which these policies were issued, the plaintiff Kyte, by obtaining a common vict- ualer's license and making use of this building under said license, and legally or illegally selling intoxicating Uquors therein, increased the risk, then this policy became void as to the plaintiff Kyte, and he could not recover for his interest therein; and if they should find, that while these policies were in force intoxicating liquors were kept and sold in this building by the plaintiff Kyte, or with his consent or knowledge, and that thereby the risk was in- creased, this policy became void as to his interest, and he could not recover. This was a general and broad instruction, including the increase of risk by using the premises as a common victualing place or as a place for selling in- toxicating liquors, legally or illegally, and well covered the general question of the effect of an increase of risk. From this instruction, taken alone, a jury might well have inferred that the policy would be void in case of any 128 KYTE V. COMMERCIAL UNION ASSUR. CO. [CHAP. V such increase of risk at any time during the time covered by the policies and before the fire. But the defendant, in the fourth request for instructions, asked for a special instruction, adapted to the case of a temporary increase of risk which had ceased before the time of the fire; that is to say, that if the jmy should find that, by the illegal sale of intoxicating liquors in this building by the plaintiff Kyte, or by others with his consent and knowledge, for a certain portion of the time for which these policies were issued, the risk was for that period in- creased, this policy would be void as to Kyte's interest, and he could not re- cover, although this increase was not permanent. The judge declined to give this ruling, and instructed the jury, in substance, that, if that illegal use was temporary, not contemplated at the time when the policy was taken by the plaintiff, and ceased before the fire, then the fact that he had made an illegal use of the premises in 1882, which was during the time covered by the policy, would not deprive the plaintiff of the right to maintain the action; and that his right under the policy, if suspended while the illegal use of the building continued, would revive when he ceased to use it illegally. This instruction did not in express terms mention the subject of an increase of risk by the illegal use of the premises for selling liquor; but the instruction was given in place of the fourth request for instructions, and that request was refused, the judge sajdng that he had given what would be entirely in- consistent with it. The question is thus presented, whether the provision of the poUcy that it shall be void in case of an increase of risk means that it shall be void only during the time while the increase of risk may last, and may revive again upon the termination of the increase of risk. The provision is, that the poUcy shall be void if any one of several circumstances successively enumerated shall be found to exist. Some of these circumstances relate to the time of issuing the poUcy, and others could not arise till afterwards. They are of different degrees of importance, some of them going to the essential matters of the contract, and others being comparatively trivial in character. The language of the policy is the same in respect to them all, that the policy shall be void. We think an increase of risk entitles the insurer to avoid the poUcy ab- solutely. The contract of insurance depends essentially upon an adjustment of the premium to the risk assumed. If the assured, by his voluntary act, increases the risk, and the fact is not known, the result is that he gets an insurance for which he has not paid. In its effect upon the company, it is not much different from a misrepresentation of the condition of the property. If the provision stood alone, that in case of any material misrepresentation as to the risk or any voluntary increase of risk afterwards the policy should be void, it could hardly be doubted that the words should be taken in their nat- ural, obvious meaning. The fact that with this are coupled the other pro- visions above referred to does not change its meaning with reference to the effect and consequence of an increase of risk. An increase of risk which is substantial, and which is continued for a considerable period of time, is a CHAP. V] MERRILL V. AGRICULTURAL INS. CO. 129 direct and certain injury to the insurer, and changes the basis upon which the contract of insurance rests; and since there is a provision that, in case of an increase of risk which is consented to or known by the assured, and not dis- closed and the assent of the insurer obtained, the policy shall be void, we do not feel at liberty to qualify the meaning of these words by holding that the policy is only suspended during the continuance of such increase of risk, Lyman v. State Ins. Co., 14 Allen, 329; Mead v. Northwestern Ins. Co. 7 X. Y. 530. It follows, therefore, that the fourth instruction which was requested, or something in substance like it, should have been given. Upon the facts stated and assumed, the increase of risk, if there was one, continued for fifteen months, and could not be treated as a casual, inadvertent, or inevitable thing. Exceptions sustained.^ MERRILL V. THE AGRICULTURAL INSURANCE CO. CoTJHT OF Appeals of New York, 1878. 73 N. Y. 452 To avoid forfeiture when is the contract to be construed as severable or divisible? Action on a policy of fire insurance on dwelling house, barn and contents, the premium being one lump sum, but the amount of the insurance being expressly apportioned with a separate amount on each item of property. The policy contained a condition that if the property insured was incum- bered by mortgage, the policy should be void until written consent of the company was obtained. It appeared upon the trial that the buildings, but not the personal property, were incumbered by mortgage at the time of the insurance. FoLGBH, J. It is claimed by the defendant that not only was the policy avoided as to the buildings insured, but as to the chattel property as well. This depends upon whether the contract was entire or severable; whether a condition admitted to have been broken as to a part of the whole subject of insurance, was thereby broken as to each subject of insurance. When there are several subjects of insurance (as there are fourteen here) separately valued, on which a gross sum is insured not exceeding the aggre- gate of that valuation, for the insurance of which a premium in gross is paid, it is easy to see what is the rate of premium on the whole valuation, and what is the amount of premium on each subject insured. This being so, it seems • "Where a warranty is broken, the assured cannot avail himself of the defense that the breach has been remedied and the warranty complied with before loss," Eng. Mar. Ins. Act (1906), § 34 (2). In certain jurisdictions a contrary doctrine is recog- nized, Adair v. South Mut. Ins. Co., 297, 303, 38 S. E. 78, 45 L. R. A. 204, 73 Am. St. R. 122. 9 130 MERRILL V. AGRICULTURAL INS. CO. [CHAP. V fanciful to say, that if the facts thus easily reached were stated in detail in the contract it would be severable, while not being specifically spread out it is entire. If there were anything in the terms or nature of the particular contract, or in the circumstances of the case, or in the nature of the different subjects of the insurance, from which it was to be inferred that the insurer would not have been likely to have assumed the risk on one or several of them, unless induced by the advantage and profit of having a risk on all, that would be a rational cause for deeming the contract entire. But when for aught that appears, when indeed it is as likely that the insurer would have taken a risk upon anyone, or any few, of the subjects insured, at the same rate of premium as upon the whole, and has in the policy so separated the subjects, and so singled them out by a specific valuation, as that there is no difficulty in distinguishing one of the subjects from the rest, and closing the contract as to that separately, and carrying forward the contract as to the rest, it does result that the contract is severable in practical operation and hence in law. And so also, that though there may have been some conduct of the in- sured as to some of the property, not evil in itself, but working a breach of a condition in its letter, the effect of that breach may be confined to the in- surance upon that property, the contract as to that be held avoided, and as to the other subjects held valid. There is another rule that in construing the consideration as entire or distributed, the law will be guided by a respect to general convenience and equity, and by the good sense and reasonableness of the particular case; for it must be supposed that it was the intention of the parties that such construction should take place, in the occurrence of contingencies not contemplated and provided for at the making of the con- tract. These considerations lead us to the conclusion that the contract of insur- ance before us is not entire; that it is divisible; and that the breach of the condition made by the plaintiff applied only to the class of property insured, which was the immediate subject of the act of incumbrance which constituted that breach. It follows that the judgment appealed from should be affirmed. All concur except Miller, J., absent. Judgment affirmed.^ ' In consequence of this line of cases, a phrase has been adopted for the New York standard fire policy and many others, "this entire policy shall be void," etc., which will be considered hereinafter. With reference to the divisibility of the contract, many authorities on the one side and on the other are cited in the opinion in Phoenix Ins. Co. V. Pickel, 119 Ind. 155, 21 N. E. 546, 12 Am. St. R. 393. If the breach as to one item or class increases the risk on the rest, the liberal rule of construction under consideration will not apply, and the policy will be altogether avoided. Southern F. Ins. Co. v. Knight, 111 Ga. 622, 36 S. E. 821, 52 L. R. A. 70, 78 Am. St. R. 216. The Iowa court has held that if the premium is indivisible, the contract is not severable, Kahler v. Iowa State Ins. Co., 106 Iowa, 380, 76 N. W. 734. In a New York case it is held that misstatements regarding title, liens and incumbrances affecting real estate avoid the policy only as to the insured real estate, but that a misstatement that the insured had no reason to fear incendiarism is a breach of warranty affecting the entire contract on real and personal property alike, Donley v. Glens Falls Ins. Co., 184 N. Y. CHAP. V] MERRILL V. AGRICULTURAL INS. CO. 131 107, 76 N. E. 914. To mitigate the severity of the rigid common-law rule respecting warranties, many States have passed statutes varying somewhat in application and phraseology, but the dominant provision in most of which is, that in the absence of fraud, no misstatement or breach by the insured shall effect forfeiture of his policy unless it relate to a matter material to the risk or contribute to the loss. The decisive issue is thus often in effect relegated to the determination of the jury, Kenton Ins. Co. V. Wigginton, 89 Ky. 330, 12 S. W. 668, 7 L. R. A. 81 ; Albert v. Mut. L. Ins. Co., 122 N. C. 92, 30 S. E. 327, 65 Am. St. R. 693. Such statutory provisions are constitu- tional and controlling, John Hancock M. L. Ins. Co. ». Warren, 181 U. S. 73, 21 S. Ct. 535, 45 L. Ed. 955; McGannon v. Ins. Co., 127 Mich. 639, 87 N. W. 62, 54 L. R. A. 739. Accordingly, even statutes excluding suicide as a defense to the company in life insurance, although regarded by the highest Federal court as inconsistent with public policy are nevertheless held to be obligatory upon a party to the contract, Whitfield v. ^tna L. Ins. Co., 205 U. S. 489, 27 S. Ct. 578. 132 INSURANCE COMPANY V. EGGLESTON [CHAP. VI CHAPTER VI General Pbinciples — Continued Nature of Waiver and Estoppel INSURANCE COMPANY v. EGGLESTON SUPBEME COXIBT OF THE UNITED STATES, 1877. 96 U. S. 572 Nature of waiver and estoppel; course of Imsiness. Action on a policy of life insurance. Defense, forfeiture for failure to pay the last premium. The insured, residing in Mississippi, received his policy from a local agent in that State, and prior to the due date of the last premium, had always received notice from the defendant stating where the premium should be paid. One or another of the local agencies within the State had so been named. No notice was given respecting the last premium. The home office of the insurance company was in New York City. Me. Justice Beadlet: We have recently in the case of Insurance Com- pany V. Norton, 96 U. S. 234, shown that forfeitures are not favored in the law; and that courts are always prompt to seize hold of any circumstances that indicate an election to waive a forfeiture, or an agreement to do so on which the party has relied and acted. Any agreement, declaration, or course of action on the part of an insurance company, which leads a party iosured honestly to believe that by conforming thereto, a forfeiture of his policy will not be incurred, followed by due conformity on his part, will and ought to estop the company from insistLag upon the forfeiture, though it might be claimed under the express letter of the contract. The company is thereby estopped from enforcLag the forfeiture. The representations, declarations or acts of an agent, contrary to the terms of the policy, of course wiU not be sufficient, unless sanctioned by the company itself. Insurance Company v. Mowry, 96 U. S. 544. But where the latter has, by its course of action, ratified such declarations, representations, or acts, the case is very different. In the present case, it appeared that the company had discontinued its agency at the place of residence of the insured soon after the policy was issued; and had given him notice by mail from time to time, as the premium installments became due, where and to whom to pay then — sometimes at Savannah, several hundred miles, and sometimes at Vicksburg, a hundred and fifty miles from his residence. Such notice, it would seem, had never CHAP. Vl] INSURANCE COMPANY V. EGGLESTON 133 been omitted prior to the maturity of the last installment. The effect of the judge's charge was, that if this was the fact, and if no such notice had been given on that occasion, and the failure to paj^ the premium was solely due to the want of such notice, it being ready, and being tendered as soon as notice was given, no forfeiture was incurred. We think the charge was correct under the circumstances of this case. The insured had good reason to expect and to rely on receiving notice to whom and where he should pay that install- ment. It had always been given before; the office of the company was a thousand nules away; and they had always directed him to pay to an agent, but to different agents at different times. Although, as we held in the case of Insurance Company v. Davis, 95 U. S. 425, the legal effect of a policy, when nothing appears to the contrary, may be that the premium is payable at the domicile of the company; yet it cannot be expected or understood by the parties that the policy is, in or- dinary circumstances, to be forfeited for a failure to tender the premium at such domicile, when the insured resides in a distant State, and has been in the habit, imder the company's own direction, to pay an agent there, and has received no notice that the contrary will be required of him. He would have a just right to say that he had been misled. Let us look at the matter as it stands. The business of life insurance is in the hands of a few large companies, who are generally located in our large commercial cities. Take a company located, like the plaintiff in error, in New York, for example. It solicits business in every State of the Union where it is represented by its agents, who issue policies and receive premiums. Could such a company get one risk where it now gets ten, if it was expected or understood that it was not to have local agents accessible to the parties insured, to whom premiums could be paid, instead of having to pay them at the home office in New York? The universal practice is otherwise. Local agents are employed. The business could not be conducted on its present basis without them. Now, suppose the local agent is removed, or ceases to act, without the knowledge of the policy holders, and their premiums become due, and they go to the local office to pay them, and find no agent to receive them; are these policies to be forfeited? Would the plaintiffs in error or any other company of good standing have the courage to say so? We think not. And why not? Simply because the policy holders would have the right to rely on the general understanding produced by the previous course of business pursued by the company itself, that pajrment could be made to a local agent and that the company would have such an agent at hand, or reasonably accessible. We do not say that this course of business would alter the written contract, or would amoimt to a new contract relieving the parties from their obligation to pay the premium to the company, if they can find no agent to pay to. That obligation remains. But we are dealing with the question of forfeiture for not paying at the very day; and, in reference to that question, it is a good argument in the mouths of the insured to say: "Your course of business led us to believe that we might pay our premiums at home, and estops you from exacting the penalty of forfeiture without giving us reason- 134 ROWLEY V. THE EMPIRE INS. CO. [CHAP. VI able notice to pay elsewhere." The course of business would not prevent the company if it saw fit, from discontinuiag all its agencies, and requiring the payment of premiums at its counter in New York. But, without giving reasonable notice of such a change, it could not insist upon a forfeiture of the policies for want of prompt payment caused by their failure to give such notice. In the case of Insurance Co. v. Davis cited above, the agent's powers were discontinued by the occurrence of the war, of which all persons had notice; and the law of nonintercourse between belHgerents prevented any payment at all; and the policy became forfeited and ended without any fault attributable to either of the parties. That case, therefore, was entirely differ- ent from the present; and it was in consequence of such forfeiture in the absence of fault that we held, in the case of New York Life Insurance Co. v. Statham et al., 93 U. S. 24, that the insured was entitled to recover the equitable value of his poUcy. In the present case it seems to us that the charge of the judge was in sub- stantial conformity to the principles we have laid down. The insured, re- siding in the State of Mississippi, had always dealt with agents of the com- pany, located either in his own State, or within some accessible distance. He had originally taken his policy from, and had paid his first premium to, such an agent; and the company had always, untU the last premium became due, given him notice what agent to pay to. This was necessary, because there was no permanent agent in his vicinity. The judge rightly held, that, imder the circumstances, he had reasonable cause to rely on having such notice. The company did not itself expect him to pay at the home oflBce; it had sent a receipt to an agent located within thirty miles of his residence; but he had no knowledge of this fact — at least, such was the finding of the jury from the evidence. We think there was no error in the charge, and the judgment of the Circuit Court must be Affirmed.^ ' ROWLEY V. THE EMPIRE INS. CO. CoDBT OF Appeals of New York, 1867. 36 N. Y. 550 Where the act of the insurance company constitutes the breach of contract. Action on a fire insurance policy. Defense, breach of warranty for mis- statements in the application forming part of the contract. FuLLERTON, J. If this court follows the decision in the case of Plumb v. The Cattaraugus County Mutual Insurance Company, 18 N. Y. 392, this ' The practitioner during the trial of insurance cases is very frequently confronted with some question of waiver or estoppel. CHAP. Vl] EOWLEY V. THE EMPIEE INS. CO. 135 judgment must be aflSrmed. That this case has changed the rule which has hitherto prevailed in this State relating to warranties in policies of insurance will be made apparent by a brief reference to it. In that case, one Ide, in making out the application for insurance, acted as the agent and surveyor of the company. It was proved that he called upon Henry, the assured, with a printed blank appUcation, and solicited him to effect an insurance with the defendant's company. Henry expressed a desire to postpone mak- ing the application, but told the agent, Ide, that if he insisted upon taking the application that day, he must get along alone and act on his own re- sponsibility. Ide then proceeded to make the survey alone; after which he filled up the application, and stated to Henry that it was aU right and just as it should be. Henry, without any particular examination as to the state- ment of the distances between, and relative situation of the buildings, told Ide that upon his representations and statements he would sign, and there- upon did sign the application, and paid the premium. This testimony was objected to and taken under exception. On the trial of the action brought upon the policy, the insurance company, imder objection, proved that there were material errors in the survey, as to the relative positions and distances of surrounding buildings, and gave testimony tending to show that the risk was increased thereby. The judge at the circuit directed a verdict for the plaintiff, and, after affirmance by the General Term, the judgment was appealed to this court, where it was held that the company was estopped from showing a breach of the warranty as to the relative situation of the buildings. This decision was put on the ground that the insurance agent, acting within the scope of his authority, bound the principal in making the survey and filling up the application, and consequently the company could not be per- mitted to show that the contract was other than the writing expressed. Mr. Justice Pratt, in delivering the opinion of the court, says: "But when the party through whose acts and representations the other party was induced to enter into the contract claims the right to show the facts were different from what he had represented them to be, for the purpose of showing a breach of the warranty, and thus avoiding what would otherwise be a binding con- tract and escaping its obligations, I cannot discover why the doctrine of estoppel may not justly be applied to him, and he be precluded from denying what he once asserted. It presents, I think, the precise case for the appli- cation of the doctrine of estoppel in pais as defined in the cases." It must be conceded that this case goes the whole length of establishing the doctrine that, although an application for insurance contains a false statement as to a material matter, the writing must still be held to express the contract between the parties, and thp.t neither party can insist that the contract is other than what the writing expresses, provided such false state- ment is chargeable to the agent of the company in making the survey and filling up the appUcation, while acting within the line of his duty. That this is in conflict with the rule as it has heretofore existed is apparent. (Brown v. The Cattaraugus County Mutual Insurance Co., 18 N. Y. 385; 136 EOWLEY V. THE EMPIRE INS. CO. [cHAP. VI Jennings v. The Chenango County Mutual Insurance Company, 2 Denio, 75; Vandervorst v. The Columbian Insurance Company, 2 Caines, 155; Cheriot V. Barker, 2 Johns. 346; Higginson v. Dall, 13 Mass. 96, 172; Weston v. Ernes, 1 Taunt. 115; Atherton v. Brown, 14 Mass. 152; Parks v. General Insurance Company, 5 Pick. 34; Flinn v. Tabrin, 1 Moody & Malk. 367.) This brings me to the examination of the facts in the present case. The written appointment of the agent Dean shows that he was the agent of the defendant "to take applications for insurance in the company, and receive the cash percentage to be paid thereon." Acting under this authority, the agent received the plaintiff's application for insurance. The manner of doing it was as follows: Rowley stated verbally to the agent the facts necessary to meet the requirements of the rules of the company, and, among other things, informed him that the premises were incumbered by mortgage. An applica- tion was then signed in blank by the plaintiff, and given to the agent; he promising to insert over the signature thus obtained, the particulars thus furnished him, as a basis of the insurance, on his return to his residence. The agent Dean was a witness on the trial of the case, and in giving the interview between himself and Rowley, at this time, says: "He" (Rowley) "made no objection to my taking 'it'" (the application) and filling it up at "Horseheads, if it would be all right." The just and natural inference from this language is that this unusual mode of doing the business was at the suggestion or request of the agent. But, be that as it may, for some reason unexplained, the agent, on his return, in filling up the application, inserted what was not the fact, and in violation of his instruction; that there was no incumbrance on the premises. The defendant now seeks to avoid its liability on the policy, alleging that this statement was a warranty on the part of the assured and that it was false. The appellant's counsel contends that Dean, in filling up this application, was the agent of the plaintiff, and that the company is in no wise responsible for the mistake. I am aware that he is sustained in this position by the opinion of Mr. Justice Balcom in Smith v. The Empire Insurance Co. (25 Barb. 497) ; but I do not think this court should adopt that rule in this case. Considering the authority of Dean in its most limited sense, "to take appli- cations for insurance," I think he must be considered the agent of the in- sm-er rather than of the assured in filling up the application. His duty to his principal was to take the application for insurance. It cannot be said that that duty was performed when he received the blank paper signed by Rowley because the appUcation was then in an inchoate state. The conditions of insurance plainly contemplate that it should be in writing, and such was the intention of the parties. When, therefore, was the duty which the agent owed to the company at an end, so, that he ceased to bind his principal? It is not establishing a harsh or imreasonable rule in reference to insurance companies, to hold that their agents, authorized "to take applications for insurance" are acting within the scope of their authority in everything which they do, which may be necessary to complete such applications. I must therefore regard Dean as in the act of taking the application when CHAP. Vl] ROWLEY V. THE EMPIRE INS. CO. 137 he was fiUing up the blank signed by the plaintiff, and therefore acting on behalf of the defendant. Any other rule would be fraught with mischief. Insurance companies send out an army of agents to solicit business. Property holders are waited upon by them at their residences; and it is not going too far to say that many of the applicants would be unable to make a proper application and survey to meet the rigid and elaborate requirements of these corporations, while experience shows that they are not expected to do so. Hence, these agents render such seriaces as are necessary, to enable the con- tracting parties to attain their respective objects, the one to insure, and the other to become insured against fire. To hold that in performing these preliminary labors, touching the very business which must necessarily be transacted before a pohcy can be effected, the insurance broker becomes the agent of the applicant for insurance, would seem to be an unnecessary and undesirable refinement. I repeat that in performing these prehminary labors, the agent is engaged in takiiig the application, which is strictly within his duty, and the principal should be held responsible for any error he may com- mit; especially when the error consists in recording a false statement over the signature of a confiding appHcant which, it is claimed, vitiates the whole contract. Rowley in this case told the truth in regard to the incumbrances on the property, and in that respect discharged his duty. That satisfied the claims of morality and fair dealing, and ought to meet the requirements of the law. (Vide Masters v. Madison County Insurance Company, 11 Barb. 624.) If these views are concurred in, then the defendant, on the principle of Plumb V. The Cattaraugus Insurance Company, 18 N. Y. 392, is estopped from showing its own error to defeat its contract. The judgment should be affirmed, with costs. AH concur, except Bockes, J., not voting, and Geovee, J., dissenting. Affirmed.^ ' Election Once Made Is Final. — If with knowledge of a, forfeiture the insurer elects to revive the contract, and evinces his election by an unequivocal and positive act of confirmation, or by conduct amounting to an estoppel he cannot thereafter insist upon the past breach, Masonic Mutual Benefit Asso. v. Beck, 77 Ind. 203, 40 Am. Rep. 295; Brink v. Hanover Fire Ins. Co., 80 N. Y. 108. But a waiver as to one breach does not of necessity imply a similar indulgence as to breaches in future, Thomp- son V. Ins. Co., 104 XJ. S. 252, 26 L. Ed. 765. Whether New Considehation Reqdieed. — To support a, waiver or an estoppel the insured need pay no fresh consideration for the indulgence granted, provided he can show that in reliance upon the statement or conduct of the insurers he has been misled to his detriment, Kieman v. Dutchess Co. Mut. Ins. Co., 150 N. Y. 190, 44 N. E. 698. Mutual promises afford evidence of a sufficient consideration, so also loss to a promisee is as effective in establishing consideration as advantage to a promisor, De Frece v. Nat. Life Ins. Co., 136 N. Y. 144, 151, 32 N. E. 556. And, if the act of waiver or estoppel occur before loss, it may be presumed that except for reliance upon it the insured might have protected himself by taking out other insurance, Manchester V. Guardian Assur. Co., 151 N. Y. 88, 92, 45 N. E. 381, 56 Am. St. R. 600 (citing cases). So also if it have to do with formalities relating to the proofs of loss, or time for in- stituting action, it may be presumed that except for misleading conduct of the insurer the insured would have governed himself by the strict technicalities of the contract, Dobson V. Hartford F. Ins. Co., 86 App. Div. 115, 83 N. Y. Supp. 456, aff'd 179 N. Y. 138 ROWLEY V. THE EMPIRE INS. CO. [CHAP. VI 557. In case, however, there is no element of estoppel or of new consideration, then, by the weight both of reason and authority, the act of waiver, unless it be evidenced by an executed written statement or agreement, Gibson El. Co. v. L. & L. & G. Ins. Co., 159 N. Y. 418, 426, 54 N. E. 23; Viele v. Germania Ins. Co., 26 Iowa, 9, 57, 96 Am. Dec. 83, is not binding upon the insurer, Ins. Co. o. Wol£f, 95 U. S. 326, 333, 24 L. Ed. 387; United Firemen's Ins. Co. v. Thomas, 82 Fed. 406, 27 C. C. A. 42, 47 L. R. A. 450 (cited with approval, 183 U. S. 340); Morris v. Orient Ins. Co., 106 Ga. 472, 475, 33 S. E. 430; Northwestern Mut. L. Ins. Co. v. Amerman, 119 III. 329, 10 N. E. 225, 59 Am. Rep. 799. Otherwise the sanction of the written contract is virtually destroyed by parol. Northern Assur. Co. u. Grand View Bldg. Asso., 183 U. S. 308, 361, 22 S. Ct. 133, 46 L. Ed. 213; Conn. F. Ins. Co. v. Buchanan, 141 Fed. 877, 889 (citing many cases). CHAP. VIl] ANCTIL V. MANUFACTUREKS' LIFE INS. CO. 139 CHAPTER VII General Principles — Continued Doctrine of Waiver and Estoppel Further Illustrated ANCTIL V. MANUFACTURERS' LIFE INS. CO. House of Lords, 1899. App. Cas. 604 Waiver as applied to insurable interest. The plaintiff was "the protector of the deceased whenever he stood in need of protection," and claimed that that relationship gave him an insurable interest in the life of the deceased within the meaning of the Civil Code of Lower Canada, which in Art. 2590 provides "the insured must have an in- surable interest in the life upon which the insurance is effected." The policy provided that the instrument should become incontestable after the period of a year or upwards, during which premiums should be regularly paid. Lord Watson. The question remains whether that clause of the policy which provides that the instrument shall become "incontestable" on the lapse of a period of a year or upwards, during which premiums are regularly paid, furnishes a good answer to the objection founded on the terms of the Code. Upon that point, their Lordships concur in the opinion expressed by the majorities of the Supreme Court and of the Superior Court sitting in re- view. The rule of the Code appears to them to be one which rests upon general principles of public policy or expediency, and which cannot be de- feated by the private convention of the parties. Any other view would lead to the sanction of wager policies. Their Lordships will, therefore, humbly advise Her Majesty to affirm the judgment appealed from and to dismiss the appeal.' > Compare Wright v. Mut. Ben. Life Assn., 118 N. Y. 237, 23 N. E. 186, 16 Am. St. R. 749, 6 L. R. a. 731; Light v. Mut. Fire Ins. Co., 169 Pa. St. 310, 32 Atl. 439, 47 Am. St. R. 904. The provisions of remedial statutes in general cannot be waived; thus the usual statutes that a life policy shall not be forfeited for nonpayment of a premium without the prescjibed notice to warn the assured, Mut. Life Ins. Co. v. Cohen, 179 U. S. 262; or a valued policy law, Orient Ins. Co. v. Daggs, 172 U. S. 557; or a law providing that license shall be revoked if insurer removes a case to Federal court. Security Mut. L. Ins. Co. v. Prewitt, 202 U. S. 246. New Stjbject ob New Pebil Not to Be Inteoduced by Waiver. — The doctrine of waiver and estoppel is not to be extended so far as to introduce into the contract an entirely new subject-matter, Sanders v. Cooper, 115 N. Y. 279, 22 N. E. 212, or a new peril, McCoy v. Northweetem, etc., Assoc, 92 Wis. 577, 66 N. W. 697, 47 L. R. A. 681. 140 UNION MtTTTJAL LIFE INS. CO. V. MOWRY [cHAP. VII UNION MUTUAL LIFE INS. CO. v. MOWRY United States Supbeme Cotjht, 1877. 96 U. S. 544 Effect of an oral promise of the insurers or their agerU, made at the time of or before the making of the contract. Action upon a policy of life insurance. Defense, forfeiture for nonpay- ment of premium. There was a verdict for the plaintiff; and, judgment having been rendered thereon, the defendant sued out this writ of error. Mr. Justice Field dehvered the opinion of the court. The insurance effected was from the 9th of March, 1867, and the policy recited the payment of the first annual premium on that day, and stipulated for the payment of the subsequent premiums on the same da3' of that month each year. The payment of the insurance money, after notice and proof of the death of the insured, was made dependent upon the ptinctual payment, each year, of the premium. The policy, in terms, declared that it was made and accepted by the insured and the nephew, upon the express condition that if the amoimt of any annual premium was not fuUy paid on the day and in the manner provided, the policy should be ''null and void, and wholly for- feited." And it declared that no agent of the company, except the president and secretary, could waive such forfeiture, or alter that or any other condi- tion of the policy. The second premium, due on the 9th of March, 1868, was not paid, and the insured died on the 8th of April following. Forty-five days after it was due, and fifteen days after the death of the insured, this premium was tendered to the company, and was refused. The question for determination is, whether a tender of the premium at that time was sufficient to hold the company to the payment of the insurance money. By the express condition of the policy, the liability of the company was released upon the failure of the insured to pay the premium when it matured; and the plaintiff could not recover, unless the force of this condition could in some way be overcome. He sought to overcome it by showing that the agent who induced him to apply for the policy represented to him, in answer to suggestions that he might not be informed when to pay the premiums, that the company would notify him in season to pay them, and that he need not give himself any uneasiness on that subject; that no such notification was given to him before the maturity of the second premium, and for that reason he did not pay it at the time required. This representation before the policy was issued, it was contended in the court below, and in this court, constituted an estoppel upon the company against insisting upon the forfeiture of the policy. CHAP. VIl] UNION MUTUAL LIFE INS. CO. V. MOWKY 141 But to this position there is an obvious and complete answer. All previous verbal arrangements were merged in the written agreement. The understand- ing of the parties as to the amount of the insurance, the conditions upon which it should be payable, and the premium to be paid, was there expressed for the very purpose of avoiding any controversy or question respecting them. The entire engagement of the parties, with all the conditions upon which its fulfillment could be claimed, must be conclusively presumed to be there stated. If, by inadvertence or mistake, provisions other than those intended were inserted, or stipulated provisions were omitted, the parties could have had recourse for a correction of the agreement to a court of equity, which is competent to give all needful relief in such cases. But, until thus corrected, the policy must be taken as expressing the final understanding of the assured and of the insurance company. The previous representation of the agent could in no respect operate as an estoppel against the company. Apart from the circumstance that the policy subsequently issued alone expressed its contract, an estoppel from the representations of a party can seldom arise, except where the representa- tion relates to a matter of fact — to a present or past state of things. If the representation relate to something to be afterwards brought into existence, it win amount only to a declaration of intention or of opinion, liable to modifi- cation or abandonment upon a change of circumstances of which neither party can have any certain knowledge. The only case in which a representa- tion as to the future can be held to operate as an estoppel is where it relates to an intended abandonment of an existing right, and is made to influence others, and by which they have been induced to act. An estoppel cannot arise from a promise as to future action with respect to a right to be acquired upon an agreement not yet made. The doctrine of estoppel is applied with respect to representations of a party, to prevent their operating as a fraud upon one who has been led to rely upon them. They would have that effect, if a party, who, by his state- ments as to matters of fact, or as to his intended abandonment of existing rights, had designedly induced another to change his conduct or alter his condition in reliance upon them, could be permitted to deny the truth of his statements, or enforce his rights against his declared intention of abandon- ment. But the doctrine has no place for appMcation when the statement relates to rights depending upon contracts yet to be made, to which the per- son complaining is to be a party. He has it in his power in such cases to guard in advance against any consequences of a subsequent change of in- tention and conduct by the person with whom he is dealing. For compliance with arrangements respecting future transactions, parties must provide by stipulations in their agreements when reduced to writing. The doctrine carried to the extent for which the assured contends in this case would subvert the salutary rule that the written contract must prevail over previous ver- bal arrangements, and open the door to all the evils which that rule was in- tended to prevent. The learned judge who tried this case in the Circuit Court instructed the 142 BOYD V. INSURANCE CO. [CHAP. VH jury, in substance, that if they could find from the language of the agent that there was an agreement between him and the assured, made before the policy was executed, that the latter should have notice before he should be required to pay the annual premium, then that the company, not having given such notice, waa estopped from setting up the forfeiture stipulated by the policy for nonpajrment of the premium when due. For the reasons we have stated, we think the court erred in this instruction. There is nothing in the record which shows that the agent was invested with authority to make an insurance for the company. In representing him- self as an agent, he only solicited an application by the assured to the com- pany for a policy. That instrument was to be drawn and issued by the com- pany, and it shows on its face that the authority to the agent was limited to countersigning it before delivery and to receiving the premiums. But even if the agent had possessed authority to make an insurance for the company, and he made the agreement pretended, still the assured was bound by the terms of the policy subsequently executed and accepted by him. The judgment must be reversed, and the cause remanded for a new trial; and it is So ordered.^ BOYD V. INSURANCE COMPANY Supreme Cottbt of Tennessee, 1891. 90 Tenn. 212 Effect of demanding proofs of loss. Action upon a policy of fire insurance on a dweUing house, stated in the pohcy to be occupied by good tenants. Defense, overinsurance and var cancy. 1 Thompson s. Knickerbocker Life Ins. Co., 104 U. S. 252; but certain courts in their anxiety to avoid forfeiture, do not give strict adherence to this rule. Thus, an oral consent by the agent of the insurance company to a subsequent procuring of other insurance in violation of the terms of the iwlicy, was held to be binding upon the company. Havens v. Home Ins. Co., Ill Ind. 90, 93, 12 N. E. 137, 60 Am. Rep. 689. So also an oral promise that the iron-safe clause warranty would not be insisted upon in certain instances, Berry v. Ins. Co. (1909), 83 S. C. 13. Silence Not a Waiveb. — Mere inaction by the insurers after knowledge of forfeiture is held to constitute no waiver, Iowa Life Ins. Co. v. Lewis, 187 U. S. 335, 350, Keith B. Ins. Co., 117 Wis. 531, 94 N. W. 295. Other courts take the opposite view, Cassimus V. Scottish U. & N. Ins. Co., 135 Ala. 256, 33 So. 163; Swedish Am. Ins. Co. v. Knut- son, 67 Kan. 71, 72 Pac. 526, 100 Am. St. R. 382. A retention by the insurance com- pany, however, without objection of proofs of loss is a waiver of defects contained in them that might have been corrected upon notice. Weed v. Hamburg-Bremen Ins. Co., 133 N. Y. 394, 31 N. E. 231; Kieman v. Dutchess Co. Mut. Ins. Co., 150 N. Y. 19o! 44 N. E. 698. Certain courts have gone so far as to infer waiver unless the insurer upon learning of a ground of forfeiture, during the term of the policy, within a reason- able time thereafter informs the insured or serves notice of cancellation upon him ; for example, Kalmutz v. Northern Mut. Ins. Co., 186 Pa. St. 571, 40 Atl. 816; Morrison CHAP. VIl] TITUS V. THE GLENS FALLS INS. CO. 143 It appieared that the policy was forfeited for unoccupaacy, but the plaintiff contended that the defendant had waived the forfeiture by requiring the insured to go to the trouble and expense of furnishing proofs of loss, as re- quired by the pohcy. Ltjrton, J. The third and last assignment is upon the refusal of the court to charge that if after the loss and knowledge of the facts by the company a negotiation for a settlement of the loss was begun, "by which Boyd was required to go to expense and trouble in getting up an estimate of his loss, or of the value of the house destroyed,'' that this would operate as a waiver of the defenses heretofore considered. It was not error to refuse this. The company did not admit the amount of the loss, and claimed overinsurance in addition to the defenses growing out of breach of warranty of occupation. The policy required that the assured should furnish evidence of his loss, and, if required, plans and specifications of the building destroyed. The require- ment of such evidence, even if it did involve expense, is not a waiver of other defenses. It is inconceivable, that there should be authority for the position that, if the insurer after a loss requires proof of loss, it thereby waives all right to set up as a defense that it is not hable by reason of the fact that it never had a vaUd contract at aU. Waiver is generally but another term for estoppel. There can be no estoppel where the assured has not been misled to his prejudice. This defense was one to the whole demand. Its assertion might waive defects in proof, or want of notice, but the demand of estimates of loss in no way misled plaintiff, for he knew that not only was all liabiUty denied, but that, if any ejosted, the amount of his demand was contested. The judgment must he affirmed.^ TITUS V. THE GLEN FALLS INS. CO. Ck)TJBT OF Appeals of New York, 1880. 81 N. Y. 410 Effect of requiring aMUional -proofs of loss. AcmoN on a fire insurance policy. Defense, breach of warranty by the conmiencement of foreclosure proceedings. t. Ins. Co., 69 Tex. 353: and see Norris v. Hartford Fire Ins. Co., 57 S. C. 358, 35 S. E. 572. Denial op All Liability Waives the Condition Reqtjieino Proofs of Loss. — Royal Ins. Co. v. Martin, 192 U. S. 149, 48 L. Ed. 385; Hegson v. North River Ins. Co. (N. C, 1910), 67 S. E. 509; Miller v. Sovereign Camp, 140 Wis. 505. 1 Armstrong v. Agricultural Ins. Co., 130 N. Y. 560, 567, 29 N. E. 991 ; Phoenix Ins. Co. V. Flemming, 65 Ark. 54, 44 S. W. 464; Freedman v. Ins. Co., 175 Pa. St. 350, 34 Atl. 730; RundeU v. Anchor F. Ins. Co., 128 la. 575, 101 N. W. 517. Other courts have expressed the view that a demand for proofs of loss amounts to a waiver by the insurance company of any known forfeiture. Planters' Mut. Ins. Co. v. Loyd, 67 Ark. 684, 56 S. W. 44, 77 Am. St. R. 136; German Fire Ins. Co. v. Grunert, 112 111. 68; Reiner r. DweUing-House Ins. Co., 74 Wis. 89, 42 N. W. 208. 144 TITUS V. THE GLENS FALLS INS. CO. [CHAP. VII Defendant's policy provided that the insured should "if required submit to an examination imder oath." It also contained a condition declaring it void in case foreclosure proceedings were commenced against the insured property. It was shown on the trial that foreclosure of a mortgage on the insured premises was commenced and judgment obtained prior to the fire. It also appeared that the defendant had learned of the foreclosure proceedings be- fore making demand upon the insured to submit to an examination under oath regarding his loss, as provided for by the policy. The plaintiff recovered judgment. Eael, J. We are of opinion that the claim of the plaintiff is well founded, that the forfeiture caused by the foreclosure proceedings was waived by the defendant. After the fire and after the defendant had notice of the proceed- ings, it required the insured to appear before a person appointed by it for that purpose to be examined imder the clause in the policy hereinbefore mentioned, and he was there subjected to a severe inquisitorial examination. It had the right to make such examination only by virtue of the poUcy. When it required him to be examined, it exercised a right given to it by the policy. It then recognized the vaUdity of the policy, and subjected the insured to trouble and expense, after it knew of the forfeiture now alleged, and it cannot now, therefore, assert its invalidity on accoimt of such forfeiture. When there has been a breach of condition contained in an insurance poUcy, the insurance company may or may not take advantage of such breach and claim forfeiture. It may, consulting its own interests, choose to waive the forfeiture, and this it may do by express language to that effect, or by acts from which an intention to waive may be inferred, or from which a waiver follows as a legal result. A waiver cannot be inferred from its mere silence. It is not obliged to do or say anything to make the forfeiture ef- fectual. It may wait until claim is made under the policy, and then, in denial thereof, or in defense of a suit commenced therefor, allege the for- feiture. But it may be asserted broadly that if, in any negotiations or trans- actions with the insured, after knowledge of the forfeiture, it recognizes the continued vaUdity of the policy, or does acts based thereon, or requires the insured by virtue thereof to do some act or incur some trouble or expense, the forfeiture is as matter of law waived; and it is now settled in this court, after some difference of opinion, that such a waiver need not be based upon any new agreement or an estoppel. The judgment should be affirmed. All concur. Judgment affirmed.^ 1 Replogle V. Am. Ins. Co., 132 Ind. 360, 31 N. E. 947; Grubbs v. North Carolina Home Ins. Co., 108 N. C. 472, 13 S. E. 236, 23 Am. St. R. 62; McMillan v. Ins. Co., 78 S. C. 433, 58 S. E. 1020 (adjuster called for certified copies of invoices). Contra, Freedman v. Ins. Co., 175 Pa. St. 350. It is very doubtful to what extent this rule may be pronounced sound. Phoenix Ins. Co. v. Flemming, 65 Ark. 54; Boruszweski v. Ins. Co., 186 Mass. 589; although it has been followed by the courts of many States. CHAP. VIl] TITUS V. THE GLENS FALLS INS. CO. 145 A jury in such instances rarely discriminates between full knowledge of the facts con- stituting forfeiture and a mere suspicion on the part of the insurance company, and the companies, through fear of waiving their defenses, are often induced to forego the benefit of the contract methods of investigating the facts to which they are fairly entitled. If it turns out that the insurance company erroneously assumed a certain ground of forfeiture to exist, then it is also made clear that the company was justly entitled to pursue the contract methods of investigating the facts before being com- pelled to pay the loss. It has been stated that no implication of waiver should arise from acts done in accordance with the contract, Parker w. Knights Templars, 70 Neb. 268, 97 N. W. 281 ; Hare v. Headley, 54 N. J. Eq. 545, 555, 35 Atl. 445. Indeed, the English court concludes that it is a natural incident of any insurance contract that the insured is under obligations to furnish reasonable information after loss, even though there be no express promise to do so, Harding v. Bussell (1905), 2 K. B. 83; Boulton V. Houlder Bros. (1904), 1 K. B. 784. One embarrassment connected with the doctrine of waiver in this connection is that a jury is apt to be so f&r prejudiced in favor of the insured that it often finds knowledge of forfeiture in the company when in fact its representatives possess no such information. Where, as in the New York standard pohcy, there is an express provision that proceedings on appraisal and examination shall cause no waiver, effect should be given to this nonwaiver agree- ment, Phoenix Ins. Co. v. Flemming, 65 Ark. 54, 44 S. W. 464, 39 L. R. A. 789, 67 Am. St. R. 900; Oshkosh Match Works v. Manchester Fire Assur. Co., 92 Wis. 510, 66 N. W. 525. It is obvious, however, that an acceptance and retention of proofs of loss by the insurer constitutes a waiver of such mistakes and defects in the proofs as the insured could have remedied upon notice, Wildey Cas. Co. v. Sheppard, 61 Kan. 351, 59 Pac. 651, 47 L. R. A. 650; Hutton ». Patrons' Mut. F. I. Co., 191 Pa. St. 369, 43 Atl. 219. Claimant Not Concluded bt Statements in Proof of Loss. — Statements in the proofs of loss are evidence against the claimant because they are in the nature of admissions, Ins. Co. v. Newton, 22 Wall. (U. S.) 32, 35; but where it appears that the proofs contain erroneous statements or estimates, these may usually be corrected on the trial. Supreme Lodge v. Beck, 181 U. S. 49. The essential elements of estoppel are lacking, except in the very rare instances in which the company is able to prove that it defended solely because of the wrong statement set forth in the proofs. A striking instance of the general rule is furnished by the Van Tassel case, where after taking the defendant to the Court of Appeals the plaintiff was allowed to increase his claim from five thousand to ten thousand dollars and ultimately to recover judgment for the latter amount, Underwood as Ex'r v. Greenwich Ina. Co., 28 App. Div. (N. Y.) 163, 151 N. Y. 130, 45 N. E. 365, 184 N. Y. 607. It will be observed, however, that proofs of loss are not evidence on behalf of the claimant to prove the truth of their contents, but simply to prove his compliance with the clause of the policy requiring the preparation and service of proofs, Lundvick v. Ins. Co., 128 Iowa, 376, 104 N. W. 429. Company Mat Defend on Other Grounds Than Those First Named. — Stating to the assured after loss certain reasons or grounds for refusing payment is in general no waiver of other grounds of forfeiture, nor will the company be thereby estopped when it subsequently comes to litigation from setting up any other defenses that it may have. A number of decisions to the contrary, for example, Taylor v. Supreme Lodge, 135 Mich. 231, 97 N. W. 680; Castner d. Farmers' Mut. Ins. Co., 50 Mich. 273, 275, 15 N. W. 452, are opposed to the weight of authority and find slender support in reason, Armstrong ». Agricultural Ins. Co., 130 N. Y. 560, 29 N. E. 991; Welsh v. London Assur. Corp., 151 Pa. St. 607, 619, 25 Atl. 142, 31 Am. St. R. 786; Findlay v. Union Mut. F. Ins. Co., 74 Vt. 211, 52 Atl. 429, 93 Am. St. R. 885. Elements of estoppel are generally lacking in such a case. There is no breach of contract obligation by the insurer, nor is there any misleading conduct to the prejudice of the assured. In no one of the cases here cited, on the one side or the other, was it established that the assured would have abandoned his claim and refrained from instituting action if 10 146 TITUS V. THE GLENS FALLS INS. CO. [CHAP. VII the insurer had remained altogether silent until litigation. The company owes no duty, until it interposes its defenses in a lawsuit, to assign its reasons for not paying. An assignment of reasons is not only gratuitous, but often largely a matter of lay opinion. The claimant generally knows more about the facts than the company does at all stages of the preliminary investigation, and much more at the outset. And if he has not undertaken the litigation solely as a result of fraudulent or deceitful mis- representations of fact by some agent duly authorized to stand in the place of the company, it is difficult to see how any adequate basis of estoppel has been established. This rule in favor of the insurance company, however, must not be extended to apply to an undisclosed defense which might upon timely notice after loss have been met and remedied. Nor does the rule apply to the subject of amendments of pleadings after action is begun and after the issues therein have been framed. Every court BKercises its own discretion to withhold the privilege of setting up new defenses, or to grant it, and with or without the imposition of terms, as seems to it reasonable, Penn- sylvania Fire Ins. Co. v. Hughes, 108 Fed. 497, 502, 47 C. C. A. 459; Wildey Cas. Co. c. Sheppard, 61 Kan. 351, 59 Pac. 651, 47 L. R. A. 650. CHAP. VIll] K.ICKERBOCKER LIFE INS. CO. V. NORTON 147 CHAPTER VIII General Principles — Continued Waiver and Estoppel by Agents KNICKERBOCKER LIFE INS. CO. v. NORTON United States Supreme Coukt, 1877. 96 U. S. 234 Authority of agents to waive. This action was brought by Phoebe A. Norton on a policy of insurance, issued by the Knickerbocker Life Insurance Company of New York, on the life of Jesse O. Norton, for the benefit of his wife and children. The policy contained the following condition: "If the said premium shall not be paid on or before twelve o'clock, noon, on the day or days above mentioned for the pa3Tnent thereof, at the oflSce of the company in the city of New York (un- less otherwise expressly agreed. in writing), or to agents when they produce receipts signed by the president or secretary, or if the principal of or interest upon any note or other obhgation given for the premium upon said policy shall not be paid at the time the same shall become due and payable, then, and in every such case, the company shall not be liable to pay the sum as- sured, or any part thereof; and said policy shall cease and be null and void." By an indorsement on the policj', it was declared that "agents of the com- pany are not authorized to make, alter, or abrogate contracts, or waive for- feitures.'' The insured died on the 3d of August, 1875; and the company refused to pay the insurance, on the ground that the policy was forfeited by reason of the nonpayment of certain notes given for the last premium, which was due April 20, 1875. It was conceded that all the other premiums had been paid. It appeared on the trial that the premium in question was settled by the payment of $50 in cash, and the balance in two promissory notes given by Jesse O. Norton to the insurance company, payable respectively in two and three months, and maturing, one on the 20th of June, the other on the 20th of July, 1875. Each note contained a clause declaring that if it were not paid at maturity the policy would be void — this being the usual form of premium notes. On the issue as to extension of time on the notes, and the authority of the agent to grant it, the plaintiff produced three witnesses^Randall, agent of the company down to March, 1874; Frary, his successor, who was agent at 148 KNICKERBOCKER LIFE INS. CO. V. NORTON [CHAP. VIII the time in question; and Martin Norton, son of the insured, who acted in behalf of his father in reference to the alleged extension, and to the tender of payment. The testimony of these witnesses tended to show that formerly the com- pany had allowed their agent to extend time on premium notes for a period of ninety days; that this indulgence was afterwards reduced to sixty days, and then to thirty; and that, at the period in question, the agent was re- quired, as a general thing, to return the notes in his hands if not paid by the 15th of the month following that in which they became due. As to what took place with reference to the notes in question, there is some conflict in testimony between Martin Norton and the agent Frary. The former testified, in substance, that he called on the agent, in behalf of his father, in June, 1875, a few days after the first note became due, and told him that hb father wished it extended for thirty days; to which the agent agreed — his answer being, "All right." That he called again on or about the 8th of July, to request an extension of the other note, which would become due on the 20th of that month, and a further extension of the first note to the 10th of August. That the agent said he would have to write to the company about this. That, on the 13th, he called again, and told the agent that his father had concluded to pay both notes; and the agent gave him the figures, showing what was due on them. That he called again on the 15th, prepared to pay the notes, when Ije was informed by the agent that he could not re- ceive the money, having received orders from the company to return all the papers to New York, and he had done so. That he then made a legal tender of the amount due on the first note, which was refused. Frary testified that he had no recollection of the first interview, or of agreeing to extend the first note. As to the rest, they did not materially differ. In addition to the testimony relating to the general practice of the agents in granting extensions of time for the pajrment of premium notes, evidence was given tending to show that Norton, the insured, had usually received more or less indulgence of that kind. The counsel for the defendant moved to strike out the testimony touching the usages of the company as to nonpayment of prior premium notes by Norton, and prior indulgence thereon to him, as incompetent, and in confiict with the terms of the poUcy, and as showing no authority in Frary to give the alleged extension; which was without consideration, if made, and after the forfeiture had occurred. The counsel for the defendant also moved to strike out that portion of Martin Norton's testimony relative to an agreement for an extension of the premium notes, such agreement being without authority on the part of the agent, etc. The court overruled the latter motion; and, as to the first, di- rected the jury to disregard so much of Eandall's testimony as tended to show the conduct of the defendant and plaintiff in regard to former pasrments; but allowed to stand so much of Randall's and Frary's testimony as tended to show the powers of the agents in reference to giving extensions on premiums or premium notes. This ruling was excepted to. CHAP. VIIl] KNICKERBOCKER LIFE INS. CO. V. NORTON 149 In charging the jury, the court left it to them to say, from the evidence, whether the agent of the defendant had power to waive a strict compliance with the terms of the agreement as to the time of paying the notes given for the premium; and, if he had such power, whether such a waiver was in fact made: if it was, and if the insured offered to pay the notes within the time to which they were extended, and the company refused to receive pay- ment, that then the plaintiff was entitled to recover. The jury were further instructed that the power vested in Randall, the previous agent, was only pertinent as it tended to throw light on the powers vested in his successor, Frary. The defendant's counsel excepted to the charge, and submitted several instructions, the purport of them being, in substance, that, in view, of the express provision of the policy, the evidence was utterly irrelevant and incompetent to show any authority in the agent to grant any indulgence as to the time of paying the notes, and to waive the forfeiture incurred by their nonpayment at maturity; or to show that any valid and legal extension was, in fact, granted, or that the forfeiture of the policy was waived. These instructions were refused. There was a judgment for the plaintiff, whereupon the company sued out this writ of error. Mk. Justice Bradley, after stating the case, delivered the opinion of the court. The material question in this case is, whether, in view of the express pro- visions of the policy, the evidence introduced by the assured was relevant and competent to show that the company had authorized its agent to grant indulgence as to the time of paying the premium notes, and waive the for- feiture incurred by their nonpayment at maturity; or to show that any vaUd extension had, in fact, been granted, or the forfeiture of the policy waived. The written agreement of the parties, as embodied in the policy and the indorsement thereon, as well as in the notes and the receipt given therefor, was undoubtedly to the express purport that a failure to pay the notes at maturity would incur a forfeiture of the policy. It also contained an express declaration that the agents of the company were not authorized to make, alter, or abrogate contracts or waive forfeitures. And these terms, had the company so chosen, it could have insisted on. But a party always has the option to waive a condition or stipulation made in his own favor. The com- pany was not bound to insist upon a forfeiture, though incurred, but might waive it. It was not bound to act upon the declaration that its agents had no power to make agreements or waive forfeitures; but might, at any time, at its option, give them such power. The declaration was only tantamount to a notice to the assured, which the company could waive and disregard at pleasure. In either case, both with regard to the forfeiture and to the powers of its agent, a waiver of the stipulation or notice would not be repugnant to the written agreement, because it would only be the exercise of an option which the agreement left in it. And whether it did exercise such option or not was a fact provable by parol evidence, as well as by writing, for the obvious reason that it could be done without writing. 150 KNICKERBOCKER LIFE INS. CO. V. NORTON [CHAP. VIII That it did authorize its agents to take notes, instead of money, for premi- ums, is perfectly evident, from its constant practice of receiving such notes when taken by them. That it authorized them to grant indulgence on these notes, if the evidence is to be believed, is also apparent from like practice. It acquiesced in and ratified their acts in this behalf. For a long period it allowed them to give an indulgence of ninety days; after that, of sixty; then of thirty days. It is in vain to contend that it gave them no authority to do this, when it constantly allowed them to exercise such authority, and always ratified their acts, notwithstanding the language of the written instruments. We think, therefore, that there was no error committed by the court below in admitting evidence as to the practice of the company in allowing its agents to extend the time for payment of premiums, and of notes given for premiums, as indicative of the power given to those agents; nor any error in submitting it to the jury, upon such evidence, to find whether the defendant had or had not authorized its agent to make such extensions, nor in submitting it to them to say whether, if such authority had been given, an extension was made in this case. Much stress, however, is laid on the fact that the extension claimed to have been given in this case was not given, or applied for, until after the first note, became due and the forfeiture had been actually incurred. But we do not deem this to be material. The evidence does not show that any distinction was made in granting extensions before or after the maturity of the notes. The material question is, whether the forfeiture was waived; and we see no reason why this may not be done as well by an agreement made for extending the note after its maturity, as by one made before. In either case, the legal effect of the indulgence is this: the company say to the insured, Pay your note by such a time, and your policy shall not be forfeited. If the insured agrees to do this, and does it, or tenders himself ready to do it, the forfeiture ought not to be exacted. In both cases, the parties mutually act upon the hjT)othe- sis of the continued existence of the pohcy. It is true, if the agreement be made before the note matures and before the forfeiture is incurred, it would be a fraud upon the assured to attempt to enforce the forfeiture, when, rely- ing on the agreement, he permits the original day of payment to pass. On the other hand, if the agreement be made after the note matures, such agree- ment is itself a recognition, on the company's part, of the continued existence of the policy, and, consequently, of its election to waive the forfeiture. It is conceded that the acceptance of payment has this effect; and we do not see why an agreement to accept, and a tender of payment according to the agree- ment, should not have the same effect. Both are acts equally demonstrative of the election of the company to waive the forfeiture of the policy. Grant that the promise to extend the note is without consideration, and not binding on the company — ^which is perhaps true as well when the promise is made before maturity as when it is made afterwards — still it does not take from the company's act the legitimate effects of such act upon the forfeiture of the policy. Perhaps the note might be sued on in disregard of the extension; but if it could be, that would not annihilate the fact that the company elected CHAP. VIIl] UNION MUTUAL INS. CO. V. WILKINSON 151 to waive the forfeiture by entering into tke transaction. If it should repu- diate its agreement, it could not repudiate the waiver of the forfeiture, with- out at least giving to the assured reasonable notice to pay the money. Forfeitures are not favored in the law. They are often the means of great oppression and injustice. And, where adequate compensation can be made, the law in many cases, and equity in all cases, discharges the forfeiture, upon such compensation being made. It is true, we held in Statham's Case, 93 U. S. 24, that, in life insurance, time of payment is material, and cannot be extended by the courts against the assent of the company. But where such assent is given, the courts should be liberal in construing the transaction in favor of avoiding a forfeiture. We find no error in the record, and the judgment of the Circuit Court is Affirmed. Mr. Justice Swayne, Mr. Justice Field, and Mr. Justice Strong dissented. Mr. Justice Strong. I dissent from the judgment given in this case. The insurance effected by the policy became forfeited by the nonpayment ad diem of the premium note. The policy then ceased to be a binding contract. It was so expressly stipulated in the instrument. Admitting that the com- pany could afterwards elect to treat the policy as stiU in force, or, in other words, could waive the forfeiture, the local agent could not, unless he was so authorized by his principal. The policy declared that agents should not have authority to make such waivers. And there is no evidence in this case that the company gave to the agent parol authority to waive a forfeiture after it had occurred. They had ratified his acts extending the time of payment of premium notes, when the extension was made before the notes fell due. But no practice of the company sanctioned any act of its agent done after a policy had expired, by which new life was given to a dead contract. UNION MUT. INS. CO. v. WILKINSON United States Supreme Court, 1871. 13 Wall. 222 Authority of agents to waive. The Union Mutual Insurance Company, of Maine, insured the life of Mrs. Malinda Wilkinson in favor of her husband. Both husband and wife, prior to the rebellion, had been slaves, and the husband came to Keokuk, Iowa, from Missouri. The company did business in Keokuk (where the application was made and the policy delivered), through an agent, one Ball, to whom it furnished blank applications. The mode of doing business appeared to have 152 UNION MUTUAL INS. CO. V. WILKINSON [cHAP. Vlll been that the agent propounded certain printed questions, such as are usual on applications for insurance on lives, contained in a form of application, and took down the answers; and when the application was signed by the applicant, the friend and physician forwarded it to the company, and if ac- cepted, the policy was returned to this agent, who delivered it and collected and transmitted the premiums. On this form of appUcation were the usual questions to be answered by the person proposing to effect the assurance; and by the terms of the policy it became void if any of the representations made proved to be untrue. Among them: "Question. Mother's age, at her death? Answer. 40. Question. Cause of her death? Answer. Fever." Mrs. WUkinson having died, and the company refusing to pay the sum insured, Wilkinson, the husband, brought suit in the court below to recover it. The defense was that the answers as above given to the questions put were false; that the mother had not died at the age of 40, but at the earlier age of 23, and had died not of fever but of consumption. Evidence having been given by the defendant tending to show that she died at a much younger age than 40 years, and of consumption, the plaintiff in avoidance of this, was permitted (under the defendants' objection and exception) to prove that the agent of the insurance company, who took down the answers of the appUcant and his wife to aU the interrogatories, was told by both of them that they knew nothing about the cause of the mother's death, or of her age at the time; that the wife was too young to know or remember anything about it, and that the husband had never known her; arid to prove that, there was present at the time the agent was taking the application, an old woman, who said that she had knowledge on that subject, and that the agent questioned her for himself, and from what she told him he filled in the answer which was now alleged to be untrue, without its truth being affirmed or assented to by the plaintiff or the wife. This the jury found in their special verdict, and found that the mother died at the age of 23; did not die of consumption; and that the applicant did not know when the appUcation was signed how the answer to the question about the mother's age and the cause of her death had been filled in. In charging the jury the court said that if the appUcant did not know at what age her mother died, and did not state it, and declined to state it, and that her age was inserted by the agent upon statements made to him by others in answer to inquires he made of them, and upon the strength of his own judgment, based upon data thus obtained, it was no defense to the action to show that the agent was mistaken, and that the mother died at the age of 23 years. Verdict and judgment having gone for the plaintiff, the insurance company brought the case here on error. Mh. Justice Milleh deUvered the opinion of the court. The defendant excepted to the introduction of the oral testimony regarding the action of the agent, and to the instructions of the court on that subject; CHAP. VIIl] UNION MtJTUAL INS. CO. V. WILKINSON 153 and assigns the ruling of the court as error on the ground that it permitted the written contract to be contradicted and varied by parol testimony. The great value of the rule of evidence here invoked cannot be easily over- estimated. As a means of protecting those who are honest, accurate, and prudent in making their contracts, against fraud and false swearing, against carelessness and inaccurancy, by furnishing evidence of what was intended by the parties, which can always be produced without fear of change or liability to misconstruction, the rule merits the eulogies it has received. But experience has shown that in reference to these very matters the rule is not perfect. The written instrument does not always represent the intention of both parties, and sometimes it fails to do so as to either; and where this has been the result of accident, or mistake, or fraud, the principle has been long recognized that under proper circumstances, and in an appropriate proceed- ing, the instrument may be set aside or reformed, as best suits the purposes of justice. A rule of evidence adopted by the courts as a protection against fraud and false swearing would, as was said in regard to the analogous rule known as the statute of frauds, become the instrument of the very fraud it was intended to prevent, if there did not exist some authority to correct the universality of its application. It is upon this principle that courts of equity proceed in giving the rehef just indicated; and though the courts, in a common-law action, may be more circumscribed in the freedom with which they inquire into the origin of written agreements, such an inquiry is not always forbidden by the mere fact that the party's name has been signed to the writing offered in evidence against him. In the case before us a paper is offered in evidence against the plaintiff containing a representation concerning a matter material to the contract on which the suit is brought, and it is not denied that he signed the instrument, and that the representation is untrue. But the parol testimony makes it clear beyond a question, that this party did not intend to make that rep- resentation when he signed the paper, and did not know he was doing so, and, in fact, had refused to make any statement on that subject. If the writing containing this representation had been prepared and signed by the plaintiff in his application for a policy of insurance on the life of his wife, and if the representation complained of had been inserted by himseff, or by some one who was his agent alone in the matter, and forwarded to the principal office of the defendant corporation, and acted upon as true, by the officers of the company, it is easy to see that justice would authorize them to hold him to the truth of the statement, and that as they had no part in the mis- take which he made, or in the making of the instrument which did not truly represent what he intended, he should not, after the event, be permitted to show his own mistake or carelessness to the prejudice of the corporation. If, however, we suppose the party making the insurance to have been an individual, and to have been present when the application was signed, and soliciting the assured to make the contract of insurance, and that the in- surer himself wrote out all these representations, and was told by the plain- tiff and his wife that they knew nothing at all of this particular subject of 154 UNION MtJTUAL INS. CO. V. WILKINSON [CHAP. VIII inquiry, and that they refused to make any statement about it, and yet knowing all this, wrote the representation to suit himseU, it is equally clear that for the insurer to insist that the policy is void because it contains this statement, would be an act of bad faith and of the grossest injustice and dishonesty. And the reason for this is that the representation was not the statement of the plaintiff, and that the defendant knew it was not when he made the contract; and that it was made by the defendant, who procured the plaintiff's signature thereto. It is in precisely such cases as this that courts of law in modem times have introduced the doctrine of equitable estoppels, or, as it is sometimes called, estoppels in pais. The principle is that where one party has by his rep- resentations or his conduct induced the other party to a transaction to give him an advantage which it would be against equity and good conscience for him to assert, he should not in a court of justice be permitted to avail himself of that advantage. And although the cases to which this principle is to be applied are not as well defined as could be wished, the general doctrine is well understood and is appUed by courts of law as well as equity where the technical advantage thus obtained is set up and relied on to defeat the ends of justice or establish a dishonest claim. It has been applied to the precise class of cases of the one before us in numerous weU-considered judgments by the courts of this country. Indeed, the doctrine is so well imderstood and so often enforced that, if in the transaction we are now considering, Ball, the insurance agent, who made out the application, had been in fact the under- writer of the policy, no one would doubt its appUcabUity to the present case. Yet the proposition admits of as little doubt that if Ball was the agent of the insurance company, and not of the plaintiff, in what he did in filling up the application, the company must be held to stand just as he would if he were the principal. Although the very well-considered brief of counsel for plaintiff in error takes no issue on this point, it is obvious that the soundness of the court's in- structions must be tested mainly by the answer to be given to the question, "Whose agent was Ball in filling up the appUcation?" This question has been decided differently by courts of the highest re- spectability in cases precisely analogous to the present. It is not to be denied that the appUcation, logically considered, is the work of the assured; and if left to himself, or to such assistance as he might select, the person so selected would be his agent, and he alone would be responsible. On the other hand, it is well known — so well that no court would be justified in shutting its eyes to it — that insurance companies organized under the laws of one State, and having in that State their principal business office, send these agents all over the land with directions to solicit and procure applications for policies, furnishing them with printed arguments in favor of the value and necessity of life insurance, and of the special advantages of the corpora- tion which the agent represents. They pay these agents large commissions on the premiums thus obtained, and the policies are delivered at their hands to the assured. The agents are stimulated by letters and instructions to CHAP. VIIl] UNION MUTUAL INS. CO. V. WILKINSON 155 activity in procuring contracts, and the party who is in this manner induced to take out a policy rarely sees or knows anything about the company or its officers by whom it is issued, but looks to and relies upon the agent who has persuaded him to effect insurance as the full and complete representative of the company, in all that is said or done in making the contract. Has he not a right to so regard him? It is quite true that the reports of judicial de- cisions are filled with the efforts of these companies, by their counsel, to establish the doctrine that they can do all this and yet limit their responsi- bility for the acts of these agents to the simple receipt of the premium and delivery of the policy, the argument being that, as to all other acts of the agent, he is the agent of the assured. This proposition is not without support in some of the earlier decisions on the subject; and at a time when insurance companies waited for parties to come to them to seek assurance, or to forward applications on their own motion, the doctrine had a reasonable foundation to rest upon. But to apply such a doctriae in its full force to the system of selling policies through agents, which we have described, would be a snare and a delusion, leading, as it has done in numerous instances, to the grossest frauds, of which the insurance corporations receive the benefits, and the parties supposing themselves insured are the victims. The tendency of the modem decisions in this coimtry is steadily in the opposite direction. The powers of the agent are, prima fade, coextensive with the business intrusted to his care, and will not be narrowed by limitations not communicated to the person with whom he deals. An insurance company, establishing a local agency, must be held responsible to the parties with whom they transact business for the acts and declarations of the agent, within the scope of his employment, as if they proceeded from the principal. The modem decisions seem to us founded in reason and justice, and meet our entire approval. This principle does not admit oral testimony to vary or contradict that which is in writing, but it goes upon the idea that the writ- ing offered in evidence was not the instrument of the party whose name is signed to it; that it was procured under such circumstances by the other side as estops that side from using it or relsdng on its contents; not that it may be contradicted by oral testimony, but that it may be shown by such testimony that it cannot be lawfully used against the party whose name is signed to it. Judgment affirmed,^ ' iEtna Life Ins. Co. v. Fallow, 110 Tenn. 720, 77 S. W. 937. Customarily a mere solicitor whether of a life or a fire insurance company is never expressly authorized by his principal either to make or to alter the insurance contract. Cotton States Life Ins. Co. V. Scurry, 50 Ga. 48; Elliott v. Farmers' Ins. Co., 114 la. 153, 86 N. W. 224. Many States, however, have passed statutes in substance making the solicitor agent for the insurance company, no matter what the policy provides. 156 RYAN V. WORLD MUTUAL LIFE INS. CO. [CHAP. VIII RYAN V. WORLD MUTUAL LIFE INS. CO. Connecticut Supreme Court of Errors, 1874. 41 Conn. 168 Authority of agents to waive. Carpenter, J. This is an action on a policy of life insurance. The policy is expressed to be "in consideration of the representations, declara- tions and covenants contained in the application therefor, to which reference is here made as a part of this contract, etc." It is further declared that "This poUcy is issued and accepted on the following express'conditions and agreements: First. That the statements and declarations made in the ap- plication therefor, and on the faith of which it is issued, are in all respects true, etc." The application, therefore, is a part of the policy; and the plain- tiff's agreements therein contained are warranties, and, if not true, she can- not recover, unless there has been a waiver by the defendants, or under the circumstances they are estopped from denying their truth. In the application are the following questions and answers: "12. Has the party ever had any of the following diseases [naming a long list of diseases, and among them]: bronchitis, consumption, spitting of blood, or any serious disease?" — "None of these." " 17. Has the party had during the last seven years any severe sickness or disease? If so, state the particulars, and the name of the attending physician who was consulted and prescribed," — "No." "25. Has the party employed or consulted any physician? Please answer this yes or no. If, yes, give name or names and resi- dence." — "No." "27. Has any previous examination or application been made for assurance on the life proposed?" — "No." "Has any company declined to issue a policy for the party? " — " No." Upon the trial the plaintiff offered to prove, not that the above answers were true, but that different answers were in fact given, both by himself and the insured, and that the answers were wrongly written by the local agent of the defendants without the knowledge or consent of the plaintiff or her husband. Aside from the claim that the defendants are responsible for the conduct of their local agent, this is merely an attempt to substitute for a part of the written contract declared on, a different parol contract; for the rep- resentations and warranties of the plaintiff contained in the written agree- ment, oral representations and warranties of an entirely different character. It requires no argument to show that this cannot be done. But the plaintiff claims that truthful answers having been given to each interrogatory, and the incorrect answers contained in the application being there by the sole act of the agent, the defendants are bound by the answers as written, and are precluded from denying their truth. Whether this is so or not depends upon the extent of the agent's authority. It must be admitted that the express authority of the agent was limited to receiving the appUcation, forwarding it to the home office, receiving, CHAP. VIIl] RYAN V. WORLD MUTUAL LIFE INS. CO. 157 countersigning, and delivering the policy and collecting the premiums. The courts in this State have construed the powers of these agents liberally, and extended them somewhat by implication. Thus it has been held that in writing the application, and explaining the interrogatories and the meaning of the terms used, he is to be regarded as the agent of the company. In this case we are asked to go further than any case has yet gone, and clothe the agent with an authority not given him in fact, and to hold the principal responsible for an act which could not by any possibility have been contemplated as being within the scope of the agency. In most, if not in all, of the cases in which the act of the agent has been regarded as the act of the principal, the act has been the natural and probable result of the relations existing between the parties, or so connected with other acts expressly au- thorized as to afford a reasonable presumption that the principal intended to authorize it. But it cannot be supposed that these defendants intended to clothe this agent with authority to perpetrate a fraud upon themselves. That he deUberately intended to defraud them is manifest. He well knew that if correct answers were given no pohcy would issue. Prompted by some motive he sought to obtain a policy by means of false answers. His duty required him not only to write the answers truly as given by the applicant, but also to communicate to his principal any other fact material to the risk which might come to his knowledge from any other source. His conduct, in this case, was a gross violation of duty, in fraud of his principal, and in the interest of the other party. To hold the principal responsible for his acts, and assist in the consummation of the fraud, would be monstrous injustice. When an agent is apparently acting for his principal, but is really acting for himself, or third persons, and against his principal, there is no agency in respect to that transaction, at least as between the agent himself or the person for whom he is really acting and the principal. The principal reason urged for holding the defendants liable in this case is the one suggested in the argument, that when one of two innocent per- sons must suffer by the fraud, negligence, or unauthorized act of a third, he who clothed the third with the power to deceive or injure must be the one. Our answer is, in the first place, that this is not exactly a case in which one of two innocent persons must necessarily suffer. There is no absolute loss for us to determine on whom it shall fall. If the plaintiff fails to recover she sustains no pecuniary loss, except the premium paid, nor that even if she is innocent and the law is so that she can recover it back on the ground that there was a failure of consideration. It is unlike a case of fire insurance. Nearly all property may be insured at some rate, if not in one office in another. But in this case the plaintiff's husband was not an insurable subject. His situation was such that one company had rejected him, and but for the aid of fraud neither this nor any other company would have accepted him. Had the truth been stated no policy would have issued, and as she would have had no better success probably with other companies we cannot see that she has been misled to her prejudice except in relation to the premium, which is comparatively a small matter. 158 RYAN V. WORLD MUTUAL LIFE INS. CO. [CHAP. VIII In tie second place, if the rule is to be applied to this case it is by no means certain that it will aid the plaintiff. The fraud could not be perpetrated by the agent alone. The aid of the plaintiff or the insured, either as an accom- plice or as an instrument, was essential. If she was an accomplice, then she participated in the fraud, and the case falls within the principle of Lewis v. The Phcenix Mutual Life Ins. Co., 39 Conn. 100. If she was an instrument, she was so because of her own negligence, and that is equally a bar to her right to recover. She says that she and her husband signed the application without reading it and without its being read to them. That of itself was inexcusable negligence. The application contained her agreements and repre- sentations in an important contract. When she signed it she was bound to know what she signed. The law requires that the insured shall not only, in good faith, answer all the interrogatories correctly, but shall use reasonable diligence to see that the answers are correctly written. It is for his interest to do so, and the insurer has a right to presume that he will do it. He has it in his power to prevent this species of fraud and the insurer has not. Courts should never extend by implication the power of an agent except to carry into effect the probable intention of the parties, or to prevent third persons dealing with the agent from being misled to their injury. In this case there is no ground for the supposition that the defendants ever intended to authorize the agent to act directly contrary to their interests; and if the plaintiff has been deceived, her own negligence at least materially contrib- uted to it. We need not enlarge upon the evils necessarily resulting from holding in- surance companies liable for such acts of their agents. The question is vital to the insurance interests of the country. The insured no less than the in- surers are deeply interested in it. If this verdict is sustained it will tend to establish a principle fraught only with mischief. Every life insurance com- pany in this country, and to some extent the fire insurance companies, will be at the mercy of their agents. A door will be open to fraud, collusion, and legal robbery, imprecedented in the history of jurisprudence. In view of the probable consequences of such a principle — evils coextensive almost with the magnitude of the interests involved — ^we ought to pause and consider well before extending the doctrine of some of the modem cases to a case like this. We are constrained therefore to hold that a limited agency in a case of life insurance wiU not be extended by operation of law to an act done by the agent in fraud of his principal, and for the benefit of the insured, espe- cially where it is in the power of the insured by the use of reasonable diligence to defeat the fraudulent intent. The court very properly instructed the jury that "an untrue or fraudulent statement or denial made by the applicant of a fact material to the risk to induce the issuance of a policy wiU prevent the policy from taking effect as a valid contract, unless the insurer has in some way waived or estopped him- self from relying upon such misstatement to avoid the policy. This waiver, to be effectual, must be made by an officer of the company authorized to CHAP. VIIl] RYAN V. WORLD MUTUA;. LIFE INS. CO. 159 make it. If there has been no evidence of any waiver except by a medical examiner of the company, or by a local agent, there must be additional proof of specific authority given them, or the company will not be bound." Some of the cases cited by the plaintiff are cases of fire insurance, in which the agents were intrusted with blank policies, signed by the president and secretary, and had fuU power to fiU up and issue the same without referring the application to the home office. In such cases the corporation contracts solely by its agent. The acts and knowledge of the agent are the acts and knowledge of the corporation, and there is a manifest propriety ia holding the corporation hable accordingly. This court has held that in writing the answers to the interrogatories in the application, the agent is to be regarded as the agent of the company rather than the agent of the insured. We do not question the propriety of those decisions, considering the circumstances of the cases in which they were made; but we cannot regard them as establishing an inflexible rule of law applicable to all cases. A brief reference to some of the cases ■nill illustrate the distinction which we make. When the applicant stated fully and truthfully the circumstances relating to the title to the property insured, and the agent, knowing all the facts, but for the sake of convenience, stated the title incorrectly and issued a policy, it was held that the company could not take advantage of it. The court regarded the transaction as equivalent to an agreement that, for the piirpose of the insurance, the title should be considered as it was stated to be by the agent, Peck v. New London County Mutual Ins. Co., 22 Conn. 575. See also Woodbury Savings Bank v. Charter Oak Ins. Co., 31 Conn. 517. When the applicant answered the interrogatory, "Is a watch kept on the premises during the night?" by stating the facts, and the agent wrote the answer, "Watchman till 12 o'clock," which answer was not strictly true, it was held that the company was bound by it. Malleable Iron Works v. Phoenix Ins. Co., 25 Conn. 465. See also Beebe v. Hartford County Mut. Fire Ins. Co., 25 Conn. 51; Hough v. City Fke Ins. Co., 29 Conn. 10. The case before us is a case of life insurance. The power of the agent was in fact limited. He has no power to issue policies. The terms of his agency conferred no authority to waive conditions or forfeitures, or to agree to false and fraudulent answers to any of the interrogatories, or to make any other contract to bind the company. Presumptively the insured and the plaintiff knew all this before pajong the premiimi; for the printed poUcy, which was in their hands for several days, contained at the bottom this note: "The presi- dent and secretary of the company are alone authorized to make, alter or dis- charge contracts, or to waive forfeitures." The jury then were correctly told that "there must be additional proof of special authority given them," (the local agent and the medical examiner), "or the company will not be bound." The jury foimd such special authority. But we look through the record in vain to find any evidence to support such a finding. 160 KYAN V. WORLD MUTUAL LIFE INS. CO. [CHAP. Ann The verdict was manifestly against the evidence, and justice requires that it should be set aside and a new trial awarded.' ' Knights of Pythias v. Withers, 177 U. S. 260; Stemaman v. Mut. L. Ins. Co., 170 N. Y. 13, 62 N. E. 763, 88 Am. St. R. 625, 57 L. R. A. 318 (agents of company). Rinker v. .^tna Life Ina. Co. of Hartford, 214 Pa. St. 608. In an English case. Big- gar, the insured, was canvassed by the insurance company and was induced to send in a proposal for insurance against accidents. Cooper, the soliciting agent of the company, instead of consulting Biggar as to the answers to be given, filled them in as best he might, and then invited Biggar to sign the paper, which he did without reading it. The answers inserted by Cooper were false in many particulars, but Biggar did not know it. The proposal contained a declaration by which the apphcant agreed that its statement should form the basis of the policy, and the policy contained the usual proviso that it was grantedon the condition of their truthfulness. The King's Bench Division, in rendering judgment for the company, decided that the company's so- licitor, in filling up the application, acted as agent for Biggar. The English court also approved and adopted the views of the United States Supreme Court as expressed in New York Life Ins. Co. o. Metcher, 117 U. S. 509, 6 S. Ct. 837, 29 L. Ed. 934, and held that the insured in allowing another to fill up his proposal, and in neglecting to read it, became responsible for its contents, Biggar v. Rock Life Assur. Co. (1902), 1 K. B. 516. Agent's Interpretation of the Conthact. — Many courts hold the insurance company to the solicitor's interpretation of the meaning of the questions in the ap- plication or terms of the contract as explained by him to the applicant, McMaster v. N. Y. Life Ins. Co., 183 U. S. 25, 38, 22 S. Ct. 10; Equitable Life Ins. Co. v. Hazel- wood, 75 Tex. 338, 12 S. W. 621, 16 Am. St. R. 893, 7 L. R. A. 217. Notice to the Insured of Restriction in the Authority of Solicitor. — In a California case Iverson, the insured, warranted that he had never had paralysis. The soliciting agent of the defendant at the time the application was signed by Iverson, knew that he had had a stroke of paralysis. The officers of the company had no knowledge of this. In the application was a stipulation that only the ofiicers had authority to determine whether the policy should issue, and that no statements of the solicitor should be binding unless presented in writing to the officers. The court held that the issuance of the policy was not a waiver of the forfeiture, that the solicitor's knowledge was not knowledge by the company and that the solicitor had no authority to waive the forfeiture, Iverson v. Met. Life Ins. Co., 151 Cal. 746, 91 Pac. 609; Butler V. Michigan Mut. L. Ins. Co., 184 N. Y. 337, 77 N. E. 398. On the other hand, in a later case, the South Carolina court, with the California case before it, takes the opposite view, and concludes that the knowledge of the solicitor, acquired in the course of his work for the company, is imputable to the company, no matter what the policy says. The applicant, Rearden, made a false answer in his application regarding his fainting fits, but the soliciting agent knew the facts. The application provided that the company should not be bound by knowledge of the solicitor not contained therein. The court held that the company was estopped from setting up the breach of warranty. Here, however, the solicitor afiirmatively advised the applicant that his fainting spells amounted to nothing, Rearden v. State Mut. Life Ins. Co. (S. C, 1908), 60 S. E. 1106; Globe Mut. Life Ins. Assoc, v. Ahern, 191 111. 167, 60 N. E. 806; Bierman v. Ins. Co., 142 Iowa, 341. A crucial question in respect to which the courts differ is this, whether the policy restriction on the one hand, or the character and requirements of the business in- trusted to the agent on the other, shall be the prevailing factor in determining the extent of his authority to waive, Northern Assur. Co. v. Grand View BIdg. Asso., 183 U. S. 308, 22 S. Ct. 133, 46 L. Ed. 213 (policy stipulation) ; Hicks v. Brit.-Am. Assur. Co., 162 N. Y. 284, 56 N. E. 743, 48 L. R. A. 424 (policy stipulation) ; Stemaman v. Met. Life Ins. Co., 170 N. Y. 13, 62 N. E. 763, 88 Am. St. R. 625 (character of busi- ness, medical examiner) ; Stone v. Hawkeye Ins. Co., 68 la. 737, 28 N. W. 47, 56 Am. CHAP. VIIl] FORWARD V. CONTINENTAL INS. CO. 161 FORWARD V. THE CONTINENTAL INSURANCE COMPANY CoTTBT OF Appeals of New York, 1894. 142 N. Y. 382 Effect of knowledge by the company's agent of a ground of forfeiture at the time the policy is issued. O'Brien, J. The judgment in this case was recovered upon a policy of insurance, issued April 23, 1891, at one year, upon a store and the goods therein, which were owned by the plaintiff. The entire property was de- stroyed by fire on the 27th of September, 1891. The only defense interposed by the answer or urged upon the argument of the appeal in this court was a breach on the part of the plaintiff of one or perhaps two of the conditions contained ia the following clause of the policy: "This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void ... if the interest of the insured be other than unconditional, sole ownership, ... or if the subject of insurance be personal property, and be or become incumbered by a chattel mort- gage. ... In any matter relating to this insurance, no person, unless duly Rep. 870 (character of business). If the agent in fact has real or apparent power to accomplish a waiver, then as the Mississippi court and others declare a peremptory rule of law, superior to the erroneous recitals or stipulations of the policy, seems to intervene to fasten responsibility upon the principal for the result of acts done on its behalf and for its benefit, within the natural scope of the business transacted. Home Ins. Co. V. Gibson, 72 Miss. 58, 17 So. 13; Continental Fire Ins. Co. v. Brooks, 131 Ala. 614, 30 So. 876; German Ins. Co. v. Gray, 43 Kan. 497, 23 Pac. 637, 8 L. R. A. 70, 19 Am. St. R. 150. And as bearing upon the apparent power of the agent to affect the warranties and answers of the application it makes a material difference in the estimate of many courts whether the restrictive stipulation is contained in the applica- tion itself or only in the policy which is not delivered or disclosed to the assured until after the application has been executed. Wilder v. Continental Cas. Co., 150 Fed. 92; Kausal ». Ins. Co., 31 Minn. 17, 16 N. Vf. 430, 47 Am. Rep. 776; Kenyon v. Knights Templars, 122 N. Y. 247, 25 N. E. 299; Kister r. Lebanon Mut. Ins. Co., 128 Pa. St. 553, 18 AtL 447, 15 Am. St. R. 696, 5 L. R. A. 646. Contra, Wilber v. Williamsburgh City F. Ins. Co., 122 N. Y. 443; McCoy v. Met. L. Ins. Co., 133 Mass. 82. Ilutehate Applicants. — If the assured cannot read or is ignorant and illiterate and has given correct oral answers, the company, regardless of policy stipulations, is held responsible for errors of its agent in transcribing. Capital F. Ins. Co. t. Mont- gomery, 82 Ark. 90, 100 S. W. 749. Peter O'Brien on becoming a member of a benefit societj' signed the usual application, and by it, among other things, asserted that he had never had rheumatism and had never been attended by a physician. Both these answers were untrue, but O'Brien could neither read nor write, and the application, which was warranted to be the basis of the contract, and full, complete and true, whether written by his own hand or not, was filled in by an agent of the society. The defendant's witnesses testified that the answers as written, correctly recorded O'Brien's statements, but there was some testimony to the contrary which carried that issue to the jury. The verdict for the plaintiff was unanimously affirmed by the New York Court of Appeals, O'Brien v. Home Benefit Society, 117 N. Y. 310, 22 N. E. 954. 11 162 FORWARD V. CONTINENTAL INS. CO. [CHAP. VIII authorized in writing, shall be deemed the agent of this company. . . . This policy is made and accepted subject to the foregoing stipulations and con- ditions, together with such other provisions, agreements or conditions as may be indorsed hereon or added hereto, and no officer, agent or other representa- tive of this company shall have power to waive any provision or condition of this policy, except such as, by the terms of this policy, may be the subject of agreement, indorsed hereon or added hereto; and, as to such provisions and conditions, no officer, agent or other representative of this company shall have such power, or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached hereto. Nor shall any privilege or permission affecting the insurance under the policy exist or be claimed by the insiored unless so written or attached." It was shown at the trial that the plaintiff, about two months before the policy had been issued to him, had executed and deUvered to his brother an instrument in the form of a biU of sale upon the stock of goods, furniture and fixtures in the store, which, on March 3, 1891, was filed in the town clerk's office. This instrument purports, in consideration of $500, to transfer the plaintiff's interest in the property absolutely to his brother. The proof at the trial tended to show that there was in fact no consideration for the trans- fer. That it was colorable merely and made between the two brothers with reference to some litigations pending or threatened against the plaintiff. The brother never in fact paid anything as a consideration for the transfer, and no debt was due or owing to him by the plaintiff. There was also proof that the existence of this bill of sale, its true consideration, character and purpose were disclosed to the defendant's agent before the pohcy was issued or de- livered. The verdict was in favor of the plaintiff, and hence all the disputed facts material to the questions of law must be deemed to be established in the plaintiff's favor. It has uniformly been held by this court that a con- dition of this character in a contract of insurance will not operate to avoid it after a loss, providing the company, before delivering the pohcy, had knowledge of the fact that the insured, notwithstanding the warranty, or the statement and the condition, was not the sole owner or that it was in- cumbered. In such cases the company is deemed to have waived the con- dition, or by the delivery of the pohcy with the condition avoiding it in case the insured is not the sole owner, or that the property is incumbered, and accepting the premium, is held estopped from setting upon the condition as a defense. It was never supposed that such a condition was intended to apply to a state of facts in regard to which the company had been fully in- formed when it accepted the risk. The cases on this point are numerous, and it is impossible to make any distinction in principle between the con- ditions considered and that involved in the case at bar. (Van Schoick v. Niagara Falls Ins. Co., 68 N. Y. 434; Whited v. Germania Ins. Co., 76 N. Y. 415; Woodruff v. Imperial Ins. Co., 83 N. Y. 134; Short v. Home Ins. Co., 90 N. Y. 16 ; McNally v. Phoenix Ins. Co., 137 N. Y. 389 ; Carpenter v. German Ins. Co.. 135 N. Y. 298; Cross v. National Fire Ins. Co., 132 N. Y. 133; Berry ?'. .American Central Ins. Co., 139 N. Y. 49.) CHAP. VIIl] FORWAKD V. CONTINENTAL INS. CO. 163 In these cases it was held, either that the company had waived the con- dition, or was estopped by the deliveiy of the policy and the receipt of the premium, since, under such circumstances, it could not be supposed that it intended to deliver to the insured a policy which it knew to be void. When the imderwriter, before the Laception of the contract, is informed by the owner that the property is incumbered, but still delivers the pohey with the condition embodied in it, then, as it seems to me, it is not so much a question of waiver or estoppel as a question whether the condition ever attached or operated upon the facts thus disclosed. It can, of course, operate in the future upon transfers or incumbrances as the facts arise, and then the question is one of waiver. But when the facts are all known before any contract is made, a condition against a state of things known by all the parties to exist cannot be deemed to be within their intention or purpose. This case cannot be taken out of the rule by any possible distinction imless it be the character and powers of the agent of the defendant, to whom, upon the finding of the jury, the facts were commimicated. It is urged that the cases cited do not apply for the reason that the waiver there was by a general agent. That may be true with respect to the four cases last cited. But it does not seem to me to be so much a question of power or authority in an agent to waive a condition in the contract as of knowledge by the company through its agent of the real facts. In the Carpenter case (supra) the information as to the true state of the title was given to a mere clerk of the general agent, and we held that such knowledge was imputable to the company, through the general agent, for whom the clerk acted in soliciting the insurance, and that a condition of this character remaining in the policy did not avoid it. Now, the powers of the agent in tins case were certainly much broader than those of the clerk in the case referred to. In this case the person to whom the information was communicated was certainly an agent appointed by the defendant itself, while in that, the person had no authority directly from the company, but was a mere servant or clerk acting for and solely under the authority of the agent. The agent in this case and the clerk in the other were engaged in precisely the same duty and performing the same service when they acquired the knowledge as to the condition of the property and the state of the title. They were both soliciting insurance and ascertaining the character and con- dition of the property upon which the risk was about to be taken, and I am \mable to suggest any reason for imputing knowledge in the one case and not in the other. Moreover, the record is entirely silent as to any facts tend- ing to show that in this case the agent was acting in pursuance of a special or limited power. On the face of the policy he appears to be the duly authorized agent of the defendant and actually did grant special permits and waive conditions in the poUcy. He certainly had power to waive conditions, pro- viding it was done in the manner stipulated in the policy, that is to say, in writing. He had power to sohcit insurance, collect premiums and deliver policies. There is no proof in the record that the plaintiff ever made any formal application for this policy, written or otherwise, or that he touched the company at any point or in any form except through this agent. The 164 FORWARD V. CONTINENTAL INS. CO. [CHAP. VIII fair inference from the proof is, that the defendant furnished the agent with policies duly executed, which he filled up and delivered at his discretion, reporting the facts to the company. There is nothing on the face of the policy and nothing was communicated to the plaintiff to lead him to beheve that the powers of the agent were special or restricted. Insurance companies doing business by agencies at a distance from their principal place of business, are responsible for the acts of the agent, within the general scope of the .business intrusted to his care, and no limitations of his authority will be binding on parties with whom he deals which are not brought to their knowl- edge. I am unable to discover in the record any basis for the contention that the knowledge of the agent as to the existence and purpose of the bill of sale is not the knowledge of the defendant. On the contrary, his knowledge of the facts is, I think, imputable to his principal. So far as appears, the plaintiff dealt with him as the representative of the company. If there were in fact any limitations or restrictions on his powers as an ordinary agent it was for the defendant to show it. His commission was not put in evidence nor any proof given tending to show that he was not what he was described in the complaint, the defendant's duly authorized manager or agent at the place where the contract was made. There were no other means of communication between the plaintiff and the defendant employed. So far as appears he made this contract for his principal, and the knowledge that he obtained in the course of the business was the knowledge of the defendant.' There is another view of the question that deserves some notice. Con- ditions in contracts of insurance against liabihty when the property is in- cumbered or where the title is not absolute in the insured are inserted for the purpose of guarding against the moral hazard involved. When the transfer or incumbrance is merely colorable or nominal and not real or ef- fective the reasons that induced the stipulation do not apply. Was there any real sale or transfer of this property within the meaning of the policy? Nothing was done except to execute and file a paper. There was no intention in fact to transfer the title or vest any beneficial interest in the nominal vendee. There was no debt to be enforced, no consideration passed, and the use and possession remained unchanged. The filing of the paper added nothing to its validity. It was not a mortgage nor intended as security for any debt. It was a mere paper transfer without consideration and without delivery of possession, and while it had the form it had none of the legal elements necessary, even between the parties, to constitute a valid contract of sale. In legal effect it was, I think, the same as an unexecuted gift. The ' The usual local countersigning agent is said to be a general agent, Hagan v. Scottish Union Ins. Co., 186 U. S. 423, 433, 22 S. Ct. 862; Grabbs v. Farmers' Mut. F. Ins. Assoc, 125 N. C. 389, 397, 34 S. E. 503. His written commission grants him "full power to receive proposals for insurance in a certain locality, to fix the rates of pre- miums, to receive moneys, and to countersign, issue, and renew policies of insurance signed by the president and attested by the secretary or signed by the manager, sub- ject to the rules and regulations of the company and to such instructions as may from time to time be given by the officers." CHAP. VIIl] HOME INS. CO. OF N. Y. V. GIBSON 165 worst that can be said of it is that it was intended to defraud creditors, but if that be true the moral hazard which was the basis of the condition of the policy would still be absent, since the plaintiff's interest in the property at the time of the insurance was in fact the same as before the paper was exe- cuted. There is no legal ground upon which this court can properly disturb the verdict, and the judgment should, therefore, be affirmed. Finch and Peckham, JJ., concur. Andrews, Ch. J., and Babtlett, J., concur on last ground mentioned in opinion. Eahl, J., dissents on first ground and concurs on last ground. Gray, J., dissents. Judgment affirmed.^ HOME INSURANCE CO. OF NEW YORK v. GIBSON Supreme Court of Mississippi, 1894. 72 Miss. 58 Effect of knowledge by the company's agent of a ground of forfeiture at the time the policy is issued. Action on a policy of fire insurance on a building. Whitfield, J. The two grounds of defense mainly relied on are: First, that the appellee was not the owner in fee simple of the ground on which the building, the subject of insurance, was situated, and second that the interest of the insured was "other than the unconditional and sole ownership" of the building. It is insisted that the waiver of the requirement that appellee's real interest should be set out in the policy, by the conduct of its agent, W. A. Drennan, Jr., who issued the policy and received the premium, after he was fully informed of all the lease showed, cannot be shown by parole, and cannot bind the company. This contention has been thoroughly considered by this court and settled adversely to appellant in Sheffy's Case, 71 Miss. 919, and in Matthews' Case, 65 Miss. 301; Rivara's Case, 62 Miss. 727; Bowdre's Case, 67 Miss. 631. The very pith of the true reasoning on this subject is condensed into this single sentence of the Supreme Court of Michigan, 33 Mich. 143, quoted with approval by Judge Campbell in Matthews' Case: "There can ' Observe that less than a majority of the court approved the first ground. But there was no dissent in Robbins v. Springfield F. & M. Ins. Co., 149 N. Y. 477, 44 N. E. 159; German Ins. Co. v. Shader, 68 Neb. 1, 93 N. W. 972, 60 L. R. A. 918 (cites corroborating decisions from some twenty-seven States) ; Raulet v. Northwestern Nat. Ins. Co. (Cal., 1910), 107 Pac. 292; Chismore v. Anchor F. Ins. Co., 131 la. 180, 108 N. W. 230; MUler v. Prussian Nat. Ins. Co., 158 Mieh. 402, 122 N. W. 1093; McMillan v. Ins. Co., 78 S. C. 433, 58 S. E. 1020; Ins. Co. v. Richmond Mica Co., 102 Va. 429, 46 S. E. 463, 102 Am. St. R. 846; Medley v. Ins. Co., 55 W. Va. 342, 47 S. E. 101. 166 HOME INS. CO. OF N. Y. V. GIBSON [cHAP. VIII be no more force in an agreement in writing not to agree by parol, than in a parol agreement not to agree in writing. Every such agreement is ended by the new one which contradicts it." And this is true as well of the provisions which relate to the formation and binding force of the contract while running, as to those provisions relating to what has to be done after a loss. 11 Am. & Eng. Enc. L. 343, note 1, and page 338, paragraph 4, and authorities in note 2, p. 339. The case of Cleaver v. Insurance Co., 65 Mich. 527, whilst properly distinguishing the case of Insurance Co. v. Earle, 33 Mich. 143, in no way conflicts with the doctrine which the last named case announces, and which we approve. In Cleaver's case, the stipulation in the policy was that (p. 528), "the agent of this company has no authority," etc. Here the stipula^ tion is that "no officer, no agent and no other representative shall," etc. That this distinction was the foundation of Cleaver's case, is clearly shown in 39 N. W. R. 571, where the case was reversed in favor of the assured, on its being shown that R. T. Smith, the secretary, had waived the stipulation otherwise than by indorsement on the policy. It is vain to say that this clause does not seek to prevent the corporation itself from waiving a stipulation. The corporation acts only through agents; and if "no agent, no officer, and no other representative" can waive a stipu- lation, who is left to waive it for the corporation? This clause is a species of refinement by which the corporation withdraws within its invisible and intangible ideality when liability is sought to be imposed upon it, bound by the acts of no agent, officer, or other representative, but reaches forth there- from with Briarean hands to receive the profits and avails of these same acts performed by these same "agents,'' as against those with whom these same agents have dealt. The refinement is too subtle for the practical affairs of actual life, and we repudiate it. It may be noted too that in Cleaver's case (p. 531), the premium had been received after the agent knew of the groimd of forfeiture. The provision relied on here is in the exact words of the stipulation relied on in Lamberton v. Insurance Co., 39 N. W. Rep. 76, decided by Supreme Court of Minnesota in 1888, respecting which the court says in a very clear and strong opinion: "That is to say, in other words, that one of the parties to a written contract, which is not required by law to be in writing, cannot, subsequent to the making of the contract, waive by parol agreement pro- visions which had been incorporated in the contract for his benefit. If this provision is effectual at aU as a limitation of the power of future action, it limits the power of every agent, officer, and representative of the company, and hence practically that of the corporation," and it was held that "this provision, not being a limitation upon the authority of any particular agent or class of agents, but in effect upon the capacity of the corporation for future action," could not be imposed, but was void. We find no error in the record, and the judgment is Affirmed.^ > Beebe v. Ohio F. Ins. Co., 93 Mich. 514, 53 N. W. 818, 18 L. R. A. 481, 32 Am. St. R. 519. CHAP. VIIl] DEWEES V. MANHATTAN INS. CO. 167 DEWEES V. MANHATTAN INS. CO. New Jersey Court of Errors and Appeals, 1872. 6 Vroom, 366 Effect of knowledge by the company's agent of a ground of forfeiture at the time the policy is issued. Assumpsit on a policy of insurance. Bkasley, Chief Justice. The contract between these litigants, on the point which I shall discuss, is clear and unambiguous. The defendants agreed to insure a building occupied as a country store, and the stock of goods, consisting of the usual variety of a country store. This, by the plain meaning of the terms employed, is a warranty on the part of the insured that the building was used, at the date of the agreement, for the purpose specified. It was a representation, on the face of the policy, touching the premises in question, and which affected the risk; and such a representation, according to all the authorities, amounts to a warranty. Formal words are not neces- sary for the creation of an obligation of this character, and, in fact, it usually arises from words of description which limit the risk contained in the written contract. For example, in a marine insurance the words "to sail on such a day," or "in port," or "all well on such a day," are plain warranties, demand- ing a literal fuMUment, and are quite as efficacious as would be a formal clause framed to effect the same purpose. Referring to a fire insurance, the court in Wood r. The Hartford Fire Ins. Co., 13 Conn. 533, says any state- ment or description, on the part of the insured, on the face of the policy, which relates to the risk, is an express warranty, and such a warranty, being a condition precedent, must be strictly complied with, or the insurance is void. The same doctrine is maintained by the Court of Appeals of New York, in the case of Wall v. The East River Mutual Insurance Company, 3 Seld. 370, the pohcy in that instance being declared void on the ground that the building was described as being "occupied as a storehouse," and it ap- peared it was used also for another purpose. The cases are numerous and decisive upon the subject — so much so that it does not appear to me to be necessary to refer to them in detail, as, in my opinion, the character of a representation of this kind is apparent upon its face. It can be intended for no other purpose than to characterize the use of the building at the date of the insurance; for, unless this is done, there can be no restriction on the use of the property by the insured during the running of the risk. Unless this description has the force thus attributed to it, the premises could have been used for any of the most hazardous purposes. A building described in a policy as a "dwelling-house" could, except for the rule above stated, be con- verted into a mill or factory. I think it is incontestably clear that the de- scription of the use of the premises in this case was meant to define the char- acter of the risk to be assumed by the defendants. 168 DEWEES V. MANHATTAN INS. CO. fcHAP. Vlll But, besides this, it is plain that the written contract was violated in a fatal particular by the assured. By the express terms of one of the stipula- tions of the insurance, it is declared that, if the premises should be used "for the purpose of carrying on therein any trade or vocation, or for storing or keeping therein any articles, goods, or merchandise denominated hazardous, or extra hazardous, or specially hazardous, in the second class of the classes of hazards annexed to this policy, etc., from thenceforth, so long as the same shall be so used, etc., the policy shall be of no force or effect." Among the extra hazardous risks, that of keeping a "private stable" is enumerated; and it was shown on the trial, and was not denied, that at the date of the poUcy, and at the time of the fire, a part of the building insured was applied by the plaintiff to this use. It cannot be denied, then, that if we take into view these conditions of the case alone, the plaintiff's action must fall to the ground. He did an act which, by force of his written agreement, had the effect to suspend, tempo- rarily, his insurance. As this fact, having this destructive effect, could not be disputed, it became necessary, in order to save the plaintiff's action, to avoid the effect of the written contract; and this burden was assumed, on the argument, by the counsel of the plaintiff. The position taken with this view was, that the policy was obtained for the plaintiff by the agent of the defendants, and that he knew that the building in question was, in part, used as a stable. The plaintiff's claim appears to be a meritorious one, and on this account, and in the hope that there might be found some legal ground on which to support this action, the case was allowed by me at the circuit to go to the jury, and the questions of law were reserved for this court. But the consid- eration which I have since given the matters involved has excluded the faintest idea that, upon legal principles, this suit can be successfully carried through. In my opinion, that end can be attained only by the sacrifice of legal rules which are settled, and are of the greatest importance. Let us look at the proposition to which we are asked to give our assent. The contract of these parties, as it has been committed to writing, is, that if the plaintiff shall keep a stable on the premises insured, for the time being the policy shall be vacated. But, it is said, the agent of the defendants who procured this contract was aware that the real contract designed to be made was that the plaintiff might apply the premises to this use. This knowledge of the agent of the defendants, and which, it is conceded, will bind the de- fendants, is to have the effect to vary the obligations of the written contract. Upon what principle is this to be done? There is no pretense of any fraud in the procurement of this poUcy. The only ground that can be taken is, that the agent, knowing that the premises were to be, in part, used as a stable, should have so described the use in the policy. The assumption is, and must be, that the warranty, in its present form, was a mistake in the agent. But a mistake cannot be corrected, in conformity with our judicial system, in a court of law. No one can doubt that in a proper case of this kind an equitable remedy exists. It is possible, CHAP. VIIl] DEWEES V. MANHATTAN INS. CO. 169 therefore, that in this case, in equity, the present contract might be reformed so as to contain a permission for the plaintiff to keep his stable in this build- ing; but I think it has never before been supposed that this end could be reached in this State by proof before the jury in a trial at the circuit. The principle would cover a wide field, for, if this mistake can be there corrected, so can every possible mistake. If the plaintiff can modify the stipulation with respect to the restricted use of the premises, on the plea of a mistake in such stipulation, on similar grounds it would be open to the company to modify the policy with respect to the amount insured. I am at a loss to see how, on the adoption of the principle claimed, we are to keep separate the functions of our legal and equitable tribunals. Nor do I think, if this court should sustain the present action, that it could be practicable to preserve, in any useful form, the great primary rule that written instruments are not to be varied or contradicted by parol evi- dence. The knowledge of the agent, in the present transaction, is important only as showing what the tacit understanding of the contracting parties was. Suppose, instead of proof of such tacit understanding, the plaintiff had of- fered to make a stronger case, by showing that the agent expressly agreed that the building might be used not only as a country store, as the policy stated, but also as a stable, and that the restraining stipulation did not ap- ply to the extent expressed. Can anyone doubt that, according to the practice and decisions in this State, such proof should have been rejected? A rule of law admitting such evidence would be a repeal of the principle giving a controlling efficacy to written agreements. The memory and un- derstanding of those present at the formation of the contract would be quite as potent as the written instrument. I have not found that it is anywhere supposed that this general rule which Ulegalizes parol evidence, under the conditions in question, has been relaxed with respect to contracts for insurance. Decisions of the utmost authority, both in England and in this country, propound this doctrine as applicable to policies in the clearest terms. Chief Justice Parker, in his opinion in Higginson v. Ball, 13 Mass. 96, says that "policies, though not under seal, have, nevertheless, ever been deemed instruments of a solemn nature, and subject to most of the rules of evidence which govern in the case of specialties. The poUcy is itself considered to be the contract between the parties, and whatever proposals are made, or conversations had, prior to the sub- scription, they are to be considered as waived, if not inserted in the policy, or contamed m a memorandum annexed to it." Atherton v. Brown, 14 Mass. 152, is, upon this point, of the same complexion, and has close pertinency to the case under consideration with respect to the appUcation of the rule of evidence. The description was of property insured "on board the Spanish brig New Constitution," and the vessel was captured, and, with her cargo, was condemned as American property; and it was held that the description in the policy amounted to a warranty that the vessel was Spanish, and that it was not competent for the assured to show that the underwriters were in- formed, at the tune of then- subscription, that she was, in fact, an American 170 DEWEES V. MANHATTAN INS. CO. [CHAP. VIII vessel. The court said that parol evidence of what was within the knowledge of the underwriters was not admissible. The following are cases which es- tablish the same proposition : Vandervoort v. The Columbia Insurance Com- pany, 2 Caines' R. 155; Weston v. Emes, 1 Taunt. 115; Parks v. General Int. Assur. Co., 5 Pick. 34; FUnn v. Tobin, 1 Mood. & Malk. 367; Jennings V. The Chenango Mut. Ins. Co., 2 Denio, 75; Angell on Fire and Life Ins., §§ 20, 21. There are several reported decisions which I do not think are distin- guishable with respect to legal rules and their application, from the present. Among these is that of Jennings v. The Chenango Mutual Insurance Com- pany, 2 Denio, 75. There the property insured was described as a "grist-mill," and it was proved that carpenters' work was accustomed to be done in it, with instruments and fixtures which were kept there. One of the principal questions in the case was whether it was competent to prove, that, at the time the application was made for this policy, the agent for the defendants was informed that these fixtures were in use in the mill. This proof was re- jected, and the policy held void; the ground of rejection being the general rule of evidence, which places written instruments above the level of parol testimony. Quite as strong in favor of the same doctrine is the case of Ken- nedy V. The St. Lawrence County Mutual Insurance Company, 10 Barbour, 285. The application of the insured, which formed a part of the policy, described erroneously the buildings which were within a certain distance of the premises. Here the same circumstance was relied on as a defense which has been set up in the present case; namely, that the agent of the defendants had full knowledge of the situation of the premises and its neighborhood, and that he drew the application, and specified in it such buildings as he chose. This defense was overruled, and the defendants had judgment. With respect to the case of Plmnb v. The Cattaraugus County Mutual Insurance Company, 18 N. Y. 392, to which we were referred by counsel, my answer is twofold: first, that I cannot assent to the doctrine on which that judgment is founded; and, in the second place, that doctrine, if correct, could have no application to the facts now under consideration. In the case from New York here referred to, there was, in the application for the policy, a misdescription of the distance of the adjacent buildings from the premises insured, and to this defense the reply was, that the agent of the company had made the measurements, and had obtained the signature of the plaintiff on the assurance "that the appUcation was aU right, and just as it should be." The court decided that this declaration of the agent could not be offered for the purpose of altering or contradicting the written contract, but that it was admissible as an estoppel in pais. Now, it is at once obvious that, by force of that view, the agreement in question was enforced, not in the sense of the written terms, but in the sense of the oral evidence, and that the practical result was precisely the same as though the instrument had been reformed in conformity to such evidence at the trial. I think there is no doubt that this application of the doctrine of estoppel to written contracts is an entire novelty. In the long hne of innumerable cases which have pro- CHAP. VIIl] DEWEES V. MANHATTAN INS. CO. 171 ceeded and been decided on the ground that parol evidence is not admissible as against a written instrument, no judge or counsel has ever intimated, as it is believed, that the same result could be substantially obtained by a resort to this circuity. It is true that, if there be a substantial ground in legal prin- ciple for its introduction, the fact that it is new will not debar from its adop- tion; but I have not been able to perceive the existence of such substantial ground. In my apprehension, the doctrine can be made to appear plausible only by closing the eyes to the reason of the rule which rejects, in the presence of written contracts, evidence by parole. That reason is, that the common good requires that it shall be conclusively presumed in an action at law, in the absence of deceit, that the parties have committed their real understand- ing to writing. Hence, it necessarilj' follows, that all evidence merely oral is rejected, whose effect is to vary or contradict such expressed understand- ing. Such rejection arises from the consideration that oral testimony is un- reliable in comparison with that which is written. It is idle to say that the estoppel, if permitted to operate, will prevent a fraud or inequitable result; most parol evidence contradictory of a written instrument has the same tendency; but such evidence is rejected not because, if true, it ought not to be received, but because the written instrument is the safer criterion of what was the real intention of the sontracting parties. In the case now criticised, the partj' insured stipulated against the existence of buildings within a def- inite number of feet from the insured property; by the admission of parol testimony, this stipulation was restricted and limited in its effect. This re- sult, no doubt, was strictly just, if we assume that the parol evidence was true; but, standing opposed to the written evidence, the law presumed the reverse. The alternative is unavoidable; it is a choice between that which is written and that which is unwritten. In the case cited, the effect of the rule adopted by the court was to give a different effect to the written terms from that which they intrinsically possessed, a result induced by the admission of oral evidence. This, I cannot but think, was a palpable alteration of the agreement of the parties. The mistake of the court appears to have been in regarding simply the legal effects of the facts which were proved by parole. Receiving that testimony into the case, a clear estoppel was made out; but the error consisted in the circumstance that such oral evidence was, on rules well settled, inadmissible. The question presented was purely one as to a rule of evidence, but it was treated as a problem relating to the application of general legal principles to an admitted state of facts. The case was not decided by a unanimous court; three judges dissented, and, in my judgment, that dissent was based on satisfactory grounds. But it has been already observed, that, even if the doctrine of the adjudi- cation should be received by this court, such result could have no effect on our decision of the present case. The reason is, that the facts now before us do not present the elements of an estoppel. Such a defense rests on a miscon- ception as to a state of facts, induced by the party against whom it is set up. The person who seeks to take advantage of it must have been misled by the words or conduct of another. Now, in the present case, the agent did not 172 NOETHERN ASStJR. CO. V. GRAND VIEW B. ASSN. [CHAP. VIII make any statement nor did he do anything which led the plaintiif to alter his condition. The most that can be laid to his charge is, that from careless- ness he omitted properly to describe the use of the premises insured. But this was not a misstatement of a fact on which the plaintiff acted, because the plaintiff was aware of the circumstance that the building was put to another use. The alleged error in the description is plain on the face of the policy, and the law incontestably charges the defendant with knowledge of the meaning and legal effect of his own written contract. Certainly the entire state of things was as well known to the plaintiff as it was to the agent of the defendants. To found an estoppel on the ignorance of the plaintiff of the plainly expressed meaning of his own contract, would be absurd. Being of opinion that the plaintiff's case, on this first point, cannot stand, I have not thought it necessary to look into the other groimds of objection raised on the part of the defense. NORTHERN ASSURANCE COMPANY v. GRAND VIEW BUILDING ASSOCIATION United States Supbbme Couet, 1901. 183 U. S. 308 Effect of knowledge by the company's agent of a ground of forfeiture at the time the policy is issued. Action on policy of fire insurance which as in the Forward case, supra, was in New York standard form. One of its clauses is as follows: "This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy." In fact, plaintiff without written permit of the defendant had obtained a policy from another company on the same property, but, on the trial plain- tiff's witnesses testified that the countersigning agent of the defendant had knowledge of the other subsisting insurance at and before the delivery of the policy in suit. Defendant's witness denied this. Verdict and judgment in favor of the plaintiff. Mb. Justice Shiras dehvered the opinion of the court. After a discus- sion of many cases, English and American, the court said : What, then, are the principles sustained by the authorities, and apphcable to the case in hand? They may be briefly stated thus: That contracts in writing, if in unam- biguous terms, must be permitted to speak for themselves, and cannot by the courts, at, the instance of one of the parties, be altered or contradicted by parol evidence, unless in case of fraud or mutual mistake of facts; that CHAP. VIIl] NORTHERN ASSUR. CO. V. GRAND VIEW B. ASSN. 173 this principle is applicable to cases of insurance contracts as fully as to con- tracts on other subjects; that provisions contained in fire insurance policies, that such a policy shall be void and of no effect if other insurance is placed on the property in other companies, without the knowledge and consent of the company, are usual and reasonable; that it is reasonable and competent for the parties to agree that such knowledge and consent shall be manifested in writing, either by indorsement upon the poUcy or by other writing; that it is competent and reasonable for insurance companies to make it matter of condition in their policies that their agents shall not be deemed to have au- thority to alter or contradict the express terms of the policies as executed and dehvered; that where fire insurance poUcies contain provisions whereby agents may, by writing indorsed upon the policy or by writing attached thereto, express the company's assent to other insurance, such limited grant of authority is the measure of the agent's power in the matter, and where such Umitation is expressed in the poUcy, executed and accepted, the insured is presumed, as matter of law, to be aware of such limitation; that insurance companies may waive forfeiture caused by nonobservance of such condi- tions; that, where waiver is relied on, the plaintiff must show that the com- pany, with knowledge of the facts that occasioned the forfeiture, dispensed with the observance of the condition; that where the waiver relied on is an act of an agent, it must be shown either that the agent had express authority from the company to make the waiver, or that the company subsequently, with knowledge of the facts, ratified the action of the agent. . . . The plaintiff's case, at its best, is based on the alleged fact that the agent had been informed, at the time he delivered the policy and received the premium, that there was other insurance. The only way to avoid the defense and escape from the operation of the condition, is to hold that it is not competent for fire insurance companies to protect themselves by conditions of the kind contained in. this pohcy. So to hold would, as we have seen, entirely sub- vert well-settled principles declared in the leading English and American cases, and particularly in those of this court. This case is an illustration of the confusion and uncertainty which would be occasioned by permitting the introduction of parol evidence to modify written contracts and by approving the conduct of agents and persons ap- plying for insurance in disregarding the express limitations put upon the agents by the principal to be affected. It should not escape observation that preserving written contracts from change or alteration by verbal testimony of what took place prior to and at the time the parties put their agreements into that form, is for the benefit of both parties. In the present case, if the witnesses on whom the plaintiff relied to prove notice to the agent had died, or had forgotten the circum- stances, he would thus, if he had depended to prove his contract by evidence extrinsic to the written instrument, have found himself unable to do so. So, on the other side, if the agent had died, or his memory had failed, the defendant company might have been at the mercy of unscrupulous and in- terested witnesses. 174 GRAY & CBOZIER V. GEEMANIA FIRE INS. CO. [CHAP. VIU Besides the knportaHce of such considerations to the parties immediately concerned in business transactions, the community at large have a deep in- terest in the welfare and prosperity of such beneficial institutions as fire insurance companies. It would be very unfortunate if prudent men should be deterred from investing capital in such companies by having reason to fear that conditions which have been found reasonable and necessary to put into poUcies to protect the companies from faithless agents and from dis- honest insurers, are liable to be nullified by verdicts based on verbal testi- mony. Increased importance should be given to the rules involved in this discussion by the fact that, in latter times and in most, if not all, of the States, statutory changes have opened the courts to the testimony of the very par- ties who have signed the written instrument in controversy. The judgment of the Circuit Court of Appeals is reversed. The judgment of the Circuit Court is likewise reversed, and the cause remitted to that court with directions to proceed in conformity with this opinion. The Chief Justice, Mb. JusncB Hablan and Me. Justice Peckham dissented.i GRAY & CROZIER v. THE GERMANIA FIRE INS. CO. OF NEW YORK New Yoek Coubt of Appeals, 1898. 155 N. Y. 180 Present knowledge of an intended future violation of the contract. The action was upon a policy of fire insurance for one thousand dollars, issued by the defendant October 1, 1892, insuring the goods of the plaintiffs in their store at Haverstraw, N. Y. It was a New York standard poUcy, and prohibited other insurance unless the consent of the company was indorsed thereon. It also provided that none of its agents should have power to waive any of its provisions except by a written indorsement on the poHcy. The defendant's agent applied to the plaintiffs to insure their goods. They 1 This case has since repeatedly been approved by the Federal Supreme and Circmt Courts, Penman u. St. Paul F. & M. Ins. Co., 216 U. S. 311, 30 S. Ct. 312; Scottish U. & N. Ins. Co. B. Encampment Smelting Co., 166 Fed. 231; Harris v. N. Am. Ins. Co., 190 Mass. 361 ; Martin v. Ins. Co., 57 N. J. L. 623; L. & L. & G. Ins. Co. i. Richardson Lumber Co., 11 Okla. 585, 69 Pac. 938; Maupin v. Jns. Co., 53 W. Va. 557, 45 S. E. 1003 (but see 55 W. Va. 342). The sequel to the famous Northern Assur. Co. Case (183 U. S. 308) is instructive. After being defeated in the United States Supreme Court in the action on the contract the plaintiff instituted a fresh action in the State court for reformation of the policy and was allowed a recovery notwithstanding the expiration of the one-year limitation of the policy which the Nebraska court regarded as contrary to public policy. Grand View Bldg. Assoc, v. Northern Assur. Co., 73 Neb. 149, 102 N. W. 246. This recovery baaed on reformation was subsequently left undisturbed by the United States Supreme Court on appeal to that court, 203 U. S. 106, 27 S. Ct. 27. CHAP. VIIl] GRAY & CROZIER V. GERMANIA FIRE INS. CO. 175 informed Mm of their intention to procure insurance to the amount of three thousand dollars in three different companies, and permitted him to write a policy for one thousand dollars in the defendant companj'. When the policy was deUvered the agent, in answer to an inquiry of the plaintiffs, stated that it was correct. They subsequentl}' obtained two other pohcies upon the property insured, one for seven hundred doUars and the other for one thou- sand dollars. The defendant's agent had power to issue pohcies and to in- dorse permission for other insurance. But no such indorsement was made upon the pohcy in suit. Mabtin, J. The only question we are called upon to determine in this case is whether the knowledge of the defendant's agent that the plaintiffs intended to procure other insurance upon the property covered by the de- fendant's policy constituted a waiver of the provision therein prohibiting other insurance without the indorsement upon the policy of an agreement to that effect. The courts below have so held. This conclusion was based upon the theory that as the defendant's agent knew that the plaintiffs in- tended to procure other insurance when the j^olicy in suit was issued, and deUvered it with that knowledge, it constituted a waiver of its provision as to other insurance. Manifestly, this theory cannot be sustained. It is well settled in this State that where an insurance company issues a pohcy, with full knowledge of facts which would render it void in its inception if its pro- visions were insisted upon, it wiU be presumed that it by mistake omitted to express the fact in the policy, waived the provision or held itself estopped from setting it up, as a contrary inference would impute to it a fraudulent intent to dehver and receive pay for an invaUd instrument. But it is manifest that that principle has no appHcation to the facts in this case. When the defendant's pohcy was dehvered neither of the other pohcies had been issued, but were subsequently obtained. Consequently, the defendant's pohcy was vaUd in its inception. If it became invalid it was by the act of the plaintiffs in subsequently procuring additional insurance, without obtaining an indorsement upon the pohcy of the defendant's con- sent. As the defendant issued to the plaintiffs a pohcy which was valid when deUvered, the fact that they informed the defendant's agent of their intention to subsequently procure other insurance was insufficient to justify the courts below in holding that there was a waiver of that condition, or that the defendant was estopped from insisting upon it. The distinction between the knowledge of an existing fact which renders a pohcy void when dehvered and the omission of the insured to give notice of and procure the required consent to a subsequent act, which, by its con- ditions invalidated it, although previously consented to, was clearly pointed out in the authorities cited. The decisions of the courts below are at variance with the principle that written contracts cannot be controlled or varied by oral evidence, and that a written instrument must be regarded as the receptacle of the entire contract between the parties, and merges all previous oral agreements in it. 176 GRAY & CKOZIEE V. GERMANIA FIRE INS.' CO. [cHAP. VIII Nor do we think the contention of the respondents, that they were en- titled to recover upon a parol contract of insurance, made with the agent, can be sustained. There was no proof that the defendant's agent ever agreed to issue a policy different from the one deUvered, or that he agreed that other insurance might be procured without the indorsement required. It is man- ifest that this action was upon the policy issued by the defendant, and was not based upon any other agreement between the plaintiffs and the agent of the defendant. The judgment of the General Term and of the trial court should be re- versed and a new trial granted, with costs to abide the event. All concur, except Gray, J., absent. Jvdgmeni reversed.'^ ' Present Knowledge of Existing Facts Which will Shortly Constitute Breach. — The rule that issuing the policy with knowledge of a ground of forfeiture constitutes a waiver has been extended to the case where the general or counter- signing agent knew at the inception of the contract that the property was unoccupied, and understood that the unoccupancy was likely to continue for more than the stipu- lated period of ten days, Mill Mechanics' Ins. Co. v. Brown, 3 Kan. App. 225, 44 Pac. 3.5. Compare Hartley v. Penn. F. Ins. Co., 91 Minn. 382, 98 N. W. 198 (use of gaso- line); Waukan MilUng Co. v. Citizens' Mut. F. Ins. Co., 130 Wis. 47, 109 N. W. 937 (cessation of milling operations) . Thus, where on account of the great coal strike of 1905 the tenant of the insured, just before issuance of policy had left his furniture and per- sonal effects in the insured house in the country and had moved to a New York City hotel with his family for a few weeks, the company's local countersigning agent, his near neighbor, being at all times fully cognizant of the facts, the company was held es- topped, N. Y. Mut. Savings & Loan Assn. v. Westchester Fire Ins. Co., 110 App. Div. 760, 97 N. Y. Supp. 436, aff'd 189 N. Y. 525. By the weight of authority, however, the policy restriction upon the authority of the countersigning agent is conclusive as regards the effect of his declarations and acts after the policy is issued, unless the assured can show an actual authority of broader extent, Iowa Life Ins. Co. v. Lewis, 187 U. S. 335, 348, 23 S. Ct. 126; Continental F. Ins. Co. v. Brooks, 131 Ala. 614, 30 So. 876; Hunt v. State Ins. Co., 66 Neb. 121, 92 N. W. 921. Thus, where during the term of a standard policy the assured informed the local agent of a change of owner- ship and got the reply, "I will see that the insurance is all right," held no waiver, because no written consent was indorsed, Northam v. Dutchess Co. Ins. Co., 166 N. Y. 319, 322, 59 N. E. 912, 82 Am. St. R. 655. And see Kirkman v. Farmers' Ins. Co., 90 la. 457, 57 N. W. 952, 48 Am. St. R. 454; Sutherland t). Ins. Co., 110 Mich. 668, 68 N. W. 985; Travelers' Ins. Co. v. Myers, 62 Ohio St. 529, 57 N. E. 458; Oshkosh Match Works v. Manchester F. Assur. Co., 92 Wis. 510, 66 N. W. 525. But compare the vievis of other courts, Orient Ins. Co. v. McKnight, 197 111. 190, 64 N. E. 339; Springfield, etc., Co. v. Traders' Ins. Co., 151 Mo. 90, 52 S. W. 238, 74 Am. St. R. 521; WUson X. Assur. Co., 51 S. C. 540, 29 S. E. 245. Overt Act with AnTHORiTY to Perform the Act. — Many courts draw a dis- tinction between a mere declaration or promise made by the countersigning or other agent and an overt act done by him with authority, if such act is consistent only with the continued validity of the policy. Under these circumstances it has been held that where the assured relies upon the act to his prejudice an estoppel is established as a paramount, inexorable inference of law, no matter what the policy provides in respect to the agent's authority to waive or to the method of waiver. Thus where an agent, whose duty it is to collect premiums, and make wTitten indorsements, actually collects a premium or makes an indorsement with knowledge of previous forfeitures for which no written consent is given, the company is held to be estopped, jEtna Life Ins. Co. i. Fallow, 110 Tenn. 720, 77 S. W. 937 (citing numerous cases). The same rule has been CHAP. VIIl] GRAY & CROZIER V. GERMANIA FIRE INS. CO. 177 applied where the premium was not collected until after loss, Mechanics' & T. Ins. Co. V. Smith, 79 Miss. 142, 30 So. 362 (tender back after trial begun is too late). Acts of Adjuster as Bearing on Waiver. — Georgia Home Ins. Co. v. Allen, 119 Ala. 436, 24 So. 399; Bernhard v. Rochester German Ins. Co., 79 Conn. 388, 65 Atl. 134; Matthie v. Globe F. Ins. Co., 174 N. Y. 489, 67 N. E. 57; McMillan v. Ins. Co., 78 S. C. 433, 58 S. E. 1020. 13 178 DIXON V. SADLER [CHAP. IX CHAPTER IX Geneeal Principles — Continued Marine Insurance — Seaworthiness, Deviation, Illegality, Total Loss, Measure of Recovery, etc. DIXON V. SADLER Court of Exchequer, 1839. 5 M. & W. 405 Warranty as to seaworthiness. Assumpsit on a policy of insurance, dated the 22d of January, 1838, on the ship John Cook, and cargo, at and from the 17th of January, 1838, until the 17th of July, 1838, at noon, in port and at sea, at all times and in all places, being for the space of six calender months. The declaration averred the loss of the ship to have taken place on the 19th of May, 1838, by perils of the sea. The defendant pleaded, first, that the vessel was not lost by the perils of the sea; secondly, the following special plea: "That, though true it is that the said vessel was by the perils of the sea wrecked, broken, damaged, and injured, and become and was wholly lost to the plaintiffs, for plea, nevertheless, the defendant says that the said wreck- ing, breaking, damaging, and injuring the said vessel, and the loss of the same by the perils of the sea, as in the said first count mentioned, was occasioned wholly by the willful, wrongful, negligent, and improper conduct (the same not being barratrous) of the master and mariners of the said ship, whilst the said ship was at sea, as in the said first count mentioned, and before the same was wrecked, broken, damaged, uijured, or lost, as therein mentioned, to wit: on the 19th of May, 1838, by willfully, wrongfully, negligently, and im- properly (but not barratrously) throwing Overboard so much of the ballast of the said ship, that by means thereof she then became and was top-heavy, crank," unfit to carry sail, and whoUy unseaworthy, and unfit and unable to endure and encounter the perils of the sea which she might and would other- wise have been able to have safely encountered and endured; and by means and in consequence of the said willful, wrongful, negUgent, and improper (but not barratrous) conduct of the said master and mariners, the said ship became and was wrecked, broken, damaged, injured, and lost by the perils of the sea, which perils, but for the said conduct of the said master and mariners, she could and would have safely encountered and overcome without being so wrecked, broken, damaged, injured, and lost, as in the said first count is mentioned." CHAP. IX] DIXON V. SADLER 179 The plaintiff replied, "That the said wrecking, breaking, damaging, in- juring the said vessel, or the loss of the same by the perils of the sea, as in the first count mentioned, was not so occasioned by such conduct of the master or mariners of the said ship, in manner and form as in the said plea is alleged," etc. At the trial before Parke, B., at the last Spring Assizes for Northumber- land, it appeared that the plaintiff was a shipowner residing at Sunderland, and was the owner of the John Cook, and had effected the policy in question with the defendant, an underwriter at Lloyd's. The vessel left Rotterdam for Sunderland properly ballasted and equipped on the loth of May, and arrived on the 19th of May opposite a point called Seaham, which was about four miles from the port of Sunderland. On arriving there, and having a pilot on board, the master commenced heaving part of the ballast overboard, as was proved to be usual on such occasions. Whilst this was going on the vessel drifted to the northward, and a strong squall coming on, the vessel drifted to the southeast, the ship was upset on her broadside, and her masts lay on the water. Everi,- endeavor was made to right her, but in vain. She after- wards sank, off Ryhope, drifted on shore, and became a total ■vsTeck. If the crew had not removed the ballast, the ship would most likely have stood the squall. It was objected at the trial that this was not a risk which the under- writer had undertaken to indemnify against. The learned judge was of opinion that the word "willful" in the plea meant that the ballast was know- ingly thrown overboard, and in a negligent manner, but said he would reserve that question for the opinion of the court. And his Lordship left two ques- tions to the jur,-: First, was it negligent conduct to throw the ballast over- board before arri^Tng in harbor? Secondly, did they think the master exer- cised a reasonable discretion in throwing overboard? They found, as to the first question, that they did think it negligent generally to throw over the bal- last; secondly, that the master did right, supposing the practice itself au- thorized him. A verdict was thereupon entered for the defendant on the second issue, the learned judge giving the plaintiff liberty to move to enter a verdict on that issue, if the court should be of opinion that his construc- tion of the meaning of the word "willful," as used in the plea, was incorrect. Pahke, B. — In this case the defendant, to a declaration upon a time policy for six months, stating a loss by perils of the seas, pleaded three pleas, on each of which issue was joined. On the first and third, the verdict was found for the plaintiff; on the second, for the defendant. This plea stated, "that, though the vessel was lost by perils of the sea, yet that such loss was oc- casioned wholly by the willful, wrongful, negUgent, and improper conduct of the master and mariners of the ship, by willfully, wrongfully, negligently, and improperly throwing overboard so much of the ballast that the vessel became unseaworthy, and was lost by the perils of the sea, which otherwise she would have safely encountered and overcome." On a motion for a judgment non obstante veredicto, it occurred to the court to be questionable whether the plea was not at all events bad, inasmuch as the terms of it did not ex- 180 DIXON V. SADLER [CHAP. IX elude the case of a loss by barratry, for which the underwriters would be clearly liable, and that on this declaration, and, as the fact certainly was, that the crew were not guilty of barratry, it was very properly agreed that the plea should be amended by inserting the words "but not barratrously" after the words "neghgently and improperly." And the plea, therefore, in its present shape raises the question whether the imderwriters are liable for the willful but not barratrous act of the master and crew, in rendering the vessel unseaworthy before the end of the voyage, by casting overboard a part of the ballast. The case was very fully and ably argued, during the course of the last and present term, before my brothers, Alderson, Gumey, Maule, and myseU. We have considered it, and are of opinion that the plea is bad in substance, and that the plaintiff is entitled to judgment, notwith- standing the verdict. The question depends altogether upon the nature of the implied warranty as to seaworthiness or mode of navigation between the assured and the under- writer on a time policy. In the case of an insurance for a certain voyage, it is clearly established that there is an impUed warranty that the vessel shall be seaworthy, by which is meant that she shall be in a fit state as to repairs, equipment, and crew, and in all other respects, to encounter the ordinary perils of the voyage insured at the time of sailing upon it. If the assurance attaches before the voyage commences, it is enough that the state of the ship be commensurate to the then risk. And, if the voyage be such as to require a different complement of men, or state of equipment, in different parts of it (as, if it were a voyage down a canal or river and thence across to the open sea), it would be enough if the vessel were, at the commencement of each stage of the navigation, properly manned and equipped for it. But the assured makes no warranty to the underwriters that the vessel shall cordinue seaworthy, or that the master or crew shall do their duty during the voyage; and their negUgence or misconduct is no defense to an action on the pohcy, where the loss has been immediately occasioned by the perils in- sured against. This principle is now clearly established by the cases of Busk V. Royal Exchange Company, 2 B. & Aid. 72; Walker v. Maitland, 5 B. & Aid. 171; Holdsworth v. Wise, 7 B. & C. 791; Bishop v. Portland, id. 219, and Shore v. BentaU, id. 798, n. ; nor can any distinction be made be- tween the omission by the master and crew to do an act which ought to be done, or the doing an act which ought not, in the course of the navigation. It matters not whether fire which causes a loss be hghted improperly, or, after being properly hghted, be neghgently attended; whether the loss of an anchor, which renders the ship unseaworthy, be attributable to the omission to take proper care of it, or to the improper act of shipping it, or cutting it away; nor could it make any difference whether any other part of the equip- ment were lost by mere neglect, or thrown away or destroyed in the exercise of an improper discretion, by those on board. If there be any fault in the crew, whether of omission or commission, the assured is not to be responsible for its consequences. The only case which appears to be at variance with this principle is that CHAP. IX] DIXON V. SADLER 181 of Law V. Hollingsworth, 7 T. R. 160, in which the fact of the pilot, who had been taken on board for the navigation of the River Thames, having quitted the vessel before he ought (under what circumstances is not distinctly stated) appears to have been held to vitiate the insurance. In this respect, we can- not help thinking that the case, although attempts were made to distinguish it in some of the decided cases, must be considered as having been over- ruled by the modern authorities above referred to; and that the absence, from any cause to which the owner was not privy, of the master or any part of the crew, or of the pilot (who may be considered as a temporary master), after they had been on board, must be on the same footing as the absence, from a similar cause, of any part of the necessary stores or equipments originally put on board. The great principle established by the more recent decisions is, that, if the vessel, crew, and equipments be originally sufficient, the assured has done all that he contracted to do, and is not responsible for the subsequent deficiency occasioned by any neglect or misconduct of the master or crew; and this principle prevents many more and difficult inquiries, and causes a more complete indemnity to the assured, which is the object of the contract of insurance. If the case, then, were that of a policy for a particular voyage, there would be no question as to the insufficiency of the plea; and the only remaining point is, whether the circumstance of this being a time policy makes a dif- ference. There are not any cases in which the obligation of the assured in such a case, as to the seaworthiness or navigation of a vessel, is settled; but it may be safely laid down, that it is not more extensive than in the case of an ordinary poUcy, and that, if there is no contract as to the conduct of the crew in the one case, there is none in the other. Here it is clear that no objection arises on the ground of seaworthiness of the vessel imtil that un- seaworthiness was caused by throwing overboard a part of the ballast, by the improper act of the master and crew; and, as the assured is not respon- sible for such improper act, we are of opinion that the plea is bad in substance, and the plaintiff entitled to our judgment. Rule absolute to enter judgment for the plaintiff, non obstante veredicto.^ ' A ship ia seaworthy when reasonably fit in all respects to encounter the ordinary perils of the seas incident to the adventure insured, Eng. Mar. Ins. Act (1906), § 38 (4) ; The Southwark, 191 U. S. 1, 8, 24 S. Ct. 1. This includes manning, equipment and stowage. The schooner Caroline Mills was insured in California for one year, subject to the provisions of the California Civil Code "to be engaged as an inter-island trader among the Sandwich Islands." The Code provides that when the insurance is for a specified length of time, there is an implied warranty that the ship shall be seaworthy at the commencement of every voyage she may undertake during that time. Before the vessel started on her voyage, the owners, knowing that the chain cables attached to her anchor were old and weak, had them reenforced with six-inch hawsers. This, however, the experts on the trial showed to be an improper and unskillful method of strengthening iron cables for use among the coral reefs of the Hawaiian Islands, be- cause rope hawsers are liable to become chafed and cut by the rocks on the bottom. During a heavy swell, but without the existence of any storm or exta'aordinary violence of the elements, when anchoring a couple of miles off Honokoa, the chains and hawsers on both anchors of the vessel parted, as she surged upon them, impelled by the swell, 182 WILLIAMS V. SHEE [cHAP. IX WILLIAMS V. SHEE CouET OF King's Bench, 1813. 3 Camp. 469 Implied warranty as to deviation. This was an action on a policy of iosiirance on goods by the ship Sir Sid- ney Smith, "at and from London to Berbice, with liberty to touch and stay at any ports and places whatsoever and wheresoever, and for all purposes whatsoever, particularly to land, load, and exchange goods, without being deemed a deviation." The vessel sailed from Portsmouth on the 25th of September, 1812, with a fleet for the West Indies, under convoy of his Majesty's ship Narcissus. They arrived off Madeira on Saturday the 17th of October. The Sir Sid- ney Smith had taken in a quantity of goods for that island, which the captain had been ordered to land there, and for which wines were to be sent on board. He began to land the goods as soon as he arrived, but, not being allowed to and thereupon she was driven ashore by the wind and totally lost. Judge Hoffman decided that the warranty of seaworthiness was not fulfilled and dismissed the libel on the policy of insurance, Pope v. Swiss Lloyd Ins. Co., 4 Fed. 153. In an English case, cocoanut oil, value to include ten per cent advance on invoice and charges was insured at and from any port or ports in Cochin, to Marseilles. The insurer defended the action brought on the policy for a total loss with the plea that the goods insured were not seaworthy for the voyage at the time the ship set sail. To this plea the plain- tiff demurred on the grounds, "that there is no impUed warranty of the seaworthiness of the goods insured by a policy; and that the plea does not allege that the loss was attributable to the condition of the goods." The demurrer was sustained and judg- ment rendered for the plaintiff, Koebel v. Saunders, 17 C. B. (N. S.) 71. The steamer Dos Hermanos when the policy issued was in process of construction at Philadelphia for use as a river steamer near Frontera, Mexico. The voyage from Philadelphia to Frontera was insured, and the use for which the vessel was designed was made known to the underwriters. Though provided with suitable crew and proper equipment for the voyage, the steamer was not, in the character of her construction, seaworthy for ocean transit. After leaving the port of Philadelphia, she took the inside course through canals and bays as far as possible, but below Fort Macon it became necessary to go outside upon the open sea, and shortly afterwards the vessel was lost. The verdict of the jury in favor of the plaintiff was sustained on appeal, Thebaud x. Great West. Ins. Co., 155 N. Y. 516, 50 N. E. 834. It will be observed that the warranty of seaworthiness applies not only to insurance on the ship, but also to insurance on cargo or other interest embarked in the ship. In a voyage poUcy on goods or other movables there is an implied warranty, that, at the commencement of the voyage, the ship is not only seaworthy as a ship, but also that she is reasonably fit to carry the goods or other movables to the destination contemplated by the policy. The Maori King (1895), 2 Q. B. 550, 558 (frozen meat) ; The Southwark, 191 U. S. 1, 24 S. Ct. 1. As to whether a warranty of seaworthiness is to be implied in a time policy, see Gibson v. Small, 4 H. L. Cas. 353; Union Ins. Co. «. Smith, 124 U. S. 405, 8 S. Ct. 534, 31 L. Ed. 497; Hoxie i. Home Ins. Co., 32 Conn. 21, 85 Am. Dec. 240; Hoxie v. Pacific Mut. Ins. Co., 7 Allen (Mass.), 211; Merchants' Ins. Co. v. Morrison, 62 lU. 242, 14 Am. Rep. 93; Berwind v. Greenwich Ins. Co., 114 N. Y. 231, 21 N. E. 151. CHAP. IX] KETTELL V. WIGGIN 183 work on the Sunday, he had not got the wines on board till the Monday at noon. The Narcissus, with the greatest part of the fleet, had sailed away the preceding day, and was then too far off to be overtaken. Seven or eight other ships belonging to the fleet, however, were left behind at Madeira, and they all agreed to sail together for mutual protection. With this view, the Si'r Sidney Smith remained at Madeira till the 24th of October. She finally parted company with them off Barbadoes, and on the 19th of Novem- ber was captured by an American privateer on her way to Berbice. The owner of the goods insured was on board during the voyage. Garrow, A. G., contended that the underwriters were discharged, on two grounds: First, the ship, by putting into Madeira, and staying behind there when the rest of the fleet had sailed, had been guilty of a deviation; secondly, the captain had willfully deserted the convoy, and as this was done with the privitj' of the owner of the goods, who was on board, the policy was vacated. Park, for the plaintiff, insisted. First, that the ship had a right to put into Madeira, and to stop there in the manner she had done, under the hberty given by the poUcy to touch and stay at all ports and places to land, load, and exchange goods; secondly, the captain could not be said willfully to have deserted the convoy, for he was anxious, if possible, to enjoy its protection; and the convoy had rather deserted him. Lord ELLENBOEOtroH. I am of opinion that the underwriters are dis- charged on the ground of deviation. The liberty in the policy must be con- strued with reference to the main scope of the voyage insured. I am inclined to think this was not a willful desertion of convoy within the meaning of the act, as the captain appears to have acted bona fide, and not to have been aware of the precise time when the convoy sailed away from Madeira. How- ever, it is unnecessary to determine that point now; for upon well-established principles the ship was guilty of a deviation by putting into Madeira and voluntarily stajring behind there for the purposes of trade when the rest of the fleet had sailed away in the prosecution of the voyage. Plaintiff nonsuited. KETTELL v. WIGGIN AND OTHERS Supreme Judicial Coukt op Massachusetts, 1816. 13 Mass. 67 Implied warranty as to deviation. Assumpsit on a policy of marine insurance upon the schooner Pocahontas. Defense, deviation. On arrival of the vessel at the Isle of May, which was within her course, she found so many vessels there that she must have waited four or five weeks for her turn to take in her cargo of salt. On the proposal of the governor of 184 KETTELL v. WIGGIN [chap. IX the island, she went to two other of the Cape de Verd Islands, and brought for him a cargo of provisions, he engaging that on her return, she should be immediately dispatched on her voyage, and by this means, she was ex- pedited sooner than she otherwise would have been. The policy gave liberty to proceed to the Cape de Verd Islands for salt. Pahker, C. J. The touching at St. Jago, on the voyage home, was relied upon by the defendants as a deviation which destroys the action. But, it being in evidence that vessels from the Isle of May usually touch at St. Jago for supplies, which are not always to be obtained at the Isle of May, the touching there was justifiable, and no deviation. But the vessel went an intermediate voyage after her arrival at the Isle of May, imder a contract with the governor of that island; and the ques- tion is, whether that act is justifiable. The vessel is insured from Gibraltar to the United States, with liberty to touch at St. Ubes or the Cape de Verd Islands for salt. Under this policy she might have sailed from one to another of those islands and successively to all of them for salt; but her arrival at any one of them where salt was to be obtained, and where the cargo was in- tended to be taken on board, determined the voyage to those islands, and the vessel could not proceed from thence to another for the purpose of earning a freight or for any other purpose under the policy. Now, the Isle of May is one of the Cape de Verd Islands at which the vessel might touch; she did touch there, and it was determined to take on board a cargo there; but she went thence to St. Jago and Fuego, not for the purpose of procuring salt, but on a contract with the governor, to get provisions for the island, and then returned to the Isle of May to prosecute her homeward voyage. This was undoubtedly a deviation, unless it can be shown to have been necessary for the safe prosecution of the voyage. Mere purposes of convenience will not excuse a deviation, nor will anything but actual necessity. It is contended that this voyage was necessary, because there was a scar- city of provisions and water, and the crew of the vessel might have suffered. This, perhaps, would be a sufficient excuse, if the necessity on which it is founded did not arise from the negligence of the master; if it did, the owners cannot avail themselves of it, to excuse a deviation. The voyage from Gibraltar was to the United States, with hberty to touch at the Cape de Verds. The vessel .should have been sufficiently found at Gibraltar to enable her to stay and load at the Isle of May, without depending upon procuring provisions there. Indeed, the necessity, which is alleged, seems to prove that the ship was not seaworthy at the time the poUcy was to take effect. But it was confidently insisted that, as the effect of this expedition, at the request of the governor, was to shorten the duration of the voyage, by en- abling the master to obtain his cargo much sooner than he otherwise could, it ought to be considered as done for the benefit of all concerned, and not as amounting to a deviation. But masters have not a right to speculate in this manner upon the possible advantages of pursuing a route which does not belong to the voyage. They CHAP. IX] KETTELL V. WIGGIN 185 are to pursue the usual course, and let the consequences fall where they may. In this case, the master probably thought he was advancing the interest of his employers, of the underwriters, and of all concerned, by getting his vessel loaded several weeks sooner than would have been his turn; and yet it is almost certain that his very success in being able to commence his homeward voyage so soon, was the cause of the disaster which befell his vessel. Cer- tainly, had he arrived at St. Jago a week later, he would have avoided the immediate cause of the loss. Notwithstanding it is established by the verdict that the voyage was in fact expedited by the intermediate voyage to St. Jago and Fuego, we are of opinion that voyage was, under the circumstances, an unjustifiable devia- tion. To test this, let us inquire whether the vessel was at the risk of the underwriters, from the Isle of May to Fuego and back. It was not within the terms of the poUcy; it was not necessary, unless it had become so by the culpable neglect of the master. Had the vessel been lost upon that voyage, the underwriters could not have been held answerable. The policy, then, had ceased to protect the vessel; and it is not possible that anything subse- quent should restore the obligations of the underwriters. We are all of opinion that the verdict must be set aside, and a New trial granted.^ ' A deviation is a voluntary departure, without necessity or reasonable cause, from the usual and regular course of the voyage contemplated by the policy, Hostetter v. Park, 137 U. S. 30, 40, 11 S. Ct. 1. Whether an increase of the risk is occasioned, Maryland Ins. Co. v. Leroy, 7 Cranch, 26, 3 L. Ed. 257, or whether the ship may have regained her route before loss, or whether the deviation may have contributed to the loss, is immaterial, Burgess v. Equitable Marine Ins. Co., 126 Mass. 70, 30 Am. Rep. 654, the insurer is discharged from liability as from the time of deviation, Wingate V. Foster (1878), 3 Q. B. D. 582. In a leading case in which reformation of the policy was prayed for, a policy in favor of Hearne for S5,000 insured the bark Maria Henry, under his charter party, valued at $16,000, "at and from Liverpool to port in Cuba, and at and thence to port of discharge in Europe." The insured vessel, loaded with coal, proceeded to St. lago de Cuba and discharged her outward cargo there. Thence she went to Manzanillo, another port in Cuba, where she took on board a cargo of native woods. On the homeward voyage she was lost by perils of the sea. The com- pany refused to pay the charterer on the ground that the voyage from St. lago de Cuba to Manzanillo was a deviation from the voyage described, inasmuch as the policy specified "port" and not "ports." The court sustained the defense and also held that the testimony produced by the plaintiff tending to show a trade usage incident to such voyages to go to two ports in Cuba, one for discharge of outward cargo, and another for shipping a return cargo, was not sufficient to establish a mutual mistake of the parties in the contract as written, and would not avail for reformation of the policy, Hearne v. Marine Ins. Co., 20 Wall. 488, 22 L. Ed. 395. A vessel named Christie John- stone was insured "at and from Plymouth to the Banks, cod-fishing, and at and thence back to Plymouth." She took the usual quantity of bait, insufficient, however, for the trip, the practice being to rely principally on catching squid on the Banks to use for bait. This year the squid, though formerly plenty, were very scarce, and in order to procure bait, the master was obliged to go one hundred miles from the Banks to the port of St. Peters, the trip thither with return to the Banks occupying about a week. Subsequently, while fishing on the Banks, the vessel sprung a leak in a severe gale and was totally lost. The insurance company claimed that the success of the fishing ad- venture was of no concern to it, however important it might be to the insured, and 186 DEVITT V. PEOVIDENCE WASHINGTON INS. CO. [cHAP. IX DEVITT V. PROVIDENCE WASHINGTON INS. CO. Supreme Court of New York, 1901. 61 A. D. 390; Aff'd 173 N. Y. 17 Total Loss. Insurance on a cargo of potatoes shipped on a canal boat from Brock- port, N. Y., to Yonkers, N. Y., with a warranty "free of particular average," that if the insured proposed either to fish or catch bait in other waters than those specified, he should have insured the fresh adventure. The court held that while the plaintiff's vessel might have delayed for any reasonable time upon the Banks for the purpose of the voyage, including, for example, the occupations of fishing or getting bait, without being guilty of deviation, yet, to depart from the specified route, though necessary to the successful conduct of the trip, was an unwarranted deviation which avoided the policy in suit, Burgess v. Equitable Mar. Ins. Co., 126 Mass. 70, 30 Am. Rep. 654. A mere plan or intention to deviate without the overt act does not avoid, Arnold V. Pac. Mut. Ins. Co., 78 N. Y. 7; until the deviation begins the policy is still in force, Marine Ins. Co. ■». Tucker, 3 Cranch, 357, 2 L. Ed. 466. But a mere deviation, with intention to return to the course and complete it, must be distinguished from a change of voyage, since the rules of law applicable are not precisely the same in both cases. There is a change of voyage, where, after the commencement of the risk, the destina- tion of the ship is voluntarily changed from the destination contemplated by the policy; and, in the latter case, according to the law of Great Britain, the insurer is discharged from liability as from the time when the determination to change is manifested, al- though the ship may not in fact have left the regular course when the loss occurs, Mar. Ins. Act (1906), § 45; Tasker v. Cunningham (1819), 1 Bligh. 87. The same dis- tinction seems to be recognized in this country Merrill v. Boylston F. & M. Ins. Co., 3 Allen (Mass.), 247. If the ship originally set sail from a place of departure, or to a destination, other than that specified in the policy, the risk does not attach at all, since the insurance is then avoided from the inception of the contract. Way v. Modig- Uani (1787), 2 T. R. 30. Deviation by Delay. — Unjustifiable delay in the prosecution of the adventure under a voyage policy amounts to a deviation, and the insurer is discharged from liability as from the time when the delay becomes unreasonable, Arnold v. Pac. Mut. Ins. Co., 78 N. Y. 7. In a Federal case, the defendant had insured the plaintiff S500 by valued policy "on his commissions as supercargo of the Leonidas from Alexandria to Pernambuco, until landed." The vessel arrived oft Pernambuco at 9 a. m., but instead of going directly into port, she came to anchor in the outer roadstead, while the master went to town for several hours to inquire about the market. A storm came on; the anchor dragged, and the vessel drifted ashore. The court instructed the jury that if the vessel could have proceeded to port without coming to anchor in the outer road, the stopping there was a deviation which discharged the underwriters. The insurance company got a verdict from the jury. West v. Columbian Ins. Co., 5 Cranch (C. C), 309, Fed. Cas. No. 17,421. In an early case, the insurance was on goods on board the Margaret and Anne from Iceland to England. A total loss happened by fire, but prior to the loss, while the vessel still lay at Iceland, the captain of an English warship lying near by, ordered the master of the Margaret and Anne to go out to sea to examine a strange sail. No vio- lence or threats accompanied the order, but the master without remonstrance or protest, perhaps with a hope of sharing prize money put out to sea, fired two guns at CHAP, ix] DEVITT V. PROVIDENCE WASHINGTON INS. CO. 187 that is, of partial loss. A certificate covering this shipment was attached to the policy which was an open policy of marine insurance. The boat was the strange sail, and upon discovery that she was a neutral, returned to his moorings. Lord Ellenborough decided that there was no duress, either physical or moral, exer- cised by the naval commander or his crew; and that however laudable might have been the purpose of the master in obeying the direction of the captain of the warship, the deviation being without legal excuse, the voyage insured was at an end, and the policy forfeited, Phelps v. Auldjo (1809), 2 Camp. 350. A policy insured the vessel Samiuil Gumming at and from Jamaica, and Trinidad in the Island- of Cuba, to any port or ports of her discharge in the United Kingdom. In an unsuccessful quest for convoy, the captain deviated slightly from the regular course, went around near Havana and made a call of an hour at Moro Castle. Chief Justice Gibbs said that whatever is necessary for the safety of the ship, the captain may do as agent to the underwriters, and that it may be as justifiable to seek convoy as to avoid an enemy. The court held that the insured was entitled to recover for the loss of his ship by capture, D'Aguilar v. Tobin (1816), Holt N. P. 185; O'Reilly ». Gonne (1815), 4 Camp. 249. In ;.n English case the plaintiffs chartered the defendants' steamship Olympias to carry a cargo of wheat from Cronstadt to the Mediterranean. Whilst on her voyage thither, the defendants' captain sighted the Arion in distress, and for £1,000 agreed to tow her into the Texel, which was out of his direct course. Whilst so doing, the Olympias stranded, and ultimately with her cargo was totally lost. To save the Avion and her cargo, it was necessary to take her to the Texel, but the deviation was not necessary to the safety of those on board her. Consequently, it was held that there was a fatal deviation, and that the plaintiffs were entitled to recover the value of their cargo against the defendants as owners of the ship in fault, Scaramanga o. Stanip (1880), 5 C. P. D. 295, 49 L. J. C. P. 674. In the following instances, on the other hand, the delay was held to be justifiable: where a ship was detained for six weeks by a belligerent cruiser, Scott n. Thompson (1805), 1 B. & P. N. R. 181; where an Ameri- can ship was delayed because of the impossibility of getting an American crew in a French port. Grant v. King (1802), 4 Esp. 175; where a ship was detained more than four months for repairs, and by insufficient depth of water to cross the bar. Smith v. Surridge (1801), 4 Esp. 25; where a ship was delayed at an intermediate port to make it seaworthy for the next stage of the voyage. Bouillon v. Lupton (1863) , 15 C. B. (N. S.) 113, 33 L. J. C. P. 37; where, in pursuance of a known usage of the trade, the ship stopped a reasonable time for selling out her cargo, Columbian Ins. Co. v. Catlett, 12 Wheat. 383, 6 L. Ed. 664. With respect to justifiable deviation the British Marine Insurance Code sums up the law as follows: "(1) Deviation or delay in prosecuting the voyage contemplated by the policy is excused: (a) Where authorized by any special term in the policy; or (b) where caused by circumstances beyond the control of the master and his employer; or (c) where reasonably necessary in order to comply with an express or implied war- ranty; or (d) where reasonably necessary for the safety of the ship or subject-matter insured; or (e) for the purpose of saving human life, or aiding a ship in distress where human life may be in danger; or (f) where reasonably necessary for the purpose of obtaining medical or surgical aid for any person on board the ship; or (g) where caused by the barratrous conduct of the master or crew, if barratry be one of the perils in- sured against," Eng. Mar. Ins. Act (1906), § 49. Illegality. — Besides the implied warranties as to seaworthiness and deviation, there is a third implied warranty understood in every contract of marine insurance, that the adventure insured is a lawful one. This doctrine is frequently applied to smuggling voyages, but this prohibition has been held not to apply to trading ad- ventures taken in violation of the revenue laws of other nations, Fracis v. Sea Ins. Co., 8 Asp. Mar. Cas. 418; Parker v. Jones, 13 Mass. 173. The defendant insurance com- pany insured for whom it might concern, in the sum of $20,000 the ship Avon, valued at $28,000 for one year. She sailed from Maine to New Orleans, thence to Natchez, 188 DEVITT V. PROVIDENCE WASHINGTON INS. CO. [CHAP. IX sunk in the canal by striking a hidden obstruction. Subsequently the boat was detained by ice, and the cargo frozen. A portion of the cargo arrived at Yonkers in specie, but in bad condition. The total expenses of salvage exceeded the amount of the gross proceeds of the sale of the rescued cargo. Goodrich, P. J. In construing any contract, it is usually important to scrutinize the surrounding circumstances and to have regard to the object sought to be subserved. The vegetabla" shipped by the plaintiff in the canal boat constituted the entire shipment, and the sole subject of the in- surance. The contemplated voyage covered by the insurance was confined to inland and shallow waters. Perils from jettison, theft, robbery, barratry and many other causes, ordinarily insured against, are altogether excepted by the terms of this pohcy. It was practically impossible for the boat in the prosecution of this voyage to reach foreign seas or foreign territory, or to traverse deep waters. It was practically impossible that during the prosecu- tion of this voyage the entire cargo should be irretrievably lost in specie by the only perils insm'ed against in the policy. It is almost inconceivable that such a result could be brought about in these shallow waters, either by fire or by a wreck or a foundering of the boat. If the boat had been de- stroyed by fire or sunk in the middle of the Hudson River, the merchantable value of the cargo might have been entirely lost, but it is hardly supposable that expert wreckers could not have recovered some portion of a cargo of nearly 7,000 bushels of potatoes. The voyage at every point was easily accessible to the representatives of the underwriters. It must be assimied that the insurance company acted in good faith in accepting the premium, and in delivering this certificate of insurance. If the policy is inoperative in the case at bar on the ground that some portion of the cargo was ultimately delivered to the consignee in specie, then under the same doctrine, we find it difficult to conceive of any probable contingency imder which the assured could successfully claim a recovery. The distinctions between an actual and a constructive total loss, laid down in the law of insurance, may not be satisfactory or altogether pertinent when applied to an inland marine pohcy covering a voyage by a canal boat, in the terms of the policy before us. and on her passage thence for Liverpool was totally lost by perils of the seas. The master, Arthur Child, was employed for the owners to obtain certain rigging and equipment for the ship. It was his intention to change a hempen cable for one of iron. While at New Orleans, Child, without privity of the owners, substituted for the hempen cable, an iron cable, worth more than $400, which had been smuggled in and secretly put aboard the Avon at night, Child's object being to avoid payment of duties to the United States. Justice Story decided that, inasmuch as the policy was founded in no illegality as to its inception, the plaintiffs were entitled to recover .S20,000 for a total loss, Clark v. Protection Ins. Co., 1 Story, 109, Fed. Cas. No. 2,832. The doctrine regarding the illegaUty of the adventure insured is applicable to fire insur- ance, Lawrence v. Ins. Co., 127 Mass. 557; Boardman v. Ins. Co., 8 Cush. (Mass.) 583 (building used for lottery). B>it in practice this principle rarely avails as a defense to the insurer in the absence of a breach of an express warranty, Erb v. German-Am. Ins. Co., 98 la. 606; Johnson v. Ins. Co., 127 Mass. 555; Miller v. Prussian Nat. Ins. Co. (Mich., 1909), 122 N. W. 1093 (liquor business without license). CHAP. IX] WASHBURN, ETC., CO. V. RELIANCE MAR. INS. CO. 189 The important inquiry is this: not whether the plaintiff's loss should be classi- fied technically as an absolute or a constructive total loss, as those phrases are used in other forms of policies, but whether this loss was not a total loss within the purpose and fail- mtendment of this contract. Smce the argument of this appeal, our attention has been called to the recent decision of the United States Suprer.ie Court in the case of Washburn & Moen Mfg. Co. v. Rehance Ins. Co. (179 U. S. 1). That court referred to the fact that the Supreme Court of Massachusetts in Kettell v. AUiance Ins. Co. (10 Gray, 144) had announced a contrary rule, and it also recognized inferentially the binding force of the decisions of the State courts over con- tracts made within the State, but declared its own hberty to construe a marine poHcy, depending on questions of general commercial law, without regard to the decisions of the State in which the action arose. Equally we are justified in holding that as that case differs in some respects from the Wallerstein Case (44 N. Y. 204) there is no reason why we should follow it, and thus differ from the decision of the highest court of this State upon the same subject. For these reasons, the judgment should be affirmed. AU concurred: Hibschbeeg and Jenks, JJ., in result. Judgment affirmed, toith costs. WASHBURN & MOEN MFG. CO. v. RELIANCE MARINE INS. CO. Supreme Cotirt of the United States, 1900. 179 U. S. 1 Toted loss. The insured cargo of wire was warranted by the memorandum clause of the policy "free from average unless general," etc.,' and by a special clause on the margin of the policy "free of particular average, but fiable for absolute total loss of a part if amounting to five per cent." The carrying vessel was stranded in the course of the voyage, but most of the cargo was saved and reached the port of destination in specie, a portion being damaged and a substantial part imiajured. There was a constructive total loss, inasmuch as the cost of saving the cargo and the incident expenses exceeded the sum realized at the forced sale, and the plaintiff contended that the cost of sal- vage was much more than the value of the cargo. A verdict was directed for S2,500, which was the actual total loss of parts of the cargo. Mr. Chief Justice Fuller delivered the opinion of the court. The memorandum and marginal clauses were in pari materia, and to be read together. They were not contradictory, and the rider merely operated ' This warranty means that the underwriter is exempt from liability with respect to the property subject to the warranty for anything less than a total loss, except where the loss is of the nature of general average, but for general average loss the underwriter is liable notwithstanding the restriction, Wadsworth v. Pacific Ins. Co., 4 Wend. (N. Y.) 33; Price s. A 1 Ships, etc., Assoc, 22 Q. B. D. 580, 5&4. 190 GREAT WESTERN INS. CO. V. FOGARTY [CHAP. IX to qualify the memorandum by allowing recovery for an actual total loss in part, which could not otherwise be had. In other words, the qualification was manifestly inserted so that, while conceding that under the memorandum clause, no liabihty was undertaken for a constructive total loss, but only a liabiUty for an actual total loss, the insurers might be held for an actual total loss of a part. The contracting parties thus recognized the rule that articles warranted free of particular average or free from average unless general are insured only against an actual total loss. The warranty or memorandum clause was introduced into policies for the protection of the insurer from liability for any partial loss whatever on certain enumerated articles, re- garded as perishable in their nature, and upon certain others, none under a given rate per cent. This was about 1749, and since then in the growth of commerce, the list of articles freed by the stipulation from particular average has been enlarged so as to embrace many which though they may not be inherently perishable, are in their nature peculiarly susceptible to damage. The general rule is firmly established in this court, that the insurers are not liable on memorandum articles, except in case of actual total loss, and that there can be no actual total loss where a cargo of such articles has ar- rived in whole or in part in specie at the port of destination, but only when it is physically destroyed or its value extinguished by a loss of identity. It is said that a different rule has been laid down in Massachusetts by the Supreme Judicial Court of that commonwealth, Kettell v. Alliance Ins. Co., 10 Gray, 144; Mayo v. India Mut. Ins. Co., 152 Mass. 172. We are not, however, persuaded that the cases cited justify the asserted conclusion as respects articles specifically included in the memorandum. It would sub- serve no useful purpose to attempt a review of the English cases on this subject. If, in England, a plaintiff may recover for a constructive total loss of memorandum articles, it is when they are so injured as to be of no sub- stantial value when brought to the port of destination. Judgment affirmed^ GREAT WESTERN INS. CO. v. FOGARTY United States Supreme Court, 1878. 19 Wall. 640 Total loss; warranted free of particular average. Error to the Circuit Court for the Southern District of New York. Fogarty sued the Great Western Insurance Company on a poUcy of marine • Compare with the last case Devitt t. Providence Washington Ins. Co., 173 N. Y. 17, 65 N. E. 777, in which the court says, of the phrase "free of particular average," "if the underwriters wish to limit their liability to actual total loss, it is very easy to say so instead of using terms of different signification in different jurisdictions. Much as we hesitate to place our view of the law even in apparent opposition to that of the Supreme Court of the United States, we feel constrained to adhere to the doctrine in Chadsey v. Guion (97 N. Y. 333), that for a constructive loss on the whole of the articles insured, the underwriter is liable." CHAP. IX] GREAT WESTERN INS. CO. V. FOGARTY 191 insurance, and recovered a judgment for $2,611.95 and costs. The policy was an open one, and the indorsement procured by the plaintiff on it was of insurance for $2,250 on machinery on board the bark Ella Adele, at and from New York to Havana, free from particular average. The memorandum clause of the policy provided that machines and machinery of every de- scription were warranted by the assured free from average unless general. The machinery insured consisted of the various parts necessary for a complete sugar-packing machine, including, as part of it, three sets of truck-irons, and also other extra truck-irons. It was described in the bill of lading and invoice as eight pieces and eight boxes, composing one sugar-packer and three trucks. The vessel on which these articles were being transported from New York to Havana, just before reaching the latter city, was driven on rocks in a violent gale, was filled with water, and finally became a total wreck, and was abandoned to the underwriters. Their agent at Havana took possession, and was engaged about a month in raising the cargo. A large number of the pieces composing the plaintiff's machinery was recovered and tendered to him at Havana, which he refused to receive, on the ground that the insurance company was liable to him as for a total loss. They denied that under the circumstances of the case there was a total loss within the meaning of the policy; and the soundness of the instruction to the jury on that point, given and refused by the Circuit Court on the trial, was the only question now be- fore this coiui;. There was very little confhct of testimony as to what was recovered, and what was its condition when tendered to plaintiff. It was all of iron. About half of it in weight was saved, and the remainder left at the bottom of the sea. That which was saved was entirely useless as machinery, and was of no value except as old iron, for which purpose it would sell for about $50. The machinery in working order was worth .52,250. That which was saved was much broken and rusted, so that it would cost more to repair it, polish it, and put it in order for use than to buy a new machine. Upon the testimony offered by the plaintiff the counsel for the defendant moved the court to instruct the jury that the action could not be sustained, because it showed that there was not a total loss. The court declined to do this, and the request was renewed at the conclusion of the defendant's evi- dence, and again declined. Several prayers for instruction were then pre- sented by the defendant, based upon the leading proposition, that if any of the pieces of the machinery insured was recovered and tendered in specie to the assured, there was no total loss. These were refused and exceptions taken to all these refusals, on which error is assigned here. An exception was also taken as to the charge of the court laying down the law by which the jury were to decide the question of total loss submitted to them. That charge was in the following words: "The meaning of the term 'free from particular average,' used in the policy, was that the defendants should be liable only for a total loss of the subject insured; that the subject insured was not machines but machinery, 192 GREAT WESTERN INS. CO. V. FOGARTY [CHAP. IX by which is generally understood the several parts or portions of machines, adapted and fitted to be put together so as to constitute a machine (in this case a sugar-packing machine), and, applying the rule of law as to what constitutes a total loss to this particular subject insiu-ed, the jury will find whether any piece or portion of the machinery insured arrived at its destina- tion in a perfect condition, so that it could have been used with its corre- sponding or connecting pieces had they also arrived in good condition; in that case the plaintiffs could not recover, as the loss would not be total; but that if every piece of the machinery was so damaged by the perils insured against as to be entirely unfit for use on being supphed with its corresponding or connecting pieces, then there was a total loss of the subject insured as machinery, although the material itseU might stiU exist; and if they so found, they would find a verdict for the plaintiff for the sum named in the policy, with interest from the tenth day of September, 1868." Verdict and judgment having gone for the plaintiff, the insurance company brought the case here. Mb. Justice Miller delivered the opinion of the court. The question presented in this case for consideration has been often in the courts, and the discriminations between what is total loss and what is not are frequently very nice and delicate. The authorities are by no means uniform or consistent with each other, when, as in the present case, the line of distinction is very narrow. Several cases bearing upon the one before us have been decided in this court, and perhaps a short review of them may aid us here better than a more extended examination of the numerous other authorities on the subject. In the case of Biays v. Chesapeake Ins. Co. (7 Cranch, 415), the plaintiff was insured upon hides, the whole mmiber of which was 14,565. Of these, 789 were totally lost by the sinking of a fighter, and 2,491 of those sunk were fished up in a damaged condition and sold. The hides were memo- randum articles, and this court held that inasmuch as less than 800 hides insured as part of a much larger number of the same kind was lost, it could not be a total loss, and overruled the argument that it was a total loss as to the 789 hides. In the case of Marcardier v. Chesapeake Ins. Co. (8 id. 47), it is said that "it seems to be the settled doctrine that nothing short of a total extinction either physical or in value of memorandum articles at an intermediate port would entitle the insured to term the case a total loss, where the voyage is capable of being performed. And perhaps even as to an extinction in value, where the commodity specifically remains, it may yet be deemed not quite settled whether, under like circumstances, it would authorize an abandon- ment for a total loss." In the case of Morean v. The United States Ins. Co. (1 Wheaton, 219), more than half of a cargo of com was thrown overboard and lost. The re- mainder was saved in a damaged condition, and sold at about one-fourth the market value of soimd com. This was held not to be a total loss, be- CHAP. IX] GREAT WESTERN INS. CO. V. FOGATITY 193 cause part of the corn was saved, and though damaged was of some value. It was, therefore, only a partial lose. The next case is that of Hugg r. The Augusta Insurance Co., 7 Howard, 595. The question there arose on an insurance of jerked beef of four hundred tons, part of which was thrown into the sea and part of the remainder so seriously damaged that the authorities of the city of Nassau refused to allow more than 150 of it to be landed. This was wet and heated, and not in a condition for reshipment. In answer to a question on this subject, certified to this court by the judges of the Circuit Court, it was replied, "that if the jury found that the jerked beef was a perishable article within the meaning of the policy, the defendant is not hable as for a total loss of the freight, unless it appears that there was a destruction in specie of the entire cargo so that it had lost its original character at Nassau, or that a total destruction would have been inevitable from the damage received if it had been re- shipped before it could have arrived at Matanzas, the port of destination.'' And though there are some very strong expressions of the judge who de- livered the opinion as to the necessity of the total destruction of the thing insured to establish a total loss in memorandum articles, no doubt the language here certified is the true expression of the court's opinion. And it wiU be observed that in this case, as in the case of Marcardier v. Chesapeake Insurance Co., the destruction spoken of is destruction as to species, and not mere physical extinction. Indeed, philosophically speaking, there can be no such thing as absolute extinction. That of which the thing insured was composed must remain in its parts, though destroyed as to its specific identity. In the case of the jerked beef, for instance, it might remain as a viscid mass of putrid fiesh, but it would no longer be either beef or jerked beef. And when the case went back for trial in the circuit, the charge of Taney, C. J., to the jury places this point in a very clear light. Taney's Decisions, 168. He says there was not a total loss at Nassau, because a part of the jerked beef remained in specie, and had not been destroyed by the disaster. And if there was reasonable ground for beUeving that a portion of this beef could, by repairing the vessel, have been transported to Matanzas, although it might arrive there in a damaged condition, but yet retaining the character of jerked beef, there was no total loss. The jury found there was a total loss. The case of Judah v. Randal (2 Caine's Cases, 324), where a carriage was insured, and all was lost but the wheels, is another illustration of the prin- ciple. A part of the carriage — namely, the wheels— a very important part, was saved; but the court held that the thing insured — to wit, the carriage — was lost; that it was a total loss. Its specific character as a carriage was gone. In the case of Wallerstein v. The Columbian Insurance Co. (44 N. Y. 204), the whole doctrine is ably reviewed with a very full reference to previous decisions; and it is there shown that there is far from unanimity in the lan- guage in which the rule is expressed, and the extreme doctrine of an absolute extinction or destruction of the thing insured is not the true doctrine, or, at least, is not applicable in all cases as a criterion of total loss. 13 194 ASFAK & CO. V. BLUNDELL [cHAP. IX The Circuit Court was right in holding that what was insured was mar chinery — pieces or parts of a macliine — pieces made and sliaped to unite at points with other pieces so as to make a sugar-packing machine. If parts of them were absolutely lost, and every piece recovered had lost its adaptability to be used as part of the machine — had lost it so entirely that it would cost as much to buy a new piece just Uke it as to repair or adapt that one to the purpose — then there was a total loss of the machinery. If no piece recovered was of any use, or could be appUed to any use connected with the machine of which it was a part, without more expense on it than its original cost, then there was no part of the machinery saved, however much of rusty iron may have been taken from the wreck. The comi; went quite as far in behalf of the defendant as the law justified, when it told the jury that the plaintiff could not recover if any piece or portion of the machinery insured arrived at its destination in a condition so perfect that it could have been used with its corresponding or connecting pieces, had they also arrived in good con- dition. We are of the opinion that the charge of the court put the case very fairly to the jury, as we understand the law, and the judgment is, therefore, - Affirmed. ASFAR & CO. V. BLUNDELL ET AL. CoDHT OF Appeal, 1896. 1 Q. B. D. 123 Total loss. The plaintiffs, merchants at Bussorah, entered into a charter party with the owners of the steamship Govino for the hire of said ship from Bussorah to London. The plaintiffs insured "£2,000 on profit on charter . . . war- ranted free from all average." Before arriving at her discharging dock in the Thames River, the Govino was run into by another vessel and became submerged for two or three tides. The cargo of dates, being saturated with sewerage and fermented, were condemned by the sanitary authorities as unfit for food, and were not allowed to be landed in London. Although un- merchantable as dates, a large proportion of them retained the appearance of dates and were sold for £2,400 for purposes of distillation into spirits. The lump freight of £3,900 became payable to the shipowners under the charter party. The total of the biU of lading freights, payable on the part of the cargo which was deUvered to the consignees was less than £3,900. The court below gave judgment for the plaintiff for £750, being the differ- ence between the charter party freight and the total amount of the bill of lading freight, which would have been payable to the plaintiff had the whole of the cargo been duly deUvered in London. CHAP. IX] ASFAR & CO. V. BLUNDELL 195 Lord Esher, M. R. I am of opinion that this appeal should be dismissed. The first point taken on behaK of the defendants, the underwriters, is that there has been no total loss of the dates, and therefore no total loss of the freight on them. The ingenuity of the argument might commend itself to a body of chemists, but not to business men. We are dealing with dates as a subject-matter of commerce, and it is contended that, although these dates were imder water for two days, and when brought up were simply a mass of pulpy matter impregnated with sewage and in a state of fermentation, there had been no change in their nature, and they still were dates. There is a perfectly weU-known test which has for many years been applied to such cases as the present — that test is whether, as a matter of business, the nature of the thing has been altered. The nature of a thing is not necessarily altered because the thing itself has been damaged; wheat or rice may be damaged, but may still remain the things dealt with as wheat or rice in business. But if the nature of the thing is altered, and it becomes for busi- ness purposes something else, so that it is not dealt with by business people as the thing which it originally was, the question for determination is whether the thing insured, the original article of commerce, has become a total loss. If it is so changed in its nature by the perils of the sea as to become an un- merchantable thing, which no buyer would buy and no honest seller would seU, then there is a total loss. That test was applied in the present case by the learned judge in the court below, who decided as a fact that the dates had been so deteriorated that they had become something which was not merchantable as dates. If that was so, there was a total loss of the dates. What was the effect of this upon the insurance? If they were totally lost as dates, no freight in respect of them became due from the consignee to the person to whom the bill of lading freight was payable — that is, to the char- terers — and there was a total loss of the biU of lading freight on these dates. Appeal dismissed.^ ' Similarly in the case of damaged hides, the condition of which was such that they would have become wholly putrid if carried on to destination, Roux v. Salvador, 3 Bing. N. C. 266. Actual Total Loss. — A loss may be total or partial. A total loss may be actual or constructive. An actual total loss occurs where the subject-matter insured is destroyed or irreparably damaged, or where the assured is irretrievably deprived of it, Soelberg v. Western Assur. Co., 119 Fed. 23, 55 C. C. A. 601. Thus, for instance, where a vessel founders in mid-ocean in a gale, Ogden v. N. Y. Mut. Ins. Co., 35 N. Y. 418, or is captiu"ed by an enemy and condemned as a prize, Rhinelander v. Ins. Co., 4 Cranch (U. S.), 29, or where goods taken ashore from a wreck are plundered by the inhabitants of the coast, Boudrett ». Heutigg, 1 Holt's Cas. (N. P.) 149. If a ship is so injured by the perils of the sea as to be incapable of repair, the loss is actual, Irving ti. Manning, 1 H. L. Cas. 287; though her materials survive. Merchants' S. Co. v. Commer- cial Mut. Ins. Co., 51 N. Y. Sup. Ct. 444. CoNSTBucnvE Total Loss, United States. — In the United States for convenience and certainty, an arbitrary rule has been adopted to determine whether the insured is entitled to claim a constructive total loss, Ins. Co. of N. X. v. Canada Sug. Ref. Co., 87 Fed. 491, 493, 5 U. S. App. 22, 31 C. C. A. 65. Reversed on another ground, 175 U. S. 609, 20 S. Ct. 239. Where the cost of repairs or expenditures will exceed fifty per cent of the value of the ship or cargo when repaired or restored, by the rule pre- 196 ASFAR A CO. V. BLUNDELL [CHAP. IX vailing in this country, a constructive total loss is established entitling the assured to abandon the subject of insurance to the underwriters, Bradlie v. Maryland Ins. Co., 12 Pet. (U. S.) 378, 9 L. Ed. 1123, Soelberg v. West. Assur. Co.* 119 Fed. 23, 31. Notice of Abandonment. — Where there is a constructive total loss, the assured may either treat it as a partial loss, or abandon the subject-matter insured to the in- surer, and treat the loss as if it were an actual total loss. Western Assur. Co. v. Poole (1903), 1 K. B. 376, 384. There is no compulsion upon the assured to abandon, Mason D. Marine Ins. Co., 110 Fed. 452, 460, 49 C. C. A. 106, but upon exercising an election to avail himself of this privilege, he must, speaking generally, with reasonable dili- gence after receipt of reliable tidings of the loss, Taber v. China Mut. Ins. Co., 131 Mass. 239; Harvey v. Detroit F. & M. Ins. Co., 120 Mich. 601, 79 N. W. 898, give to the insurer a notice of abandonment, so that the latter may have opportunity to take any proper steps to recover the property or realize any salvage that may be obtainable, Rankin v. Potter, L. R. 6 H. L. 83, 119. An actual abandonment, however, if ac- cepted by the underwriter, dispenses with the necessity of formal notice of abandon- ment, Canada Sugar Ref. Co. v. Ins. Co., 175 U. S. 609, 618, 20 S. Ct. 239. When notice of abandonment is accepted, the abandonment is irrevocable. The acceptance by the insurer of the notice of abandonment conclusively admits liability for the loss under the policy, and the sufficiency of the notice, Richelieu & O. Nav. Co. «/. Boston M. Ins. Co., 136 U. S. 408, 10 S. Ct. 934, 34 L. Ed. 398. The right to abandon, it has been said by the United States Supreme Court, is to be determined by the situation at the time of the abandonment and the rights of the assured turn upon the probabilities as reasonably to be gathered from the existing circumstances and not of necessity upon the actual result. Orient Mut. Ins. Co. v. Adams, 123 U. S. 67, 75, 31 L. Ed. 63, 8 S. Ct. 68 (subsequent result though evidence is not decisive) ; Peele v. Merchants' Ins. Co., 3 Mason, 27, 19 Fed. Cas. 98 (Story, J.). In England a notice of abandonment in order to be effective must have been justified by the state of affairs existing not only at the time when it was given but also at the time of action brought, Ruys v. Royal Exch. Ass. Corp. (1897), 2 Q. B. 135, 66 L. J. Q. B. 534; Sailing Ship Blairmore ». Macredie (1898), App. Cas. 593, 67 L. J. P. C. 96. For example, in case of capture, Bainbridge v. Neilson (1808), 10 East, 329. Effect of Abandonment. — Where there is a valid abandonment the insurer is entitled to take over the interest of the assured in whatever may remain of the subject- matter insured, and all proprietary rights incidental thereto. Mason v. Mar. Ins. Co., 110 Fed. 452, 49 C. C. A. 106, 54 L. R. A. 700. If there are several underwriters, they share in the transfer of the interest in pro- portion to the amount of their several subscriptions, Gilchrist v. China Ins. Co., 104 Fed. 566. And where the assured is insured for an amount less that the insurable value, or in the case of a valued policy, for an amount less than the policy valuation, he is deemed to be his own insurer in respect of the uninsured balance, and therefore is entitled to his share of salvage, Egan v. Brit. F. & Mar. Ins. Co., 193 111. 295, 61 N. E. 1081, 86 Am. St. R. 342; Cincinnati Ins. Co. v. Duffield, 6 Ohio St. 200. After abandonment, any acts subsequent to the casualty, performed by the assured or his agents in respect to the subject of insurance, are at the risk of the insurer and enure to his benefit, if done reasonably and in good faith, Rankin v. Potter (1873), L. R. 6 H. L. 119; Jumel v. Mar. Ins. Co., 7 Johns. (N. Y.) 412, 413, 5 Am. Dec. 283. The doctrine of abandonment in marine insurance law must not be confused with that of subrogation. The doctrine of abandonment applies only to a total loss, whether actual or constructive, and involves a change of property in the thing insured which thus passes from the insured to the insurer, but subrogation, on the other hand, in- volves no such change of property, and occurs whether the loss is total or partial, De Hart & Simey, Ins. (1907), 90. The insurers' right by subrogation is limited in amount to a recoupment for their payment to the insured, The Livingston, 130 Fed. 746. Adjustments. — The business of adjusting marine losses is often complicated and in practice very largely falls into the hands cf experts known as average adjusters. CHAP. IX] ASFAR & CO. V. BLUNDELL 197 If the policy is a valued policy the agreed valuation is conclusive in the absence of fraud, Patapsco Ins. Co. v. Biscoe, 7 Gill & J. 293, 28 Am. Dec. 219. If the policy is not valued the measure of indemnity is the insurable value of the subject-matter. Thus, the value of a ship is computed as of the time of the commence- ment of the risk, Carson v. Mar. Ins. Co., 5 Fed. Cas. 178; Leavenworth v. Delafield, 1 Gaines (N. Y.), 573, 2 Am. Dec. 201. The insurable value of goods is the market value at the time and place of lading which in practice is measured by the invoice or cost price, Pleasants ti. Maryland Ins. Co., 8 Cranch, 55, 3 L. Ed. 486. As to the method for computing the measure of indemnity where the goods arrive at destination in whole or in part, see London Assur. v. Campanhia de, etc., 167 U. S. 149, 171, 17 S. Ct. 785, 42 L. Ed. 113; Lamar Ins. Co. v. McGlashen, 54 111. 513, 5 Am. Rep. 162. Where there is a loss recoverable under a marine policy, the insurer, or each insurer, if there be more than one, is liable for such proportion of the measure of indemnity as the amount of his subscription bears to the value fixed by the policy, in the case of a valued policy, or to the insurable value in the case of an unvalued policy, Lohre v. Aitchison (1878), 3 Q. B. D. 564, 565; Western Assur. Co. v. Southwestern Trans. Co., 68 Fed. 923, 16 C. C. A. 65. Liability for Successive Losses may Sometimes Exceed Amodnt of Policy. — The rule obtains in marine insurance that if a partial loss is repaired or adjusted and there is a subsequent partial or total loss under the same policy, the insurer is liable for both, though exceeding the total amount underwritten, McArthur, Ins. (2d ed.), 206, 210. This rule, peculiar to marine insurance, secures only reasonable protection to the insured, who in the case of partial loss to his property on a distant voyage is hkely to receive no prompt report of the extent of loss and cost of restoration, and may, therefore, be in no position to take out further insurance to equal the cost of re- pairs until, by reason of a subsequent total loss, it is too late. The chance of added liability occasioned by this recognized doctrine of law is not forgotten by the under- writer when he estimates the rate of his premium. One-Thibd off New for Old. — In the case of a partial loss of a ship or its equip- ments, the old materials are to be applied toward payment for the new, and, in general, a deduction of one-third from the cost of repairing or replacing the damage is made after deducting the value or proceeds of the old materials, and the marine insurer is liable for two-thirds of the balance of the cost, Eager v. Atlas Ins. Co., 1,4 Pick. (Mass.) 141. See Appendix for list of customary deductions. 198 PRICE V. NOBLE [CHAP. X CHAPTER X General Average — Marine PRICE ET ALS. v. NOBLE ET AL. CoDHT OP Common Pleas, 1811. 4 Taunt. 123 General average loss and contribution. The English ship Brothers was captured by q French privateer. The English captaui and most of the crew were taken out and replaced by a French prize crew. On the way to Marseilles, in a heavy storm, the French- man after consulting the English mate, necessarily threw overboard the ship's guns, anchors, chains and a quantity of stores from the middle deck, in order to lighten the laboring vessel. Before reaching Marseilles, the ship was recaptured by the English mate with the aid of others aboard, and brought to Gibraltar. The owner of the ship made a claim on the owner of the cargo for contribution to the jettison. Mansfield, C. J. What has been urged respecting the underwriters can make no difference in the liabiUty of the defendants. The question then merely is, whether a part of the goods being thrown over for the benefit of the proprietors of the residue, the owners of the part that is lost, shall not have contribution against them. Whatever the law might be in a case where there was any evidence that the goods were grossly and ignorantly thrown over, that is not this case; for, looking on the testimony of the mate, I see that his expression was, "We met with bad weather and were obliged to throw these articles overboard. It was necessary to do it. I should not have thrown the stores overboard if I could have got at the cargo. It was necessary to the preserving our lives." So it seems that the French had so much better an opinion of the judgment of the mate than of their own, that they consulted him, and intrusted him with the navigation, and the stores seem to have been thrown over by his own individual direction. I think therefore that the verdict is right. Heath, J. The property was not altered by the capture; there was a spes recuperandi, and the property still remained in the former owners, as no condemnation had taken place. The law of average and contribution had existed for ages before the practice of insurance was known. Rule refused. CHAP. X] COLUMBIAN INS. CO. V. ASHBY 199 COLUMBIAN INS. CO. v. ASHBY SuPEEME Court of the United States, 1839. 13 Pet. 331 General average loss and contribution. The plaintiffs Ashby and others, owners of the brig Hope, brought this action for the purpose of ascertaining whether they were entitled to recover against the cargo of the brig a contribution for an average loss. The Co- lumbian Insurance Company were the underwriter of the cargo. The brig Hope bound for Barbadoes was assailed by a hurricane in Chesa- peake Bay. She was steered towards a point in the shore for safety, and anchored in three fathoms of water. Sails were furled, and all efforts made by use of cables and anchors to prevent her going on shore. The gale in- creased, the brig struck adrift and dragged three miles ; the windlass was ripped up, and the chain cable parted. The vessel then brought up below Craney Island, where she thumped on the shoals, and her head swinging round brought her broadside to the sea. The captain finding no possible means of saving the vessel and cargo, and preserving the lives of the crew, ran her on shore. After the storm she was left high and dry on a bank. The vessel was substantially a total loss; the lives aboard and the whole cargo were saved. Me. Justice Stoet delivered the opinion of the court. The main question in the case is, whether the voluntary stranding of a ship in a case of imminent peril, for the preservation of the crew, the ship and cargo, followed by a total loss of the ship, constitutes a general average, for which the property saved is bound to contribution. It is admitted on all sides that the rule as to general average is derived to us from the Rhodian law, as promulgated and adopted in the Roman juris- prudence. The Digest states it thus. If goods are thrown overboard in order to lighten a ship, the loss incurred for the sake of all shall be made good by the contribution of all. Dig. hb. 14, tit. 2, c. 1. That the case of jettison was here understood to be put as a mere illustration of a more general principle, is abundantly clear from the context of the Roman law, where a ransom paid to pirates to redeem the ship is declared to be governed by the same rule. Dig. lib. 14, tit. 2, c. 2, § 3. The same rule was applied to the case of cutting away or throwing overboard of the masts or other tackle of the ship to avert the impending calamity, Dig. lib. 14, tit. 2, c. 3, c. 5, § 2; and the incidental damage occasioned thereby to other things. Without citing the various passages from the Digest which authorize this statement, it may be remarked that the Roman law fully recognized and enforced the 200 COLUMBIAN INS. CO. V. ASHBT [CHAP. X leading limitations and conditions to justify a general contribution, which have been ever since steadily adhered to by all maritime nations. First, that the ship and cargo should be placed in a common imminent peril; secondly, that there should be a voluntary sacrifice of property to avert that peril ; and thirdly, that by that sacrifice the safety of the other property should be presently and successfully attained. Hence, if there was no imminent danger or necessity for the sacrifice, as if the jettison was merely to Hghten a ship too heavily laden by the fault of the master in a tranquil sea, no contribution was due. So, if the ship was injured or disabled in a storm, without any voluntary sacrifice; or if she foundered or was shipwrecked without design, the goods saved were not bound to contribution. On the other hand, if the object of the sacrifice was not attained; as if there was a jettison to prevent shipwreck, or to get the ship off the strand, and in either case it was not attained, as there was no deliverance from the common peril, no contribu- tion was due. In Bradhurst v. The Columbian Insurance Company, 9 Johns. Rep. 9, the Supreme Court of Xew York held that where a ship is voluntarily run ashore for the common good, and she is afterward recovered and performs the voyage, the damages resulting from this sacrifice are to be borne as a general average. But that where the ship is totally lost, it is not a general average. The ground of this opinion, as pronounced by Mr. Chief Justice Kent, seems mainly to have been that this was the just exposition of the Rhodian and Roman law, and that the weight of authority among foreign jurists clearly supported it. With great respect for the learned court, we have felt our- selves compelled to come to an opposite conclusion as to the true interpreta- tion of the Roman text and of the continental jurists. We agree with the learned court that when a ship is volmitarily run ashore, it does not, of course, follow that she is to be lost. The intention is not to destroy the ship, but to place her in less peril, if practicable, as well as the cargo. The act is hazardous to the ship and cargo, but it is done to escape from a more pressing danger; such as a storm, or the pursuit of an enemy, or pirate. But then, the act is done for the common safety; and if the salvation of the cargo is accompUshed thereby, it is difiicult to perceive why, because from inevitable calamity the damage has exceeded the intention or expectation of the parties, the whole sacrifice should be borne by the shipowner, when it has thereby accomplished the safety of the cargo. If one mast is cut away, and thereby another mast is unexpectedly and miintentionaUy also carried away by the falling of the former, it has never been supposed that both did not come into the common contribution. If in the opening of the hatches and the jettison of some goods to lighten the ship, other goods are unexpectedly and imin- tentionally, but accidentally, injured or destroyed, it has never been doubted that the latter were to be brought into contribution, to the extent of the loss or damage done to them. It is not like the case of saving from a fire, tanquam ex incendio, save who can. But it is like the saving of the cargo from destruc- tion by fire, by the scuttling and submersion of the ship. Upon principle, therefore, we cannot say that we are satisfied that the doctrine of the Su- CHAP, x] COLUMBIAN INS. CO. V. ASHBY 201 preme Court of New York can be maintained; for the general principle cer- tainly is, that whatever is sacrificed voluntarily for the common good is to be recompensed by the common contribution of the property benefited thereby. But the same question has come before other American courts, and has there, with the full authority of the New York decision before them, re- ceived a directly opposite adjudication. Our late brother Mr. Justice Wash- ington, than whom few judges had a clearer judgment or more patient spirit of inquiry, had the very point before him in Caze v. Reilly, 3 Wash. Cir. C. Rep. 298; and after the fullest argument and the most extensive research into foreign jurisprudence, he pronounced an opinion that there was no difference between the case of a partial and that of a total loss of the ship by a voluntary stranding, and that both constituted equally a case of general average. The Supreme Court of Pennsylvania had a short time before, in Sims V. Gurney, 4 Bin. Rep. 513, adopted the same doctrine; and again in Gray ». Wain, 2 Serg. and Rawle, 229, upon a reargument of the whole mat- ter, with all the subsequent lights which could be brought before it, adhered to that opinion; and this has ever since been the estabhshed law of that court. We have examined the reasoning in these opinions, and are bound to say that it has our unquaUfied assent; and we follow without hesitation the doctrine as well founded in authority and supported by principle, that a voluntary stranding of the ship, followed by a total loss of the ship, but with a saving of the cargo, constitutes when designed for the common safety, a clear case of general average. Having disposed of the main question, it now remains to say a few words as to some minor points suggested at the argument. In the first place, as to the objection, that here the stranding does not appear to have been made after a consultation with the officers and crew, and with their advice. There is no weight in this objection. A consultation with the officers may be highly proper in cases which admit of delay and deliberation, to repel the imputation of rashness and unnecessary stranding by the master. But if the propriety and necessity of the act are otherwise sufficiently made out, there is an end of the substance of the objection. Indeed, in many if not most of the acts done on these melancholy occasions, there is little time for delibera- tion or consultation. What is to be done must often, in order to be success- ful, be done promptly and instantly by the master, upon his own judgment and responsibility. The peril usually calls for action and skill, and intrepid personal decision, without discouraging others by timid doubts or hesitating movements. Upon the whole, our opinion is that the judgment of the Circuit Court ought to be affirmed, with costs. ' 1 Similarly the same court held that a voluntary stranding because of a smoldering but extensive fire in the hold of the ship was a good general average act although the master had no knowledge of the existence of the particular reef upon which the vessel grounded, Star of Hope, 9 Wall. 203, 19 L. Ed. 638. A voluntary stranding is not allowed as a general average act by English practice 202 COLUMBIAN INS. CO. V. ASHBY [CHAP. X in the absence of express agreement, Amoiild, Mar. Ins. (7th ed.), § 938. The English rule is said to be defended mainly upon two grounds. (1) That the stranding is not a sacrifice at all, nor the result of any selective discrimination between different inter- ests, but rather the result of an attempt to put both ship and cargo into a situation of less peril; and (2) that in practice it is impossible to distinguish between damages received by the ship and cargo prior to stranding, which are admittedly particular and not general average, and losses sustained after or in consequence of stranding. The schooner Major William H. Tantum, loaded with a cargo of iron, went for refuge inside the Delaware breakwater. The bad weather developed into a great storm, and the vessel gradually dragged her anchors until but a single anchor chain remained, and the vessel was drifting towards the beach broadside on. The master, fearing for the Uves of those on board, determined to slip his cable and run ashore, head on. The cable was accordingly slipped, the vessel, without canvas, paid off and went head on the beach. Afterwards she turned broadside to the sea and became a total loss. Part of the cargo was saved and forwarded to destination. The court concluded that while the master by slipping his cable, hastened the inevitable result, and also bettered the chance of safety to those aboard, yet, as no benefit accrued to the cargo, no cpse for general average was established by the shipowner. The Major William Tantum, 49 Fed. 252, 1 C. C. A. 236. A general average loss is a loss caused by or directly consequential on a general average act. It includes a general average expenditure as well as a general average sacrifice, Eng. Mar. Ins. Act (1906), | 66 (1). Any extraordinary sacrifice or ex- penditure, voluntarily and reasonably made or incurred, in time of danger, for the purpose of preserving the property imperiled in the common adventure, is a general average act, provided it be done by the master or one in his stead authorized to act, RalU V. Troop, 157 U. S. 386, 400, 403, 404, 15 S. Ct. 657. The party on whom the general average loss falls is entitled, subject to the conditions imposed by maritinie law, to a ratable contribution from the other parties interested, and this is called a general average contribution, Svensden u. Wallace (1885), 10 App. Cas. 415. Gener-vl Average^Related to Insurance. — General average losses, incurred to avert a peril insured against are held by legal inference to be within the scope of the marine policy. Thus, while in the first instance, the owner of ship or of cargo, regard- less of whether his interest is insured, is obligated to make contribution in proportion to the value of his property saved by a general average sacrifice or expenditure, yet by virtue of insurance law, if he is so fortunate as to be insured, he may reclaim from his underwriters, the amount of this contribution, McArthur, Mar. Ins. (2d ed.), 206. Obligation Rests upon Law Rather than Contract. — The right to general average and its correlative obligation are not founded necessarily upon contract, but arise from the common law of the sea, which is applicable to all who are engaged in maritime commerce, Ralli v. Troop, 157 U. S. 386, 400, 15 S. Ct. 657. Therefore the right and the obligation exist as between the owners of ship, freight and cargo whether their interests are insured or not insured. The Brigella (1893), Prob. 195, 7 Asp. Mar. Cas. 404. Origin of General Average. — The earliest trace of this ancient rule of maritime law is to be found in an extract from the Rhodian law which is incorporated in the Roman civil law. Thence it found its way into the common law of England and of the United States and became an implied condition both in the contract of affreight- ment and the policy of marine insurance, Ralli v. Troop, 157 U. S. 386, 393, 15 S. Ct. 657. Negugence Cause of Sacrifice. — ^A party whose negligence has made the sacrifice necessary cannot claim contribution in general average, Ralli v. Troop, 157 U. S. 386, 403, 15 S. Ct. 657; and the shipowner may be responsible in this respect for the neg- ligent acts of his master and crew. The City of Para sailed from Aspinwall for New York with a general cargo, valued at $232,561.76. Through the negligence of the master, she stranded upon a reef at the southwest comer of Old Providence Island. After ineffectual attempts to get her off, the master justifiably jettisoned part of the CHAP. X] COLUMBIAN INS. CO. V. ASHBY 203 cargo and flooded the ship for the benefit of both ship and cargo. The ship and re- maining cargo were salved. The court held that these measures were general average acts, and that the owners of the cargo jettisoned, but not the shipowners, were entitled to a general average contribution, Pac. Mail S. Co. v. X. Y., etc.. Mining Co., 74 Fed. 564, 20 C. C. A. 349. General Aver.age Losses. — For the benefit of the common adventure imperiled, a carrier by water may scuttle the ship itself, Achard ii. Ring, 31 L. T. 647, 2 Asp. Mar. Cas. 422, or cut away any of her appurtenances, Birkley v. Presgrave, 1 East, 220; The Mary Gibbs, 22 Fed. 463, or jettison the whole or any part of the cargo, Ralli 1). Troop, 157 U. S. 386, 393, or incur expenses with like purpose. Thus it will be seen that the principal kinds of losses for which a general average contribution is appropriate are naturally classified under three heads: sacrifices of parts of the ship, sacrifices of cargo, and extraordinary expenses, Lowndes, Gen. Av. (1888) 20. Where the captain of a Spanish ship, on the point of being boarded by an enemy, threw overboard a bag containing S100,000, not to avert a common danger, but to prevent the enemy from getting the money, the insurers of the money paid the loss without claiming the benefit of general average, Butler v. Wildman, 2 B. & Aid. 398. Deck Load. — In the United States and England the courts allow a jettison of deck load to be included in the general avercige, provided a custom of the trade can be shown justifying the loading of the goods on deck, Taunton Co. v. Ins. Co., 22 Pick. (Mass.) 108 ; Harris v. Moody, 30 N. Y. 266, 86 Am. Dec. 375. But, if no such custom is proved, a claim for jettison of deck load cannot be allowed in general average. The John H. Cannon, 51 Fed. 46, although if a deck load is saved by a general average act, it must itself contribute. The Adele Thackera, 24 Fed. 809. Port of Refuge and Other Expenses. — The most frequent cause of general average expenses occurs where a vessel in peril puts into a port of refuge for repairs to enable her to continue the voyage. The general practice in such case in the United States differs in some particulars from the rules prevailing in England, Svendsen v. Wallace (1885), 10 App. Cas. 404. By the law of this country, wages and provisions of the crew are allowed, in general average, from the time of deviating from the voyage for the purpose of putting into a port of refuge, until the voyage is resumed, or until the cargo and vessel are separated, or until there is no longer a reasonable prospect that the voyage will be continued, Hobson v. Lord, 92 U. S. 397. The expenses of entering the port, and of unloading, warehousing, and reloading the cargo, are allowable, provided the voyage is resumed, or so long as there is a fair prospect of its continuance. The Joseph FarweU, 31 Fed. 844. Before actually selling or pledging the cargo, however, in a port of refuge, the master is bound to communi- cate with its owners if it is possible, in order to take their instructions. The Julia Blake, 107 U. S. 418. Goods or money paid for ransom from capture. Woods v. Olson, 99 Fed. 451, or for salvage, S. S. Balmoral Co. v. Marten (1901), 2 K. B. 896, or for other services rendered for the common benefit, are also allowed in general average. Thus the necessary expense for tugs to release a stranded vessel, Magdala S. S. Co. v. H. Baars Co., 101 Fed. 303, or the necessary expense to extinguish fire. The Strathdon, 101 Fed. 600. But if the expense is not incurred for the common safety, then it is chargeable, in particular average, to that interest which it was intended to benefit, McGaw V. Ocean Ins. Co., 23 Pick. (Mass.) 405. The Lien for Contribution. — After a sacrifice, the master has a maritime lien for the contributory amounts due from the interests that have been saved and still in his possession, Dupont de Nemours & Co. v. Vance, 19 How. (U. S.) 162. Although this contributory sum cannot be ascertained until after discharge, the lien is enforce- able before parting with the goods, and the master is authorized to exact security in the form of a general average bond, Wellman v. Morse, 76 Fed. 573. The execution of such a bond is not an admission of hability. It merely stands as a security in place of the goods. The Adjustment. — It is the duty of the shipowner and his agents to take such steps as may be reasonable, and within a reasonable time, to provide that all general 204 COLXJMBIAN INS. CO. V. ASHBY [CHAP.- X average contributions whether due to himself or others are adjusted and collected, Wavertree Sailing S. Co. v. Love, 66 L. J. P. C. 77, 76 L. T. 576 (1897), App. Cas. 373. The sacrifices and ■expenses allowed in general average are apportioned over the ag- gregate value of the property saved, as computed at the time and place of adjustment, McArthur, Mar. Ins. (2d ed.) 196; but the property which has been sacrificed must bear its share as a contributor no less than if it had been saved, for, in legal theory, general average contribution is to be so regulated as to make it in result immaterial to each interest at risk, whose property shall in the first instance have been taken, whose money spent, or whose credit pledged, for the safety of all, Lowndes, Gen. Av. 38. The practical effect of such an adjustment is that the party upon whom the general average loss most heavily falls in the first instance receives the benefit of the general average contribution, and the payment is thus made proportionate to the benefit re- ceived, Harris v. Moody, 30 N. Y. 266; Wheaton v. China Mut. Ins. Co., 39 Fed. 879. The proper time for adjustment is the time of the completion of the voyage, or of the separation of the interests. An adjustment made at the end of the voyage, if vaUd there, is, in general, valid anywhere. Any port reached, subsequent to the general average act, at which the interests are separated, may be the end of the voyage for this purpose, Barnard v. Adams, 10 How. (U. S.) 270, 13 L. Ed. 417; Eliza Lines, 102 Fed. 184. Yokk-Antwebp Rules. — The rules cf practice for the adjustment of general average losses vary greatly in detail in different countries and in different ports. The regulations most frequently used by agreement are the York-Antwerp rules, adopted at Antwerp in 1877 by the Association for the Reform and Codification of the Law of Nations, and amended at their Liverpool conference in 1890, De Hart v. Compania, etc. (1903), 1 K. B. 109. CoNTRiBUTOBY Value OF Fheight. — In rcspcct to the contributory value of the freight interest, which cannot always be easily ascertained, an arbitrary rule has been adopted in New York. While the full amount of freight is contributed for in general average where the loss of freight is total, only fifty per cent of that amount is called upon for contribution, Rathbone v. Fowler, 6 Blatch. (U. S. C. C.) 296. That is sup- posed to be a rough estimate of its net value at the end of the voyage, after expenses have been deducted from gross freight. Other ports in the United States deduct one- third, Humphreys v. Union Ins. Co., 3 Mason, 429 (1824). The usage in England is to compute the net freight interest for contribution by deducting the estimated amounts saved, such as wages and port charges, instead of relying on any arbitrary ratio, 2 Amould, Ins., § 989, and this is also the provision of the York-Antwerp Rules, Rule XVII. PART II MEANING AND LEGAL EFFECT OF THE CLAUSES OF THE POLICIES STATUTORY FORMS OF FIRE INSURANCE POLICIES Standard Form of Fire Insurance Policy for New York State The Insurance Company, in consideration of the stipulations herein named and of dollars premium, does insure for the term of from the day of , 19.,, at noon, to the day of , 19.., at noon, against all direct loss or damage by fire, except as hereinafter provided, to an amount not exceeding dollars, to the following described property while located and contained as described herein, and not elsewhere, to wit: — (Description of property insured, and special clauses.) This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper deduction for deprecia- tion however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality; said ascertainment or estimate shall be made by the insured and this company, or, if they differ, then by appraisers, as hereinafter provided; and, the amount of loss or damage having been thus determined, the sum for which this company is liable pursuant to this policy shall be payable sixty days after due notice, ascertainment, estimate, and satisfactory proof of the loss have been received by this company in accordance with the terms of this policy. It shall be optional, however, with this company to take all, or any part, of the articles at such ascertained or appraised value, and also to repair, rebuild, or replace the property lost or damaged with other of like kind and quality within a reasonable time on giving notice, within thirty days after the receipt of the proof herein required, of its intention so to do; but there can be no abandonment to this company of the property described. This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof; or if the interest of the insured in the property be not truly stated herein; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss. This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy; or if the subject of insurance be a manufacturing establish- ment, and it be operated in whole or in part at night later than ten o'clock, or if it cease to be operated for more than ten consecutive days ; or if the hazard be increased by any means within the control or knowledge of the insured; or if mechanics be em- ployed in building, altering, or repairing the within described premises for more than fifteen days at any one time; or if the interest of the insured be other than uncondi- tional and sole ownership; or if the subject of insurance be a building on ground not owned by the insured in fee-simple; or if the subject of insurance be personal property and be or become incumbered by a chattel mortgage; or if, with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property covered by this policy by virtue of any mortgage or trust deed ; or if any change, other than by the death of an insured, take place in the interest, title, or possession of the subject of insurance (except change of occupants without increase of hazard), whether 207 208 STATUTORY FORMS OP FIRE INSURANCE POLICIES by legal process or judgment or by voluntary act of the insured, or otherwise; or if this policy be assigned before a loss; or if illuminating gas or vapor be generated in the described building (or adjacent thereto) for use therein; or if (any usage or custom of trade or manufacture to the contrary notwithstanding) there be kept, used, or al- lowed on the above described premises, benzine, benzole, dynamite, ether, fireworks, gasoline, greek fire, gunpowder exceeding twenty-five pounds in quantity, naphtha, nitroglycerine or other explosives, phosphorus, or petroleum or any of its products of greater inflammability than kerosene oil of the United States standard (which last may be used for lights and kept for sale according to law, but in quantities not exceed- ing five barrels, provided it be drawn and lamps filled by daylight or at a distance not less than ten feet from artificial light) ; or if a building herein described, whether intended for occupancy by owner or tenant, be or become vacant or unoccupied and so remain for ten days. This company shall not be liable for loss caused directly or indirectly by invasion, insurrection, riot, civil war or commotion, or military or usurped power, or by order of any civil authority; or by theft; or by neglect of the Insured to use all reasonable means to save and preserve the property at and after a fire, or when the property is endangered by fire in neighboring premises; or (unless fire ensues, and, in that event, for the damage by fire only) by explosion of any kind, or lightning; but liability for direct damage by lightning may be assumed by specific agreement hereon. If a building or any part thereof fall, except as the result of fire, all insurance by this policy on such building or its contents shall immediately cease. This company shall not be liable for loss to accounts, bills, currency, deeds, evi- dences of debt, money, notes, or securities; nor, unless liability is specifically assumed hereon, for loss to awnings, bullion, casts, curiosities, drawings, dies, implements, jewels, manuscripts, medals, models, patterns, pictures, scientific apparatus, signs, store or office furniture or fixtures, sculpture, tools, or property held on storage or for repairs; nor beyond the actual value destroyed by fire, for loss occasioned by ordinance or law regulating construction or repair of buildings, or by interruption of business, manufacturing processes, or otherwise; nor for any greater proportion of the value of plate glass, frescoes, and decorations than that which this policy shall bear to the whole insurance on the building described. If an application, survey, plan, or description of property be referred to in this policy, it shall be a part of this contract and a warranty by the insured. In any matter relating to this insurance, no person, unless duly authorized in writ- ing, shall be deemed the agent of this company. This policy may by a renewal be continued under the original stipulations, in con- sideration of premium for the renewed term, provided that any increase of hazard must be made known to this company at the time of renewal or this policy shall be void. This policy shall be canceled at any time at the request of the insured; or by the company by giving five days' notice of such cancellation. If this policy shall be can- celed as hereinbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, this company retaining the customary sho;-t rate; except that when this policy is canceled by this company by giving notice it shall retain only the jwo rata premium. If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached, or appended hereto. If property covered by this policy is so endangered by fire as to require removal to a place of safety, and is so removed, that part of this policy in excess of its propor- tion of any loss and of the value of property remaining in the original location, shall, STATUTORY FORMS OF FIRE INSURANCE POLICIES 209 for the ensuing five days only, cover the property so removed in the new location; if removed to more than one location, such excess of this policy shall cover therein for such five days in the proportion that the value in any one such new location bears to the value in all such new locations; but this company shall not, in any case of removal, whether to one or more locations, be liable beyond the proportion that the amount hereby insured shall bear to the total insurance on the whole property at the time of fire, whether the same cover in new location or not. If fire occur the insured shaU give immediate notice of any loss thereby in writing to this company, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, make a complete inventory of the same, stating the quantity and cost of each article and the amount claimed thereon; and, within sixty days after the fire, unless such time is ex- tended in writing by this company, shall render a statement to this company, signed and sworn to by said insured, stating the knowledge and belief of the insured as to the time and origin of the fire; the interest of the insured and of all others in the property; the cash value of each item thereof and the amount of loss thereon ; all incumbrances thereon; all other insurance, whether vaUd or not, covering any of said property; and a copy of all the descriptions and schedules in all poUcies; any changes in the title, use, occupation, location, possession, or exposures of said property since the issuing of this policy; by whom and for what purpose any building herein described and the several parts thereof were occupied at the time of fire; and shall furnish, if required, verified plans and specifications of any building, fixtures, or machinery destroyed or damaged ; and shall also, if required, furnish a certificate of the magistrate or notary public (not interested in the claim as a creditor or otherwise, nor related to the insured) living nearest the place of fire, stating that he has examined the circumstances and believes the insured has honestly sustained loss to the amount that such magistrate or notary public shall certify. The insured, as often as reqiiired, shall exhibit to any person designated by this company all that remains of any property herein described, and submit to examina- tions under oath by any person named by this company, and subscribe the same; and, as often as required, shall produce for examination all books of account, bills, invoices, and other vouchers, or certified copies thereof if originals be lost, at such reasonable place as may be designated by this company or its representative, and shall permit extracts and copies thereof to be made. In the event of disagreement as to the amount of loss the same shall, as above pro- vided, be ascertained by two competent and disinterested appraisers, the insured and this company each selecting one, and the two so chosen shall first select a competent and disinterested umpire; the appraisers together shall then estimate and appraise the loss; stating separately sound value and damage, and, failing to agree, shall submit their differences to the umpire; and the award in writing of any two shall determine the amount of such loss; the parties thereto shall pay the appraiser respectively se- lected by them, and shall bear equally the expenses of the appraisal and umpire. This company shall not be held to have waived any provision or condition of this policy or any forfeiture thereof by any requirement, act, or proceeding on its part relating to the appraisal or to any examination herein provided for ; and the loss shall not become payable until sixty days after the notice, ascertainment, estimate, and satisfactory proof of the loss herein required have been received by this company, including an award by appraisers when appraisal has been required. This company shall not be liable under this policy for a greater proportion of any loss on the described property, or for loss by and expense of removal from premises endangered by fire, than the amount hereby insured shall bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers, covering such property, and the extent of the application of the insurance under this policy or of the contribution to be made by this company in case of loss, may be provided for by agreement or condition written hereon or attached or appended hereto. Liability for reinsurance shall be as specifically agreed hereon. 14 210 STATUTORY FOKMS OF FIRE INSURANCE POLICIES If this company shall claim that the fire was caused by the act or neglect of any person or corporation, private or municipal, this company shall, on payment of the loss, be subrogated to the extent of such payment to all right of recovery by the insured for the loss resulting therefrom, and such right shall be assigned to this company by the insured on receiving such payment. No suit or action on this policy, for the recovery of any claim, shall be sustainable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months next after the fire. Wherever in this policy the word "insured" occurs, it shall be held to include the legal representative of the insured; and wherever the word "loss" occurs, it shall be deemed the equivalent of "loss or damage." If this policy be made by a mutual or other company having special regulations lawfully applicable to its organization, membership, policies, or contracts of insurance, such regulations shall apply to and form a part of this policy as the same may be written or printed upon, attached, or appended hereto. This policy is made and accepted subject to the foregoing stipulations and conditions, . together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto, and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representative shall have such power or be deemed or held to have waived such provisions or condi- tions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached. In Witness Whekeof, this company has executed and attested these presents, but this policy shall not be valid unless countersigned by the duly authorized agent of the company at , this day of 19 . . . The Massachusetts Standard Fire Policy. (Corporate name of the company or association; its principal place or places of business.) This company shall not be liable beyond the actual value of the insured property at the time any loss or damage happens. In consideration of dollars to them paid by the insured, hereinafter named, the receipt whereof is hereby acknowledged, do insure and legal representatives against loss or damage by fire, to the amount of dollars Bills of exchange, notes, accounts, evidences and securities of property of every kind, books, wearing apparel, plate, money, jewels, medals, patterns, models, scientific cabinets and collections, paintings, sculpture and curiosities are not included in said insured property, unless specially mentioned. Said property is insured for the term of beginning on the day of in the year nineteen hundred and , at noon, and continuing until the day of , in the year nineteen hundred and , at noon, against all loss or damage by fire originating from any cause except invasion, foreign enemies, civil commotions, riots, or any military or usurped power whatever; the amount of said loss or damage to be estimated according to the actual value of the insured property at the time when such loss or damage happens, but not to include loss or damage caused by explosions of any kind unless fire ensues, and then to include that caused by fire only. This policy shall be void if any material fact or circumstance stated in writing has not been fairly represented by the insured, — or if the insured now has or shall here- STATUTORY FORMS OF FIRE INSURANCE POLICIES 211 after make any other insurance on the said property without the assent in writing or in print of the company, — or if, without such assent, the said propert;y shall be re- moved, except that, if such removal shall be necessary for the preservation of the property from fire, this policy shall be valid without such assent for five days there- after, — or if, without such assent, the situation or circumstances affecting the risk shall, by or with the knowledge, advice, agency or consent of the insured, be so altered as to cause an increase of such risks, or if, without such assent the said property shall be sold, or this policy assigned, or if the premises hereby insured shall become vacant by the removal of the owner or occupant, and so remain vacant for more than thirty days without such assent, or if it be a manufacturing establishment, running, in whole or in part, extra time, except that such establishment may run, in whole or in part, extra hours not later than nine o'clock p. m., or if such establishment shall cease operation for more than thirtj' days without permission in writing indorsed hereon, or if the insured shall make any attempt to defraud the company either before or after the loss, — or if gunpowder or other articles subject to legal restriction shall be kept in quantities or manner different from those allowed or prescribed by law, — or if cam- phene, benzine, naphtha, or other chemical oils or burning fluids shall be kept or used by the insured on the premises insured, except that what is known as refined petroleum, kerosene or coal oil, may be used for lighting, and in dwelling houses kerosene oil stoves may be used for domestic purposes,^to be filled when cold, by daylight, and with oil of lawful fire test only. If the insured property shall be exposed to loss or damage by fire, the insured shall make all reasonable exertions to save and protect the same. In case of any loss or damage under this policy, a statement in writing, signed and sworn to by the Insured, shall be forthwith rendered to the company, setting forth the value of the property insured, the interest of the insured therein, all other insur- ance thereon, in detail, the piu^joses for which and the persons by whom the building insured, or containing the property insured, was used, and the time at which and manner in which the fire originated, so far as known to the insured. The company may also examine the books of accounts and vouchers of the insured, and make ex- tracts from the same. In case of any loss or damage, the company, within sixty days after the insured shall have submitted a statement, as provided in the preceding clause, shall either pay the amount for which it shall be Uable, which a-nwunt if not agreed upon shaU be ascertained by award of referees as hereinafter jn-ovided, or replace the property with other of the same kind and goodness, — or it may, within fifteen days after such statement is sub- mitted, notify the insured of its intention to rebuild or repair the premises, or any portion thereof separately insured by this policy, and shall thereupon enter upon said premises and proceed to rebuild or repair the same with reasonable expedition. It is moreover understood that there can be no abandonment of the property insured to the company, and that the company shall not in any case be liable for more than the sum insured, with interest thereon from the time when the loss shall become payable, as above provided. If there shall be any other insurance on the property insured, whether prior or sub- sequent, the insured shall recover on this policy no greater proportion of the loss sustained than the sum hereby insured bears to the whole amount insured thereon. And whenever the company shall pay any loss, the insured shall assign to it, to the extent of the amount so paid, all rights to recover satisfaction for the loss or damage from any person, town or other corporation, excepting other insurers; or the insured, if requested, shall prosecute therefor at the charge and for the account of the company. If this policy shall be made payable to a mortgagee of the insured re£il estate, no act or default of any person other than such mortgagee or his agents, or those claiming under him, shall affect such mortgagee's right to recover in case of loss on such real estate : provided, that the mortgagee shall, on demand, pay according to the established scale of rates for any increase of risks not paid for by the insured; and whenever this company shall be Uable to a mortgagee for any sum for loss under this policy, for 212 STATUTORY FORMS OP FIRE INSURANCE POLICIES whicH no liability exists as to the mortgagor, or owner, and this company shall elect by itself, or with others, to pay the mortgagee the full amount secured by such mort- gage, then the mortgagee shall assign and transfer to the companies interested, upon such payment, the said mortgage, together with the note and debt thereby secured. This policy may be canceled at any time at the request of the insured, who shall thereupon be entitled to a return of the portion of the above premium remaining, after deducting the customary monthly short rates for the time this policy shall have been in force. The company also reserves the right, after giving written notice to the insured and to any mortgagee to whom this policy is made payable, and tendering to the insured a ratable proportion of the premium, to cancel this policy as to all risks subsequent to the expiration of ten days from such notice, and no mortgagee shall then have the right to recover as to such risks. In ease of loss under this policy and a failure of the parties to agree as to the amount of loss, it is mutually agreed that the amount of loss shall be referred to three dis- interested men, the company and the insured each choosing one out of three persons to be named by the other, and the third being selected by the two so chosen ; the award in writing by a majority of the referees shall be conclusive and final upon the parties as to the amount of loss or damage, and such reference unless waived by the parties shall be a amdUion precedent to any right of action in law or equity to recover for such loss; but no person shall be chosen or act as a referee, against the objection of either party, who has acted in a like capacity within four months. No suit or action against this company for the recovery of any claim by virtue of this policy shall be sustained in any court of law or equity in this commonwealth unless commenced within two years from the time the loss occurred. In Witness Whereof, etc. The Minnesota court says: "The Massachusetts and New York standard pohcies went into effect about the same time and have formed the models for the legislation in other States," Wild-Rice Lumber Co. v. Royal Ins. Co., 99 Minn. 190, 108 N. W. 871. The use of the standard policy, including its provisions and type, is, in general, made obligatory by the statute upon all corporations, and in some States a penalty is imposed for violating the act, but any pohcy, though in purport inconsistent with the provisions of the act, is nevertheless binding upon the company issuing it, and may be enforced against the company according to its terms as written, Hewins v. London Assur. Corp., 184 Mass. 177, 68 N. E. 62, 64; Strampc v. Ins. Co., 109 Minn. 364. The New York standard poUcy is used either by statutory enactment or by custom in the great majority of the States of this Union, but certain of the standard forms of policies follow more closely the Massachusetts form, while a few States, for example California, Iowa, Michigan, South Dakota and Wisconsin have statutory policies in which certain clauses differ substantially both from the New York and the Massa- chusetts policies. PART II MEANING AND LEGAL EFFECT OF THE CLAUSES OF THE POLICIES CHAPTER XI Clauses of the Standard Fire Policy Loss by Fire, Description of Property and Interest, Measure of Recovery, Option to Rebuild, Divisibility of Contract, Fraud, etc. O'CONNOR V. QUEEN INS. CO. OF AMERICA Supreme Court of Wisconsin, 1909. 140 Wis. 388 What constitutes fire? Action upon a &e insurance policy. The servant of plaintiff built a fire in the furnace with paper and cannel coal, not used or intended to be used for such purpose, which fire developed within a few moments to such a degree of fury as to fin the house with great volumes of smoke, soot and excessive and intense heat, and damaged the personal property therein to the amount as found by the jury, $562. The only question submitted to the jury was the amount of damages, and the court directed a verdict for the plaintiff for the amount of damages found by the jury. Judgment was entered for the plaintiff accordingly, from which this appeal was taken. Kerwin, J. (after stating the facts as above). The policy in this case being the Wisconsin standard form, insured the plaintiff "against all direct loss and damage by fire"; and the controversy is as to whether the loss and damage was caused by anything insured against by the defendant company. The question arises whether the fire which caused the damage was a fire within the meaning of the poUcy. The plaintiff Uved in a rented house, heated by a furnace. His servant built a fire in the furnace of material not for use therein or intended so to be used, and of such a highly inflammable character as to cause intense heat and great volumes of smoke to escape through the registers leading into the rooms and greatly damage plaintiff's property. The heat was so intense as to char and injure furniture and the 213 214 O'cONNOR V. QUEEN INS. CO. [CHAP. XI great volumes of smoke and soot greatly injured the furnishings and per- sonal property of the plaintiff. It does not appear from the evidence that there was any ignition outside of the, furnace, although the fire was so in- tense as to overheat the chimney and flues and char furniture in the rooms. The evidence shows that the chimney was so hot it seemed as though it was on fire, that the fire was burning fiercely in the furnace, around the mop boards was burned and the mop boards blistered, the wall paper charred and burned, and the chimney cracked from the excessive heat. It is the conten- tion of appellant that the damage occasioned by heat, smoke and soot is not covered by the poUcy where the fire is confined within the furnace. This position involves the construction of the words of the poUcy "direct loss or damage by fire," and leads to a consideration of what fires are within the contemplation of the policy. No limitation is placed upon the word "fire" by the language of the policy itself, but it is said that "contracts of insurance are to be construed according to the sense and meaning of the terms which the parties have used, and, if they are clear and unambiguous, the terms are to be taken and imderstood in their plain, ordinary and proper sense." No doubt this is the general rule, but it must also be remembered in apply- ing the rule that this and other courts have construed contracts of insurance favorably to the insured. Appellant insists that a fire confined within the limits of a furnace, although producing damage by smoke and heat, is not a fire within the meaning of the pohcy in question, and reUes mainly upon the case of Austin v. Drew, 4 Gamp. 361. In that case, the plaintiff was the owner of a sugar factory several stories high with pans on the ground floor for boiling sugar and a stove for heating. A flue extended to the top of the building with registers on each floor connecting with the flue to introduce heat. Because of the negligence of a servant in not opening a register at the top of the flue or chimney, used to shut in the heat during the night, the smoke, sparks and heat from the stove were intercepted, and, instead of escaping through the top of the flue, were forced into the rooms, in conse- quence of which the sugar was damaged. The flames were confined within the stove and flue, and no actual ignition took place outside thereof, and it was held that the loss was not covered by the poUcy. The Lord Chief Jus- tice said that there was no more fire than always existed when the manu- facture was going on, and which continued to bum without any excess. The case seems to tiun upon the point that the fire was the usual and ordinary fire, never excessive and always confined within its proper limits. We shall briefly refer to other cases, cited by appellant on this point. Samuels v. Continental Ins. Co., 2 Pa. Dist. R. 397, was a claim for damages caused by smoke and soot from a lamp whose flame flared up above the lamp. Wood on Insurance (2d ed.), § 103, it is true, lays down the general rule that no liability arises where the fire is confined within the limi ts of the agencies employed, referring to the case of Austin v. Drew, supra, with the observa- tion that the doctrine of that case had been considerably misconceived by courts and text-writers. Case v. Hartford F. Ins. Co., 13 El. 676, discusses Austin V. Drew, 4 Camp. 361, and discards the idea that there can be no CHAP. Xl] o'cONNOR V. QUEEN INS. CO. 215 loss by fire without actual ignition. American Towing Co. v. German F. Ins. Co., 74 Md. 25, 21 Atl. 553, was a case of overheated boiler owing to the absence of water. Austin v. Drew, supra, is referred to and it was held dam- age not covered by the policy. Cannon v. Phoenix Ins. Co., 110 Ga. 563, 35 S. E. 775, 78 Am. St. Rep. 124, is a case where the fire was an ordinary fire in a stove. The fire was what is termed in law books a "friendly" and not a "hostile" fire. In this case, the stovepipe became disarranged, and smoke and soot escaped, together with the water used in cooling the ceiling, causing the damage. Austin v. Drew, supra, is cited in support of the opinion. It wiU be seen from the foregoing cases relied upon by appellant that the cases in this country in any way tending to support appellant's contention, rest upon the doctrine of Austin v. Drew, which has not been extended, but lim- ited to the particular facts of the case, and the doctrine enunciated therein criticised in some well-considered cases. We shall refer briefly to some of the authorities. In Scripture v. Lowell M. F. Ins. Co., 10 Cush. (Mass.) 356, 57 Am. Dec. Ill, the doctrine of Austin v. Drew is explained, and the court says that lack of study of the case by courts and text-writers has caused it to be misapplied, and refers to the language of the Chief Justice in Austin V. Drew, to the effect that the fire was an ordinary one and no more than always existed when the manufacturing was going on. Singleton et al. v. Phcenix Ins. Co., 132 N. Y. 298, 30 N. E. 839, is a case where a boat was loaded with quicklime in barrels. The boat was found to be on fire through the slacking of the lime. It was towed into the river and sunk to prevent total destruction. It was claimed that some water in the boat must have caused the slacking of the lime; held, that the loss was by fire within the meaning of the policy. Further intimated that it may not be necessary to show actual ignition or combustion to establish a loss by fire. In Way v. Abmgton M. F. Ins. Co., 166 Mass. 67, 43 N. E. 1032, 32 L. R. A. 608, 55 Am. St. Rep. 379, fire in the stove ignited the soot in the chim- ney, and the smoke and soot from the burning chimney escaped into the room and damaged property. Held, that such damage was covered by the policy insuring against all loss or damage by fire. The case seems to have turned upon the fact that the fire in the chimney was a "hostile" fire; therefore the damage caused by such fire was covered by the policy. In Russell v. German F. Ins. Co., 100 Minn. 528, 111 N. W. 403, 10 L. R. A. (N. S.) 326, it is held that, to render a fire the immediate or proximate cause of the loss or damage, it is not necessary that any part of the insured property was actually ignited or was consTomed by fire. In Ermentrout et al. v. Girard F. & M. Ins. Co., 63 Minn. 305, 65 N. W. 635, 30 L. R. A. 346, 56 Am. St. Rep. 481, the case was on a policy insuring plaintiff "against all direct loss or damage by fire," and the policy further provided that if the building fell "except as result of fire," the insurance on the building should immediately cease. There was evidence tending to prove that a building adjacent to the one insured caught fire and was partially consumed, and as a result of such fire, fell, carrying down with it a partition wall and a part of the insured building. Held, that the fall of the insured building was "the result of fire" and "a direct loss or 216 o'cONNOR V. QUEEN INS. CO. [CHAP. XI damage by fire/' although no part of it ignited or was consumed by fire. Cameron in his work on the Law of Fire Insurance in Canada, p. 51, dis- cusses the effect of the word "direct" in policies providing against "direct loss or damage by fire,'' and says that the word has no significance or value, and, whether used or not the fire must be the proximate cause of the loss or damage. See also Richards on Insurance Law (3d Ed.), § 231, where it is said that the word "direct" in a poUcy means immediate or proximate as distinguished from remote, but that the proximate results of fire may in- clude other things than combustion, as, for example, the resulting fall of a building, injuries to insured property by water, loss of goods by theft, exposure of goods during fire. The foregoing cases we think fully show that Austin v. Drew is not au- thority against plaintiff here. There the fire was luider control, not excessive, and suitable and proper for the purpose intended. It was in the language of the books, a "friendly" and not a "hostUe" fire. In the case before us the fire was extraordinary and unusual, unsuitable for the purpose intended, and in a measure uncontrollable, besides being inherently dangerous because of the unsuitable material used. Such a fire was we think a "hostile" fire and within the contemplation of the policy. Ordinarily the question in such cases is for the jury. New York & B. D. E. Co. et al. «. Traders' & M. Ins. Co., 132 Mass. 377, 42 7^. Rep. 440; s. c, 135 Mass. 221; Richards, Ins. (3d Ed.), § 231. But in this case the evidence being practically un- disputed we think no error was committed in directing a verdict for the plaintiff. The judgment of the court below is affirmed. Maeshall, J., dissenting on the ground that there being no ignition, ex- cept in the furnace and the only injury one of charring and discoloration from radiated heat and smoke the judgment should be reversed.' ' In a Massachusetts case, the plaintiff had insured its building and machinery against loss by fire. A fire occurred in the tower of the building. It was confined to the tower and did only slight damage there. Through this tower, however, wires for electric lighting were carried. The fire acted upon the wires in such a way that a con- nection called a short circuit was made between Ughtning arresters. The electricity, because of the short circuit, affected the dynamo in such a way as to cause greater resistance to the machinery. This resistance, transmitted to a pulley through a belt, in turn destroyed the pulley, which destruction in tiuTi disturbed the main shaft and ruptured other pulleys. By reason of pieces flying from the jack-pulley, or other similar cause, the fly wheel of the engine was destroyed, the governor broken, and the machinery disrupted generally. The disruption and damage to the machinery oc- curred in a part of the building remote from any fire or combustion. The court held, however, that the whole loss was by fire, and that " fire was the direct and proximate cause " within the meaning of the Massachusetts standard policy, Lynn Gas & Elee. Co. V. Meriden Fire Ins. Co., 158 Mass. 570, 33 N. E. 690, 29 L. R. A. 297, 35 Am. St. R. 540. As to whether earthquake or fire should be regarded as the proximate cause of loss, where the California earthquake broke the water mains and prevented the fire department from extinguishing the fire, see Pac. Union Club v. Commercial Union Assur. Co. (Cal., 1910), 107 Pac. 728. CHAP. Xl] KENNISTON V. MERRIMACK CO. MUT. INS. CO. 217 KENNISTON v. MERRIMACK COUNTY MUT. INS. CO. Superior Court op Judicature of New Hampshire, 1843. 14 N. H. 341 Loss by lightning. Action on a policy insuring against loss or damage by fire. The plaintiff was allowed a recovery. To sustain his claim the plaintiff offered evidence tending to show that on a certain day his house was struck by Ughtning, and different parts of it materially injured, and also articles of crockery, glass and tin ware broken or destroyed. His witnesses also testified that the boards and timber near one of the windows where the ligh tnin g struck, exhibited marks or traces of fire, being discolored and rendered of a dark brown color, as if affected by a blaze of fire. One witness testified that he saw on these boards and timbers where fire burned, and he had no doubt that the house would have been burned had not the water been admitted through the window which was broken out by the hghtning. Parker, C. J. There must be a new trial. On the facts stated the court cannot determine whether the loss is or is not within the risks of the pohcy. If the damage was from lightning without any combustion, it is clearly not within the terms of the contract of insurance. The policy does not pro- vide against every damage which may arise from the action of the electric fluid. The terms of the policy were to pay within a certain time after the destruc- tion "by reason or by means of fire." Fire is the one loss insured against; and Ughtning, though not excepted from the sources of fire, is nowhere, either in the charter or pohcy itself, directly provided against. It is true that there was evidence tending to show that the building, in- sured in the pohcy now in question, was set on fire by the lightning; and if such was the fact, this action is well brought. But this fact is not made cer- tain by the evidence, and the question must be submitted to a jury. New trial ordered.^ 1 The Following Described Peopebtt. — The description of the property covered is usually brief and often informal. The rule of construction must be inclusive rather than exclusive, Rickerson v. Hartford Fire Ins. Co., 149 N. Y. 307, 313; Graybill ». Penn Township Mut. F. Ins. Assc, 170 Pa. St. 75, 32 Atl. 632. Thus a furnace and boiler were held to be part of the house insured, West v. Farmers' Mut. Ins. Co., 117 Iowa, 147, 90 N. W. 523. An annex to the building was held to be covered by the policy on the building, Boak Fish Co. v. Manchester F. Assur. Co., 84 Minn. 419, 87 N. W. 932. And the word "sheds" may mean not only those adjoining a mill or factory insured but also more distant sheds, Wolverine Lumber Co. v. Palatine Ins. Co., 139 Mich. 432. As to the meaning of the word "additions" which is often em- ployed in connection with a description of buildings in pohcies, see Cargill v. Millers' 218 GERMANIA FIRE INS. CO. V. SCHILD [CHAP. XX GERMANIA FIRE INS. CO. v. SCHILD SuPHEME CouET OP Omo, 1903. 69 Ohio St. 136 Entirety or divmbiliiy of contract. Action on a policy of fire insurance for the sum of $625, distributed as follows: $200 on office furniture; $250 on surgical instruments; $75 on sur- Ins. Co., 33 Minn. 90, 22 N. W. 6; Home Mut. Ins. Co. v. Roe, 71 Wis. 33, 36 N. W. 594; Arlington Mfg. Co. v. Colonial Ins. Co., 180 N. Y. 337, 73 N. E. 34. Conira, Arlington Mfg. Co. v. Norwich Union F. Ins. Co., 107 Fed. 662, 46 C. C. A. 642 (facta the same as in the last case). Fluctuating Stock, etc. — A policy upon merchandise in a store applies to the stock successively in the store from time to time during the term of the policy, Man- chester F. A. Co. V. Peibelman, 118 Ala. 308, 23 So. 759; Hoffman v. .Sltna Ins. Co., 32 N. Y. 405. The same rule applies to machinery, furniture and clothing, Cummings V. Cheshire Co. Mut. F. Ins. Co., 55 N. H. 457; and to implements generally, Johnson r>. Farmers' Ins. Co., 126 Iowa, 565, 102 N. W. 502; and to vehicles, Beyer v. St. Paul F. & M. Ins. Co., 112 Wis. 138, 88 N. W. 57. Location. — While located and contained as described herein and not elsewhere. Place is ordinarily material to the contract and of the very essence of the risk, Bryce v. Lorrilard Fire Ins. Co., 55 N. Y. 240; Lyons v. Providence Washington Ins. Co., 14 R. 1. 109, 51 Am. Rep. 364. With varying location the risk is apt to vary, and whether it does or not the insurers have the right to know what risk they are assuming, Ohio Farmers' Ins. Co. v. Burget, 65 Ohio St. 119, 122, 61 N. E. 712, 55 L. R. A. 825, and often decline an insurance because of the amount already placed by them upon, or in, the same building. If a permit for removal is obtained, goods are not protected in transit, Goodhue v. Ins. Co., 84 Mass. 41, 67 N. E. 645, unless the policy so provides, Kratzenstein v. Western Assur. Co., 116 N. Y. 54, 22 N. E. 221, 5 L. R. A. 799, but are protected in the old place until removed, Kunzze v. Amer. Exch. Fire Ins. Co., 41 N. Y. 412; Sharpless v. Ins. Co., 140 Pa. St. 437. But it has been held that where the clause in the policy is simply in the words, "the following described property contained in" a certain building, the location is not material, if the nature of the property makes it clear that it must have been the intention of the parties to protect it by the policy whether in the particular place or not. In that event a designation of place is looked upon as merely descriptive and to be controlled by the necessary use of the thing insured, Boyd ». Miss. Home Ins. Co., 75 Miss. 47, 21 So. 708 ; Niagara Fire Ins. Co. V. EUiott, 85 Va. 962, 9 S. E. 694; Haws v. Fire Asso., 114 Pa. St. 431; Longueville v. West. Assn. Co., 51 Iowa, 553, 33 Am. Rep. 146. This clause is not a part of the Massachusetts standard policy, Westfield Cigar Co. v. Ins. Co. of North Am., 169 Mass. 382, 47 N. E. 1026; but the Massachusetts court limits location to the premises as described in the policy, Westfield Cigar Co. v. Ins. Co. of N. A., 165 Mass. 541, 43 N. E. 504. Measure of Damages. — Not liable beyond actual cash value of the property at the time of loss, with proper deduction for depreciation, however caused. This in express terms excludes remote damages, such as loss from interruption of business, prospective rent or profit, except as these are specially insured; it also excludes any pretium af- fectionis. The actual cash or market value at the time of the fire rules, Stenzel v. Penn. Fire Ins. Co., 110 La. 1019, 35 So. 271; and the purchase price is relevant, if at all, only as bearing upon that, Waynesboro Mut. Fire Ins. Co. v. Creaton, 98 Pa. St. 451, 42 Am. Rep. 618. Market value governs more clearly in case of certain kinds of personal property. State Ins. Co. v. Taylor, 14 Colo. 499, 24 Pac. 333. The purchase CHAP. Xl] GERMANIA FIRE INS. CO. V. SCHILD 219 gical operating chair and $100 on medical library. The policy provided "this entire policy shall be void if the interest of the insured in the property be not truly stated herein, or if the interest of the insured be other than un- conditional and sole ownership." On the trial it appeared that the surgical ojjerating chair had been bought by the insured on a conditional purchase, and had not been fully paid for when the policy was issued. Davis, J. It has been twice adjudged by this court that policies of insur- ance, like other contracts, shoiild be reasonably construed, so as to give ef- fect to the express words of the parties and not to defeat their intention. And this rule of construction should be observed notwithstanding the rule that when a policy is open to two interpretations which are equally fair, that one should be preferred which would give to the insured the greater indem- nity. There is no ambiguity in this policy; and it is not contended that it is ambiguous. Coimsel for the defendant in error insists that the words: "This entire policy shall be void," etc., have no more force than if the word "entire" were omitted, and that therefore this case is controlled by Coleman & Co. V. Insurance Co., 49 Ohio St. 310. There is much force in the argument that price, if not at too remote a period, often furnishes some evidence of present value, Johnston v. Farmers' Ins. Co., 106 Mich. 96, 64 N. W. 5. But the insured is entitled to the actual cash value of articles destroyed though they may have cost him nothing. Chapman v. Rockford Ins. Co., 89 Wis. 572, 62 N. W. 422, 28 L. R. A. 405. "Actual cash value" does not mean what the property would bring at a forced sale, Sun Fire Office a. Ayerst, 37 Nev. 184, 55 N. W. 635. A usual test to be applied to a manu- facturer is what it would cost him to reconstruct, Standard Sewing Machine Co. v. Royal Ins. Co., 201 Pa. St. 645, 51 Atl. 354; but see Mitchell v. St. Paul F. Ins. Co., 92 Mich. 594, 52 N. W. 1017. He is not entitled to his selling price since that would include profits, Niagara Ins. Co. v. Heflin, 22 Ky. L. R. 1212, 60 S. W. 393. Cost of replacing often furnishes the fair criterion for estimating the amount of loss, Cummins V. German-Am. Ins. Co., 192 Pa. St. 359, 43 Atl. 1016; Clover v. Greenwich Ins. Co., 101 N. Y. 277, 283, 43 N. E. 724. But not in case of an old building for which de- predation must be allowed, Scott v. Security F. Ins. Co., 98 Iowa, 67, 71; Germier v. Springfield F. & M. Ins. Co., 109 La. 341, 33 So. 361. Valued Polict Laws: Total Loss of Building. — As to what constitutes a total loss of a building under the valued policy laws see Northwestern Mut. L. Ins. Co. ». Rochester Ger. Ins. Co., 85 Minn. 48, 88 N. W. 265; Liverpool & L. & G. F. Ins. Co. v. Heckman, 64 Kan. 388; 67 Pac. 879; Palatine Ins. Co. ». Weiss, 109 Ky. 464, 59 S. W. 509; Royal Ins. Co. v. Mclntyre, 90 Texas, 170, 37 S. W. 1068. Reinstatement Clause. — If the insurance company elects to rebuild or replace the property lost or damaged, the contract between the parties becomes a new and independent undertaking on the part of the insurer to restore the property to its former condition, and this supersedes the engagement to pay the cash value, Hartford Ins. Co. V. Peeble's Hotel Co., 82 Fed. 546, 27 C. C. A. 223; Commercial F. Ins. Co. v. Allen, 80 Ala. 571, 1 So. 202; Wynkoop v. Niagara Fire Ins. Co., 91 N. Y. 478, 43 Am. Rep. 686. Whether the work is done properly and within a reasonable time must generally present a question for the jury, Haskins v. Hamilton Mut. Ins. Co., 5 Gray (Mass.), 432; Henderson v. Sun Mut. Ins. Co., 48 La. Ann. 1031, 20 So. 164. An exercise of the option by the insurer either to reinstate or not to reinstate and made known to the insured is final. Fire Assn. v. Rosenthal, 108 Pa. St. 474, 1 Atl. 303; Times Fire Assur. Co. v. Hawke, 1 Fost. & F. 406. 220 WORACHEK V. MUT. HOME FIRE INS. CO. [CHAP. XI the clauses, "This poUcy shall become void" and "This entire poUcy shall become void," mean the same thing; but by no legitimate construction can the latter clause be restricted to less than the whole policy and whatever is included in it, and, therefore, the strength of the argument, if it has any, goes to the soundness of the decision in Coleman & Co. v. Insurance Co. The two cases, however, are plainly distinguishable. In the former case, the language used in the policy, whether ambiguous in itself or not, had frequently been the subject of construction and ingenious debate, resulting in diametrically opposite conclusions in the courts. In this case, the parties, no doubt with knowledge of previous controversies, seem to have endeavored to put the indivisible character of their contract beyond controversy by in- serting the word "entire"; and in our judgment they succeeded in their pur- pose. Unless we reject this controlling word and thus make a new contract for the parties, the policy means precisely what it says and cannot be valid in part and void in part. The parties have agreed that it should not be a severable risk, and they have clearly expressed that intention. The judgments of the Circuit Court and the Court of Conunon Pleas are Reversed.^ BuEKET, C. J., Shauck, Pbice and Crew, JJ., concur. WORACHEK, RESPONDENT, v. THE NEW DENMARK MUTUAL HOME FIRE INS. CO., APPELLANT Supreme Court of Wisconsin, 1899. 102 Wis. 88 Fravdident statement rekding to a portion of the property insured. The plaintiff in his proofs of loss, knowingly made a false statement under oath, as to the quantity of a portion of the property insured and destroyed by the fire. Marshall, J. The sole question for decision on this appeal is. Where a pohcy of insurance against loss by fire covers a building and personal property ' A policy of $2,000 issued to Knowles for a single premium, insured 81,200 on hops grown in 1889, and $800 on hops grown in 1890, separately stored in one hophouse. Without the required written permit from the company, the crop of 1889 was incum- bered by a chattel mortgage; the court decided, though, "with hesitation" that the breach of warranty avoided the insurance only as to the crop of 1889, Knowles v. American Ins. Co., 66 Hun, 220, 21 N. Y. Supp. 50, aff'd 142 N. Y. 641, 37 N. E. 567. In a later case the court intimates a doubt as to the soundness of this rule on the merits, 184 N. Y. 111. Parsons, Rich & Co. took out a policy for $1,000 apportioned over building, machinery, stock, supplies, etc. Without permit of the insurer, the building stood on leased ground, and not on ground owned by the insured in fee simple. The court concluded that by reason of the breach the moral hazard was increased on the contents of the building as well as on the building itself, and therefore the entire contract was avoided, Parsons v. Lane, 97 Minn. 98, 106 N. W. 485. CHAP. Xl] WORACHEK U. MUT. HOME FIRE INS. CO. 221 located therein, the premium being distributed part to the realty and part to the personalty, and the building is totally destroyed by fire and the per- sonal property injured or destroyed as well, and the policy provides that any false swearing by the insured in relation to the quantity, quality, description or value of the property destroyed or damaged shall forfeit all claim under such policy and bar aU remedies thereon, and there is such false swearing as to the personalty, can the assured, nevertheless, recover as to the realty? The learned trial court decided that in the affirmative on the strength, evi- dently, of Loomis V. Rockford Ins. Co., 77 Wis. 87. There the court held that a change in the title to one of several buildings, covered by an insurance policy, such buildings being situated some distance from each other, does not render the poUcy void as to the other buildings because of a clause in the policy to the effect that any change of the title to the insured property with- out consent of the company shall render the policy void. Following deci- sions elsewhere, and construing the language of the policy strictly against the insurance company, a conclusion was satisfactorily reached that it was within the reasonable meaning of the language of the policy to say that the contract of insurance was divisible according to the distinct risks covered by it. The court, however, did not go so far as to hold that a building and its contents could be considered distinct risks. On the contrary, the decision was expressly limited to cases where the property insured is so located that the risks assumed are separate and distinct, the situation being such that the destruction of one portion of the property will not be liable to injure or destroy the other. The previous decisions of this court, Hinman v. Hart- ford F. Ins. Co., 36 Wis. 159, and Schumitsch v. Am. Ins. Co., 48 Wis. 26, to the effect that insurance on a building and its contents is indivisible, were expressly approved. The subject was again referred to in Burr v. German Ins. Co., 84 Wis. 76, and again in Carey v. German-Am. Ins. Co., 84 Wis. 80, the court sajdng that insurance on a building and contents with the risk dis- tributed to the different species of property is a single indivisible contract, and, under a general forfeiture clause, a circumstance barring a recovery for a loss on part of the property will bar a recovery for any. These decisions are decisive of the question raised here, and are in accordance with numerous authorities elsewhere, none of which need be referred to, as the cases in our own court are amply clear and all one way. The fact that false swearing as to a building totally destroyed is not prejudicial to the insurance company, and so does not work a forfeiture under the rule stated in F. Dohmen Co. V. Manufacturers' & B. F. Ins. Co., 96 Wis. 57, to the effect that false swear- ing must be such as will be Uable to work an injury to the insurance company, in order to make the contract for forfeiture operative, does not apply here. It is not necessary that injury by false swearing actually take place. It is sufficient if there be false swearing to the actual prejudice of the insurance company, or which is liable to work that way. The contract of insurance being single, if any part of it is such that false swearing in reference to it would be liable to injure the company, and there be such, according to the plain language of the contract under consideration all claims by virtue of it 222 CHAPMAN V. POLK [CHAP. XI are forfeited and all remedies upon it barred. The court cannot, by judicial construction, work any exception into such plain language. By the Court. The judgment of the Circuit Court is reversed, and the cause remanded with directions to render judgment for the defendant. Bahdeen, J., took no part. CHAPMAN V. POLE Kingston Surrey Spring Assizes, 1870. 22 L. T. (N. S.) 306 Fraud and overvaluation. Action against the Sun Insurance Company, on a fire policy. Plea, "that there appeared to be, and was, fraud in the claim made by the plaintiff upon the company, for and in respect of the said alleged loss and damage, etc., on account of the said loss or damage delivered to the company's oflSce." The policy was effected in February, 1866. The fire occurred in the fol- lowing September, and the claim was made forthwith for £418 as for a total loss, but no particulars were delivered imtil required imder the conditions. The particulars of the claim when deUvered appearing — on comparison with the salvage and debris — grossly exaggerated, payment was refused. In No- vember this action was brought, and in February, 1867, interrogatories were deUvered to the plaintiff, which, not being answered, the action was stayed until, in January, 1870, they were answered, and the action proceeded. After the plaintiff made a claim of damage to the amount of £418, further particulars being required, in October particulars of claim were delivered, claiming large sums for specific articles to each room. The plaintiff also made a statutory declaration in the usual form, "that the said estimate or account contains, to the best of my knowledge and belief, a true and faith- ful account of the loss and damage sustained by me in my said goods and chattels, all of which were my own property, and were in and upon the said house when the fire happened, and were burned, lost, or damaged by the fire; and that my real and just loss on the said goods and chattels occasioned by the fire amounts to £418; and I make this solemn declaration conscien- tiously beUeving the same to be true." It had appeared, however, on the report of the inspector as to salvage and debris, that it was impossible there could have been the quantity and value of the goods represented; and in one of the rooms remaining unconsumed, the contents, valued at £30 were not worth £3; and in the bedrooms the remains of cheap iron bedsteads, worth a few shillings, were found in the place of mahogany stated as worth £15; while the debris of crockery, etc., found would only represent a few shillings' worth, instead of £33, the value stated; and other heads of claim were found in the same proportion to exceed the real value. The company, however, having disputed the claim, and having in this CHAP. Xl] CHAPMAN V. POLE 223 action interrogated the plaintiff as to the mode in which he had acquired the goods insured, he stated in his answer that he had purchased the greater part of them at sales, and had them many years before the policy, though some of them were given to him, and some by one Bennett, an attorney, now dead. Being cross-examined as a witness, he stated that he had pur- chsised them nearly all from Bennett, and had given him between £300 and £400 for them. He also stated that in July he had assigned the goods to one Walker for advances to the amount of £400. The plaintiff was called, with Walker, in support of his claim, but could give no particulars or vouchers. Strong evidence, however, was given on the part of the company to show that the furniture was of the poorest description — ^not worth above £50; that a great part had been removed in June, so that at the time of the fire the things in the house were not worth more than £30. CocKBURN, C. J., to the jury. In consequence of the observations which have been made upon the conduct of the insurance company, I feel it to be my duty to say that I consider, that, in insisting on a full and searching ex- amination into the ease in a court of justice, the defendants, the Sun Fire Insurance Society, have only discharged their duty to their shareholders and the public. Beyond all doubt, this is a case deserving of such an exam- ination and inquiry; for, whatever may be its result, from beginning to end the case presents itself under circumstances of grave suspicion, and calling for searching inquiry. The issue for you to determine in substance upon ;his case is whether the plaintiff has made an honest or dishonest claim: the issue is fraud or no fraud. If the defendants have failed to satisfy you that the claim was fraudulent, the plaintiff is entitled to recover; and, in that case, the only question will be, what was the real value of the goods de- stroyed? for that is all he is entitled, in any event, to recover. But if you think the defense is made out, and that, in point of fact, with reference either to the quantity or value of the goods, the plaintiff knowingly preferred a claim he knew to be false and unjust, then he is entitled to recover nothing. That is one of the conditions in the policy, and the company are entitled to stand upon the defense. And considering how exposed they are to deception, and how rarely they are able to establish it by proof, in my opinion when they have a case in which they are honestly convinced that fraud has been per- petrated, and that they have sufficient evidence of it to submit to a jury to establish it, then they are not only fairly entitled, but they are bound to do so. For you will do well to bear in mind that the rate of insurance is cal- culated upon the average of losses as compared with profits, and the more the company is subjected to deception and fraud, the higher the rate of pre- mium which they are obliged to charge. Therefore, the public have an in- terest in such cases, and the company is bound to defend them, when they have fair ground for so doing, as they certainly have in this instance. We must start in such a case with certain principles. It is not, certainly, a ques- tion of mere accuracy or inaccuracy. A man may make a mistake La his claim, and it may be quite honestly. If, for instance, a man either fails to 224 BEHRENS V. GERMANIA FIRE INS. CO. [CHAP. XI recollect the precise quantity of goods he has on his premises at the time of the fire, or mistakes the value of those of which he was in possession, and thus he presses a claim according to what he beheves honestly to be true, but which may in the end turn out to be mistaken, the only consequence which ensues is, that, inasmuch as the contract of insurance is simply a contract of indemnity, he can only recover to the extent of the real value of the goods he has actually lost. You must not nm away with the notion that a policy of insurance entitles a man to recover according to the amount represented as insured by the premiums paid. It is essentially a contract of indemnity. If a man chooses to insure goods worth £100 at a rate of premium which represents a value of £500, he can only recover the real and actual value of the goods. The law will not allow of gambling in the form of insurance. Insurance companies are subject to fraud enough as it is, and, if persons were allowed to insure goods to a greater amount than the real value, it is obvious that a door would be open to fraud and wickedness of the most abominable description. Therefore, in all the cases the only question — supposing the claim to be honest — is, what was the real and actual value of the goods de- stroyed. But beyond that, although the insured has not caused the fire, yet if he has made a fraudulent claim, then, on such a condition as is con- tained in this policy, he must fall by the fraud he has thus attempted to per- petrate, and is not entitled to recover at aU. Such being the legal principles on which the question to be determined arises, it is for you to determine upon the evidence. If you beUeve the evidence for the defense, it is clearly established, and it is a gross and scandalous case of fraud. According to that evidence the claim was grossly excessive not only in point of value, but as to the quantity and character of the furniture insured; and it is not easy to conceive of such gross exaggeration being honest. A man may be somewhat mistaken as to the exact value or the precise nimiber of the articles of fur- niture he possesses, but he can scarcely be so grossly ignorant of the furniture of the rooms in which he Uves and sleeps as honestly to represent articles worth a few shillings or poimds as worth large sums of money. If, then, you believe the evidence for the defense, it is your duty to find for the de- fendant, as in that view a more scandalous fraud never was attempted. Verdict for the defendant. BEHRENS V. GERMANIA FIRE INS. CO. Supreme Coxjbt of Iowa, 1884. 64 Iowa, 19 Overvaluation to avoid the policy must be intentional. AcnoN on a policy of insurance in the usual form, to recover damages sustained by the destruction by fire of the property insured. The defendant pleaded that the plaintiff falsely and fraudulently overvalued the property CHAP. Xl] BEHEENS V. GERMANIA FIRE INS. CO. 225 insured. There was a trial by jury, verdict, and judgment for plaintifiF, and defendant appealed. Seevers, J. I. The court instructed the jury as follows: "As to the defense stated in the third instruction, you are informed, that, if you find that the preponderance of credible evidence establishes that plaintiff, in getting the policy in suit, made a false statement as to stock purchased and added to that already possessed, or intentionally deceived the agent Deggia- dorf as to the value of his property, and thereby obtained the pohcy in suit, the defendant is entitled to a verdict. But a mere honest mistake as to value is not sufficient to invaUdate the pohcy, and thereby defeat plaintiff's action." Xo exception is taken to this instruction, and it therefore must be regarded as the law of the case. The jury found specially that the plaintiff repre- sented the value of the property at the time he obtained the insurance to be two thousand dollars, and that its actual cash value at that time was only twelve hundred and forty dollars, and that the plaintiff at the time of pro- curing the policy "did not knowingly, and with intent to deceive, misrepre- sent the value of the property" insured. It is insisted that this finding is contrary to the evidence. We do not think this is so. We have read the evidence carefully, and are unable to reach the conclusion that the plaintiff purposely and with intent to deceive made a false statement of the value of the property. The policy contains this provision: The "amount of such loss or damage is to be estimated ac- cordiog to the actual cash value at the time of the loss." Under the terms of the pohcy, the plaintiff could not possibly gain anj-thing by the over- valuation. The evidence, therefore, of a fraudulent intent should at least be of a satisfying character to warrant us in disturbing the verdict. We cannot say that the evidence fails to sustain the special finding. II. Substantially, it is insisted that the overvaluation is so great, that, conceding that there was no fraudulent intent, there cannot be a recovery. But, as we have seen, the defendant's habiUty is not to be measured by the valuation at the time the insurance was effected, but by the actual cash value of the property at the time it was destroyed. Oven^aluation by owners of property is a usual occurrence, and made honestly; that is, the owner wiU place a higher value on his property than his neighbor, and we doubt not this is well imderstood by insurance companies, and we doubt whether anything short of a fraudulent intent should avoid a poUcy of the character in question. But, be this as it may, the overvaluation in this case is not so great as to justify us in holding, as a matter of law, that there cannot be a recovery on the pohcy in question. The decided weight of authority, we think, is in accord with this view. Bonham v. Iowa Central Ins. Co., 25 Iowa, 328; Franklin Ins. Co. v. Vaughan, 92 U. S. 516; Williams v. Phoenix Fire Ins. Co., 61 Me. 67; Wood on Insurance, § 426; Dogge v. Northwestern Ins. Co., 49 Wis. 501. Affirmed.^ ' Compare Slafter v. Ins. Co., 142 la. 116. 15 226 DOLLOFF V. PHCENIX INS. CO. [CHAP. XI DOLLOFF V. PHCENIX INS. CO. SAME V. GERMAN-AMERICAN INS. CO. Supreme Judicial Court of Maine, 1890. 82 Me. 266 The effect of fravd which causes no injury. Emery, J. The plaintiff procured of the defendant insurance company a policy of fire insurance for S2,000 upon his home buildings and contents, each building being separately valued, and the contents also having a separate valuation. The policy of insurance contained the following stipulation: "Any fraud or attempt at fraud, or false swearing on the part of the assured shall cause a forfeiture of all claims under this policy." The buildings and contents were consumed by fire, and the plaintiff as required by the policy and also by statute (R. S., c. 49, § 21) notified the company of the loss, and delivered to them a written statement on oath, purporting to be a particular account of the loss and damage. In this instrument called "proof of loss," the plaintiff, as the jury have found, knowingly and purposely made false statements on oath of some pretended losses which he did not in fact sustain. He contended, however, that his actual losses, throwing out his pretended losses, exceeded the whole amoimt of the policy, and that consequently the defendant company were not and could not be harmed by his false statement of additional losses, and should pay him his actual loss. His argument was that these false statements of additional losses did not increase the risk or the liabihty of the company — that the true statements showed a loss of over $2,000, and hence the false statements did no fraud, nor harm. The presiding justice overruled this contention, and instructed the jury to the opposite effect. The verdict being against him, the plaintiff excepted, and his exceptions present substantially this question: When the actual losses, truly stated in a proof of loss, exceed the whole amount of the insurance, will a knowingly and purposely false statement on oath in the proof of loss, of other pretended losses, destroy the plaintiff's claim for his actual losses under such a policy as this? We cannot doubt that it will. The parties stipulated that it should. It is so provided in the contract and it is a lawful provision. The contract of insurance is one of indemnity only. The sole lawful object of obtaining a policy of insurance is to secure simple reimbursement for actual loss. Any purpose of making a profit on the part of the assured is unlawful and will vitiate the contract. Such being the nature of the contract, it requires good faith on the part of the assured toward the insurers. Especially is this so in the adjustment of the loss after a fire. It is impracticable for the insurers to ascertain for themselves the extent of the losses, particularly where the contents of a dwelling house and barn are insured, as in this case. The as- CHAP. Xl] DOLLOFF V. PHCENIX INS. CO. 227 sured and his family or servants are usually the only persons who can give a true account of the losses. The insurers therefore usually, as in this poUcy, reqiiire from the assured a detailed statement on oath of such losses, as a necessary preliminary to the payment of the indemnity. The statute also requires tliis (R. S., c. 49, § 21). The statute and the policy both make this statement a necessary preliminary to a right of action on the pohcy and they both contemplate, of course, a true statement. The demand of the statute and of the policy for such a statement is addressed to his conscience like a bin for discovery. When, therefore, he meets this demand with knowingly false statements of losses he did not sustain, in addition to those he did sustain, he ought to lose aU standing in a court of justice as to any claim under that pohcy. The court will not imdertake for him the offensive task of separating his true from his false assertions. Fraud in any part of his formal statement of loss, taints the whole. Thus corrupted, it should be wholly rejected, and the suitor left to repent that he destroyed his actual claim by the poison of his false claim. Claflin r. Insurance Co., 110 U. S. 81; Sleeper ». Insurance Co., 56 X. H. 401; WaU v. Insurance Co., 51 Maine, 32. It is further suggested by the plaintiff that the buildings having been separately valued in the policy, the insurance on them is not affected by any false swearing as to the personal property. The pohcy of insurance, however, is an entire, single contract, to stand or fall as a whole, so far as fraud, or false swearing is concerned. Barnes v. Insurance Co., 51 Maine, 110. Exceptions overruled. 228 LADD V. iETNA INS. CO. [CHAP. XII CHAPTER XII Clauses of the Standabd Fire Policy — Continued Other Insurance, Cessation of Operations, Increase of Hazard, Uncon- ditional Ownership, Waiver by Omitting to Make Inquiry, etc. LADD V. .ETNA INSURANCE CO. CouHT OF Appeals of New Yobk, 1895. 147 N. Y. 478 What constitutes cessation of mill or manufacturing operalionsf Plaintiffs' policy covered a frame water power sawmill and machinery. By subsequent indorsement title was declared vested in King and Trushaw, loss if any payable to plaintiffs as their interest might appear. The property was destroyed by fire January 9, 1892. Bartlett, J. The policy reads as follows, viz. : "This entire poUcy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void ... if the subject of insurance be a manufacturing establishment and ... it cease to be operated for more than ten consecutive days . . . ; or if a building herein described, whether intended for occupancy by owner or tenant, be or become vacant or un- occupied and so remain for ten days.'' The facts are as follows, viz. : After King and Trushaw entered into con- tract to purchase the insured property they took possession at once and made extensive repairs; King Uved near the property and was the sawyer, and Trushaw resided some ten miles away; King, with an assistant, ran the mill until about December 11th, 1891, when he was taken ill and compelled to discontinue work. It fmiiher appears by the testimony of Trushaw that he was at the mill on Tuesday, three or four days before the fire, and observed that there was considerable limiber piled up in and around the mill , and there were also logs there; the witness testified that on this occasion he sawed two logs, planed them and drew them home; he also swears that owing to King's continued illness he had promised him to come the next Monday and saw up some hundred or hundred and fifty logs which had been dehvered at the mill , but that he was prevented from so doing by the fire. Lucy King, the wife of King, was called as a witness by defendant, and testified that her husband was dead; she corroborated Trushaw as to his CHAP. XIl] LADD /'. ^TNA INS. CO. 229 running the mill the Tuesday before the fire; she also swore that during her husband's illness, and up to the time of the fire, logs were drawn to the mill and lumber taken away. FuUerton, King's assistant, was called by plain- tiff, and testified that when King was taken sick they had arranged to begin the next day to get out a bill of lumber from logs already delivered for the purpose; that after King was taken ill he (witness) cut wood for about a week. The learned counsel for the defendant contends that, notwithstanding this array of facts tending to show that the owners of the miU had not ceased to operate it and the premises had not become vacant or unoccupied, there was a plain violation of the provisions of the pohcy already quoted, for the reason that on accoimt of King's sickness the machinery in the mill was not run for more than ten consecutive days. We are unable to agree with the defendant's contention that this clause of the policy is too clear for argument, and that any temporary cessation of the operation of the machinery in a manufacturing establishment by reason of sickness, breakdown, low water, or other unavoidable cause, although it is not the intent of the insured to cease operating, or to allow the premises to become vacant or unoccupied, is a clear violation of its provisions. We think this clause of the policy should be reasonably construed so as to afford proper protection to both parties, rather than to 'give to it a mean- ing which must inevitably mislead the insured and do violence to the plain language of the instrument. It does not seem possible that the owner of a manufacturing establishment entering into the covenants and agreements tendered to him by the standard insurance pohcy of this State, would suppose that if the necessary repairs of the machinery of his mill should take over ten days his insurance was for- feited unless the consent of the company was obtained. If it is the intention of the legislature or the insurance companies to force such a hard and un- reasonable contract upon the insured it should be under a provision to that effect worded in clear and unmistakable terms. To give the pohcy the meaning insisted upon by the defendant is not only to disregard some of the pre\'ious decisions of this court construing pro- visions somewhat similar, but is to lose sight of the reason which has led insurance companies to protect themselves against risks on manufacturing establishments which have ceased to be operated and business or residential property which has become vacant or unoccupied, to wit, the increase of the moral hazard. It is a fact well known to underwriters that the probability of loss is greatly increased when property of any kind becomes unproductive; an idle mill and a vacant dwelling house are undesirable risks. It does not follow, how- ever, that a mill is idle by reason of temporary delays incident to the business, nor that a dwelling house is vacant or unoccupied, the owner of which, leaving it fully furnished, has turned the key and left it for a short sojourn elsewhere. This court held that where the insurance was upon a sawmill run by water power, delays and interruptions incident to the business, such 230 ANGIER V. WESTERN ASSTJR. CO. [CHAP. XII as low water, diminished custom or derangement of the machinery causing a temporary discontinuance of the active use of the mill, did not come within the terms of the policy avoiding it in case the premises become vacant and unoccupied. (Whitney v. Black River Ins. Co., 72 N. Y. 117.) • In the ease at bar the undisputed facts show that the business at plain- tiff's mill was conducted as usual during the illness of King with the ex- ception of running the machinery; logs were received, lumber delivered and arrangements completed to supply King's place as sawyer. There was no violation of the policy either in letter or spirit, and we think the General Term very properly ordered a new trial. The order appealed from should be affirmed, with costs, and judgment absolute ordered for the plaintiff upon appellant's stipulation. All concur. Ordered accordingly.^ ANGIER ET AL. v. WESTERN ASSURANCE CO. SUPEEME CODBT OF SoUTH DAKOTA, 1897. 10 S. D. 82 Increase of risk. The policy provided "this entire policy shall be void if the hazard be in- creased by any means within the control or knowledge of the insured." The plaintiff Stevens, the insured, in explaining the origin of the fire, ad- ' Otheb Insurance Forbidden Without Written Permit. — Other or double insurance exists where there are two or more policies on the same interest and subject and against the same risk, West Branch L. Exchange r. American Cent. Ins. Co., 183 Pa. St. 366, 385, 38 Atl. 1081. In most jurisdictions the subject need only be in part the same, Kimball v. Howard F. Ins. Co., 8 Gray (Mass.), 33. The Syracuse Screw Company insured its building with the defendant. To the policy was attached the standard mortgagee clause in favor of Everson who held a mortgage upon the building. This clause made the insurance first payable to the mortgagee as his interest might appear, and provided that as to his interest the in- surance should not be invalidated by any act or neglect of the mortgagor. After the issuance of this pohoy, the insured took out another policy for its own exclusive benefit, without the defendant's consent and without a mortgagee clause. The court held that the mortgagee clause, attached to the first policy, created a distinct contract in favor of Everson. It further held that while the later policy was other insurance in relation to the mortgagor's interest it was not other insurance in relation to the mortgagee's interest, nor would it defeat or affect Everson's right of recovery under the prior policy, Eddy v. London Assur. Corp., 143 N. Y. 311, 38 N. E. 307, 25 L. R. A. 686. The defendant issued a policy to Johnson on his "farm implements." This description was adequate to embrace certain mowing machines and binders which were subse- quently bought by him and added to his "farm implements." After the purchase and without consent of the defendant Johnson insured his "mowing machines and binders" with another company. This was held to be "other insurance" which avoided the policy in suit, Johnson v. Farmers' Ins. Co., 126 la. 565, 102 N. W. 502. CHAP. XIl] ANGIER V. WESTERN ASSUR. CO. 231 mitted that he took a tomato can, with perhaps a pint of kerosene oil in it, and put some of the oil on kindling in a stove; that after striking a match to set it afire, the flame caught on his celluloid cuffs, and extended to the oil in the stove, and thus occasioned the conflagration which destroyed the in- sured property. CoEsoN, P. J. Keeping kerosene upon the premises in no manner violated the stipulations of the parties, and could not therefore be held to constitute an increase of the hazard, within the meaning of the policy. The term "increase of hazard" denotes an alteration or change in the situation or con- dition of the property insured, which tends to increase the risk. These words imply something of duration, and a casual change of a temporary character would not ordinarily render the policy void, under the stipulations therein contained. First Congregational Church v. Holyoke Mut. Fire Ins. Co., 33 N. E. 572, 158 Mass. 475. In that case the Supreme Court of Massachu- setts held the use of naphtha (the use or keeping of which on the insured premises was prohibited by the policy) for a period of a month, in burning paint from the outside of a wooden church, and causing the burning of the chm-ch, constituted such a change or alteration, and was sufiiciently long continued to be deemed a change in the situation or circumstances affecting the risk. In Lyman v. Insurance Co., 14 Allen, 329, three weeks was held suflacient. In the case at bar the contention of counsel for appellant that the use of kerosene at only one time, in the manner detailed constituted an increase in the hazard, in the sense in which that term is used in the policy, is not ten- able. It constituted negligence on the part of the plaintiffs, but did not in- crease the hazard in the sense that the term is used in the policies of insur- ance. But, as we have seen, under the provisions of our statute, neither the negligence of the insured nor of his agents or others exonerates the insurer from liability. Comp. Laws, § 4175. This section of the Civil Code, as appears from the reviser's notes to the corresponding provision of the Code prepared for the State of New York, is based largely upon Mathews v. In- surance Co., 11 N. Y. 9; Gates v. Insurance Co., 5 N. Y. 469; Walker v. Maitland, 5 Bam. & Aid. 171; Waters ». Insurance Co., 11 Pet. 213. In the latter case the Supreme Court of the United States, speaking by Mr. Jus- tice Story, says: "This question has undergone many discussions in the courts of England and America, and given rise to opposing judgments in the two countries. As applied to policies against fire on land, the doctrine has for a great length of time prevailed that losses occasioned by the mere fault or negligence of the assured or his servants, unaffected by fraud or design, are within the protection of the policies, and, as such, recoverable from the un- derwriters. It is not certain upon what precise grounds this doctrine was originally settled. It may have been from the rules of interpretation applied to such policies containing special exceptions, and not excepting this; or, it may have been, and more probably was, founded upon a more general ground, that, as the terms of the policy covered risks by fire generally, no exception 2S2 COLLINS V. ST. PAUL F. & M. INS. CO. [cHAP. XII ought to be introduced by construction, except that of fraud of the assured, which, upon the principles of public policy and morals, was always to be implied. It is probable too that the consideration had great weight that otherwise such policies would practically be of little importance, since, com- paratively speaking, few losses of this sort would occur which could not be traced back to some carelessness, neglect, or inattention of the members of the family." The facts in the case at bar were undisputed, and we think the court properly directed a verdict in favor of the plaintiff. The judgment of the Circuit Court and order denying a new trial are af- firmed. ' COLLINS V. ST. PAUL FIRE & MARINE INSURANCE CO. Supreme Court op Minnesota, 1890. 44 Minn. 440 Warranty of sole ovmership. Action on a fire policy. Defense, breach of warranty. GiLFiLLAN, C. J. This is an action on a policy of insurance upon a dwel- ling house and log barn, and sheds connected therewith, situate on section 31, ' The defendant, the Niagara Fire Ins. Company, insured an ice house belonging to the Des Moines lee Company, and situated on the shore of Lost Island Lake. The ice house was destroyed by fire. The loss was caused by the spread of fire from a bonfire made by the president of the plaintiff company not far away from the ice house, for the purpose of burning up some rubbish, and left burning without anyone to watch it at the noon hour. The court held that though the plaintiff's conduct might have been careless, nevertheless the loss was covered by the policy and that the temporary and incidental increase of risk amounted to no breach of warranty, Des Moines Ice Co. V. The Niagara Fire Ins. Co., 99 Iowa, 193, 68 N. W. 600. In a Georgia ease, the defendant insured "the estate of Mrs. Hudson" against fire loss to dwelling house and furniture. The husband of the decedent, in charge and occupancy of the premises, employed the owner of a movable threshing machine run by an engine to bring his machine to the premises temporarily for the purpose of threshing some wheat. The engine, which had no spark arrester, was moved thither and located about eighty-five feet from the dwelling. The work of threshing all told required about two hours. When the job was half done, a sudden and unexpected gust of wind came and carried sparks from the engine to the house, which was in consequence destroyed by fire. The plaintiff was nonsuited below. On appeal, however, the court reversed, holding that the question whether a breach of the warranty had been committed by such a tem- porary and incidental use of the machine was for the jury, Adair b. Southern Mut. Ins. Co., 107 Ga. 297, 33 S. E. 78, 45 L. R. A. 204, 73 Am. St. R. 122. The plaintiff by the terms of the policy was permitted to use one stove. By intro- ducing a second stove he increased the risk. Although this act did not cause or con- tribute to the loss the policy was held to be avoided, Daniels v. Equitable Fire Ins. Co., 48 Conn. 105. In case of doubt any question of increase of risk is for the jury, Taylor v. Security Mut. F. Ins. Co., 88 Minn. 231, 92 N. W. 952; Belcher v. Capital Fire Ins. Co., 78 Minn. 240, 80 N. W. 971. CHAP. XIl] DUPREAU V. THE HIBERNIA INS. CO. 233 township 114, range 25. Upon the trial the court below directed a verdict for the defendant, and after such verdict, upon plaintiff's motion, granted a new trial, and from the order granting it defendant appeals. On the ease made at the trial it was impossible for the plaintiff to recover, for the policy provides that the company shall not be liable "if the interest of the assured in the property is not one of absolute and sole ownership," and it appeared beyond controversy that the plaintiff had only a life estate in the property. Of course, she had an insurable interest, but that interest was not insured. The policy expressly excluded from its operation any interest other than the absolute and sole ownership. Order reversed.^ DUPREAU V. THE HIBERNIA INSURANCE COMPANY SuPEEME CouET OF MICHIGAN, 1889. 76 Mich. 615 Warranty of unconditional and sole ownership, executory vendee in possession. Action on a fire insurance policy procured by the vendee. Defense, breach of warranty regarding unconditional and sole ownership. Long, J. It appears that the plaintiff held the premises upon which the buildings were situate, and the buildings, under a land contract of purchase, dated May 15, 1888. This contract specifically describes the property, and provides for the annual payments of SI 00 until the whole amount of the purchase money (.S500) is paid; $100 being paid down at the time of the purchase. The plaintiff went into the actual possession of the premises immediately upon the execution of this contract. Upon the payment of $100 additional, the contract provided for the execution and delivery of a deed of the premises to the plaintiff. The contract itself provided for the taking of possession of the premises by the plaintiff. On the trial in the court below the court charged the jury that the clause in the poKcy relative to the title would not violate the policy, as it appeared that the plaintiff was the equitable owner in fee of the premises. The court thereupon directed a verdict in favor of the plaintiff. It does not appear that any representations as to title and ownership were made by the plaintiff at the time of taking the policy, but counsel for the defendant contend that by the terms of the policy itself upon which the ac- tion is brought, the plaintiff cannot recover, as he has no such title in fee as contemplated by the contract. The land contract, under which the plaintiff held, provided that he should keep the buildings thereon insured against loss and damage by fire by insurers, and in amount approved by the first ^ Phraseology of the standard form differs somewhat. 234 PARSONS, RICH & CO. V. LANE [CHAP. XII party, and should assign the policy and the certificates thereof to the first party. We are satisfied that the court was not in error. The plaintiff had paid quite a sum of money on the purchase price, and entered into an undertak- ing to pay the balance, and was to have immediate possession of the premises under the terms of the contract, and was to keep the buildings thereon in- sured. He was in actual possession at the time of taking the policy, and equitably the owner in fee, and we think he may be said at that time to have been the entire, unconditional and sole owner, within the meaning of the terms of the policy. We think this doctrine is fully supported by numerous decisions. If loss occurred, it would fall upon the insured. He was in possession, having paid part of the purchase price, and under a valid agreement for the payment of the balance, and, by the very terms of his contract, the very party who had the insurable interest in it. This seems to be the settled doctrine in most, if not all, of the States. We find no error in the record. The judgment of the court below must be affirmed, with costs. The other justices concurred. PARSONS, RICH & COMPANY v. LANE AND ANOTHER Supreme Coukt of Minnesota, 1906. 97 Minn. 98 Whether the insurer waives conditions regarding ownership by failing to make special inquiry. Action on fire insurance policy in standard form, on building and contents. Neither written application nor oral representation was made by the appli- cant, and no special inquiries were made by the company when the applica- tion was made. As matter of fact, the insured building stood on leased ground. Elliott, J. The form of poUcy now in common use requires the insured to disclose the extent and nature of his interest in the property, as it is a matter which largely influences underwriters in taking or rejecting risks and estimating and figuring premiums. There is no doubt but what a provision to the effect that the policy shall be void if the insured is not the sole and un- conditional owner of the property is reasonable and wiU be given full force and effect unless it is waived by some act on the part of the insurer. Phcenix V. Public Parks, 63 Ark. 187, 37 S. W. 959; East Texas v. Brown, 82 Tex. 631, 18 S. W. 713; Dow v. Nat. I. Co., 26 R. I. 379, 58 Atl. 999, 67 L. R. A. 479. But it is contended that where the policy is issued by an insurance company, without a written application, the company must be held to have waived the condition of the policy as to title and ownership. This does not appear CHAP. XIl] GLENS FALLS INS. CO. V. MICHAEL 235 to be an open question in this jurisdiction, as we have in two instances held contrary to the appellant's contention. The policies themselves, containing, as they did, the contracts that they should be void if the interest of the assured had not been truly stated to the company, or if it was not truly stated in the policy, or if it was not the sole and unconditional ownership, and a description of it was not indorsed on the policy, were pointed inquiries of the assured whether their interest was the sole and unconditional ownership of the property described, and their silence and acceptance of the policies was the answer. We are not inclined to restrict the appUcation of the doctrine of waiver as heretofore applied by this court to the conditions contained in insurance contracts. It has been an efficient means by which to prevent insurers from treating the contract as valid when it is to their interest, and repudiating it when called upon to respond to its burdens, thus playing fast and loose with the insured. But the rule contended for seems to us to require an un- reasonable extension of the doctrine. The written contract says, in language plain and unambiguous, that it shall be of no force and effect unless certain conditions then exist, and the existing facts are necessarily known to the in- sured. It is argued that the law must assume that all such conditions were known to the company, and, after having assumed this material and essential fact, again presume that it intended to waive any results arising therefrom to its advantage. But the insured knew the condition of his title, and, when he received the policy, must, if he read it, have known that the insurer had entered into the contract upon the understanding that the appheant had full ownership and a fee simple title to the lots upon which the building stood. The modem fire insurance pohcy is practically free from the stipulations, conditions, and provisions set in infinitesimal type and hidden away in elusive locations, which served as traps for the guileless and unwary of the past generations of insured. But the most of these objectionable features have been effectually eliminated by the courts or legislatures, and there seems to be no good reason why the present insurance contracts, even while giving the insured the benefit of the doubt when ambiguous language is used, should not be treated like other written contracts between responsible parties. The order appealed from is affirmed. GLENS FALLS INS. CO. v. MICHAEL Supreme Couet of Indiana, 1905. 167 Ind. 659 Whether the insurer waives conditions regarding ownership by failing to make special inquiry. Action on a fire insurance policy in standard form, like the last. Neither written application nor oral representation was made by the applicant, and 236 GLENS FALLS INS. CO. V. MICHAEL [CHAP. XII no special inquiries were made by the company. As matter of fact, the in- sured had only a life estate in the insured buildings. MoNTGOMEEY, J. We Cannot, with any regard for justice, strictly apply to this class of written instruments the rule for the interpretation of written contracts generally. The making of contracts is generally preceded by some negotiations, culminating in a meeting of the minds upon terms mutually agreeable and understood, which are then reduced to writing, and the agree- ment formally executed. Insurance policies are prepared in advance by in- surance and legal experts, having in view primarily the safeguarding of the interests of the insurer against every possible contingency. The insurer not only fully knows the contents of the writing, but also adequately compre- hends its legal effect. The insured has no voice in fixing or framing the terms of his pohcy, but must accept it as prepared and tendered, usually without any knowledge of its contents, and often without ability to comprehend the legal significance of its provisions. The meeting of the minds ordinarily deemed essential to a vaUd contract, as to many of its terms and conditions, is wanting in fact, and a mere fiction of law. In this case appellees were not the owners of a fee simple title to the real estate on which the insured buildings stood, but owned only a life estate therein. They had an insurable interest in the property at the time the poUcy was issued and at the time of the loss by fire. They desired in good faith to obtain insurance upon their interest in the property, and were guilty of no misrepresentation, concealment or fraud. They were ignorant of the in- vahdating provisions of the policy, and of the materiality of their exact title to the risk assumed. No change was subsequently made in the title held, nor was any act done increasing the risk of insurance. It is not suggested that the value of their title was not equal to the amount of insurance carried, nor that the fire would not have occurred just as it did, had their title been an unconditional fee simple. They paid the premium charges, which appel- lant accepted and retains, and honestly rested in the belief that they had valid insurance. We must assume that both parties in good faith intended, to effect a valid contract, and, if reasonably possible, so construe the poUcy as to make it effective. The appellant did not require of appellees a written appUcation for insurance, or ask of them any questions concerning the prop- erty to be insured, or concerning their title to the same.^ We must therefore presume that appellant or its agent had satisfactory knowledge of the con- dition and surroundings of the property, and of the title to the same, as then existing. Knowledge of the true state of the title on the part of the insurer being, under the circumstances shown, presumed by law, the provisions of the poUcy with respect to title pleaded in the answers were waived. It fol- lows that the policy was valid at least to the extent of the interest of the insured. Judgment affirmed. ' A detailed application is now rarely used, and it is a matter of great convenience to the insuring public that it has been dispensed with. The answers in such an ap- plication, when warranted, offered a frequent occasion for forfeiture. CHAP. XIl] GLENS FALLS INS. CO. V. MICHAEL 237 GiLLETT, J. Wliile the rule of contra proferentem, ordinarily seems to be applied in all of its \'igor hi construing insurance contracts, yet I am not aware of any well-considered case which countenances the idea that a party may be relieved upon so unwarranted an excuse as the one which the appel- lees in this case asserted. In Wierengo v. American Fire Ins. Co., 98 Mich. 621, 626, 57 N. W. 833, 835, it was said: "In this case where there was no written application, nor any terms of the policy agreed upon by parol ex- cept the amount, the insured must be charged with knowledge that the policy he receives contains the contract binding upon him as well as the in- surer. He must know that the policy which is the contract, contains the usual terms of such instruments. He maj' not lay it aside without reading, and, when he seeks to recover upon it and finds that under its plain provi- sions he cannot recover, say: 'I did not read it. The insurer did not tell me what it contained. I did not know that it was necessary to tell him about the title and condition of my property, and therefore I am not bound by its terms.' Had i\Ir. Pearson or his principal read the contract, which he could have done in a few moments, they would at once have known these plain and important conditions, which the defendant had the clear right to insert and to make a condition of its vahdity. Certainly the insured must be held to some degree of diligence in obtainLng knowledge of the contracts to which they are parties. Ignorance wiU not relieve a party from his con- tract obligations. The law only relieves him therefrom in cases of fraud, mistake, waiver or estoppel. An insurer is not required by the law to in- quire into the condition of the title to the propert.v insured, or to inform the insured of all the conditions and terms of the policy to be issued or to read it to him, or inform him of its contents. When received and accepted without objection, he must be held bound by its terms unless these terms are waived by the insurer. This is the law of contracts, and there is not reason or au- thority for holding that an insurance contract is an exception thereto." There are cases which support the view of the majority in this case, but I assert that they are not only comparatively few, but also that it is evident that they owe their origin to a misapplication of the old doctrine of conceal- ment. Before the adoption of the standard poUcy, it was the practice to embody the warranties of the assured in an application, and as a result it followed that, in many cases where the company had neglected to take an application, the only defense which the company could assert was conceal- ment. Xow, concealment involves the proposition that the assured ought to have made the disclosure, and therefore the courts, in passing on these cases, and the text-'miters in discussing them, frequently made reference to the fact that, as the representatives of the insurance company were experts, the assured had a right to suppose that as to the ordinary risks, such as the con- dition of the title, etc., the company had acquainted itself with the facts. It was enough, therefore, so far as the interest of the assured was concerned, that he had an insurable interest. With the incoming of the standard policy, all of this was changed; but a few courts, misappreliending the nonapplica- tion of the doctrine of concealment to a peremptory condition precedent that 238 GLENS FALLS INS. CO. V. MICHAEL [CHAP. XII the ownership must be sole and unconditional, and the title in fee simple, were led into error by the language of the books to which I have referred. The condition in the standard policy provides the manner in which the policy may be made to take effect, where the ownership is not sole and uncondi- tional and the title in fee, namely, by procuring a special indorsement to be placed on or added to the policy; and the effect of such a condition as this is to call on the policy holder to make disclosure, and to authorize the company, at least in the absence of notice, to assume that the ownership and title com- ply with the condition. It is a well-known fact that insurance companies issue policies without a formal examination of the title, and, in the face of the stipulation in the policy, the property owner has no right to assume that the company will not stand upon its rights. The conclusion of the majority is opposed to principle, it is out of accord with the weight of authority, and it involves a disregard of the doctrine of stare decisis. As I have attempted to point out, this holding cannot be main- tained if the court looks to the solemn dispositive agreement of the parties in determining their rights. I cannot give my sanction to a decision that nuUifies the most important element in the contract from the standpoint of the company. It is to be remembered that fire losses are in almost every instance paid out of the premiums received, and not out of the capital of the company. Careful people who read their policies are entitled to some consideration, and ought not to have their premiums enhanced by the fact that essential limitations of liability put into insurance policies are disre- garded by the courts. I vote for a reversal. CHAP. XIIl] GERMANIA FIRE INS. CO. ('. HOME INS. CO. 239 CHAPTER XIII Clauses of the Standard Firje Policy — Continued Alienation, Prohibited Articles, Vacancy, Excepted Causes, etc. THE GERMANIA FIRE INSURANCE CO. v. THE HOME INSURANCE CO. CouHT OF Appeals of New York, 1894. 144 N. Y. 195 Alienation clause. Is the insurance on the firm stock avoided by the introduc- tion of another partner into a firm? Action on a fire insurance policy. Defense, breach of alienation clause. The defendant had issued a policy to Verdier on his stock of hardware. During the tenn of the poUcy, without permit of the insurer, Verdier took in Brown as a copartner, giving him a three-tenths interest in the insured property of the concern, which was subsequently damaged by fire. The poUcy, though not in the phraseologj' df the present standard form, provided "or if the property be sold or transferred, or any change takes place in title or possession, this policy shall be void." Bartlett, J. We think it perfectly clear on principle that the sale of an interest in the insured property by Verdier to Brown and tlie formation of a copartnership between the two rendered the poUcy void. The contract of insurance is peculiarly pereonal in its nature, and the success of the business of underwriting depends largely upon what is known as the moral hazard. It is a well-established principle of the common law that every man has the right to determine with whom he will enter into contract obligations. An insurance company is induced to issue or withhold its policy after carefully scrutinizing the character of the appHcant for insurance. It is of the utmost importance to the company to ascertain who is to be vested with the title and possession of the property sought to be insured. It would be a harsh and indefensible rule that required the underwriter, who had insured an individual on a stock of goods in a store, to continue the insurance after the insured had taken in two partners and formed a firm wherein each partner was vested with an undivided third interest in the property covered by the policy, without ha\'ing been afforded the opportunity to examine into the moral and business characters of two strangers to the original contract. This right of the insurance company was in nowise invaded when this court held 240 GERMANIA FIRE INS. CO. V. HOME INS. CO. [CHAP. XIII that a sale by one partner to another of his interest, where both were insured, did not avoid the poHcy. It is only when a stranger is to be brought into contractual relations with the insurance company that the consent of the latter is essential. The appellant urges that the protection of the policy should be extended to the new partner by virtue of the following words contained therein, viz. : "And the said Home Insurance Company hereby agree to make good unto the said assured, his executors, administrators and assigns, all such immediate loss," etc. It is argued that the word "assigns'' extends the insurance to the new partner's interest. The policy is capable of no such construction; the clause in question is merely a covenant on the part of the company with the insured to pay to him or his legal representatives or assigns, the amount of the loss that may become due to him under the terms of the policy. The judgment and order appealed from should be affirmed, with costs. All concur. Judgment accordingly.^ 'The prudent broker in preparing "the forms" to be inserted in a policy for a corporation or copartnership customer is careful to insert the phrase "A. B. & Co., as now or may be hereafter constituted." "The forms" whether printed or t5T:)e- written constitute what is known as the written part of the policy and contain a description of the property and the special clauses. The insured, the Buffalo Elevating Company, in another New York case, owned and operated a large grain elevator in Buffalo. Besides its insurance on the building, and on the contents of the building, it took out a third class of insurance in forty-six policies, aggregating 873,250: to wit, $232.93 a day, and known as "use and occu- pancy" insurance, the object of which, as already shown, is to indemnify an owner or occupier for the loss of commercial use during the period required for reconstructing a building destroyed or damaged by fire. Shortly after some of these policies were is- sued, and before the rest of them were issued, the insured, without knowledge or consent of the insurers, joined for the whole active season a secret pool or trust composed of many elevators. This was done, as in former seasons, under a written pooling agreement providing, in substance, among other things, that, after payment of certain operating expenses, the balance, to wit, eighty per cent of the gross earnings of the Buffalo Elevating Company, should be turned over by it absolutely to the pool, to be divided up among the many members together with their earnings, and that, in spite of a fire destroying the elevator in question, the Buffalo Elevating Company should neverthe- less continue to receive its full percentage of the entire pool earnings from the pool. A fire destroyed the plaintiff's elevator, and the insured claimed from the insurers of use and occupancy, 860,328.87: to wit, for an arbitrated period of 259 working days required for rebuilding. The insurance companies of this class, by the same counsel all set up substantially the same defense: namely, that where the policy was issued before the transfer to the pool the insured had violated the warranty against making any change of interest in the subject-matter insured, and that where the policy was issued after the transfer to the pool, the insured had violated the warranty of sole and unconditional ownership of the subject-matter. The case was submitted on an agreed statement of facts, and the plaintiff recovered in full. The court held in substance that the insured under a use and occupancy policy is sole and unconditional owner, and has made no change of interest in the subject-matter insured thereby, although he transfer to another the earnings, Michael r. Prussian Nat. Ins. Co., 171 N. Y. 25, 63 N. E. 810. The Massachusetts and other policies are simpler. They forbid a sale of the property without assent of the company, in writing or in print, Stuart v. Reliance CHAP. XIIl] BRIGHTON B. B. ASSN. V. HOME INS. CO. 241 HOME MUTUAL INSURANCE CO. v. TOMPKIES & CO. Court of Civil Appeals of Texas, 1902. 30 Tex. Civ. App. 404 Alienation clause. Effect of executory contract of sale. Gaeeett, Chief Justice. The contract for the sale of the property de- scribed in the poUcy of insurance was an executory contract to convey in the future. No consideration was paid, and there was no change in the pos- session or the right to the possession of the property. Such a contract does not constitute a change in the interest or title of the insured property within the meaning of the stipulation ia the policy by which it should become void if any such change should take place. Erb v. Insurance Co., 98 Iowa, 606, 67 N. W. Rep. 585, 40 L. R. A. 845; 1 May on Ins., § 267. It is immaterial whether the new corporation or the promoters would be bound by the con- tract, since there was no change in the title. Reversed and rendered.^ BRIGHTON BEACH RACING ASSOCIATION v. THE HOME INSURANCE COMPANY New York Supreme Court, 1906. 113 A. D. 728, aff'd 189 N. Y. 526 Effect of executory contract of sale coupled with delivery of possession to the executory vendee. The plaintiff, as assignee of one Dunne, seeks to recover a fire loss on a policy of insurance, in the standard form, issued by the defendant upon realty situated in the borough of Brooklyn, owned in fee simple, at the time the pohcy was issued, by Dunne. The policy contains the following pro- vision: "This entire pohcy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void ... if any change other than by the death of the insured take place in the interest, title or possession of the sub- Ins. Co., 179 Mass. 434, 60 N. E. 929. Under such a provision, so long as the insured retains any insurable interest, the policy will protect it, Clinton v. Norfolk Mut. F. Ins. Co., 176 Mass. 486, 57 N. E. 998, 50 L. R. A. 833, 79 Am. St. R. 325. ' Jones J>. Capital City Ins. Co., 122 Ala. 421, 25 So. 790; National Fire Ins. Co. v. Three States Lumber Co., 217 111. 115, 75 N. E. 450; Phoenix Ins. Co. v. Caldwell, 187 111. 73, 58 N. E. 314; Wyandotte Brewing Co. v. Hartford F. Ins. Co., 144 Mich. 440. The Iowa court says, " Nothing short of a completed sale by the policy holder will be deemed sufficient breach of a condition in a policy against alienation," Bartling v. German Mut. Ins. Co. (Ia., 1909), 123 N. W. 63 (policy not in standard form). 16 242 BRIGHTON B. R. ASSN. V. HOME INS. CO. [cHAP. XIII ject of insurance (except change of occupancy without increase of hazard) whether by legal process or judgment or by voluntary act of the insured or otherwise." On July 17, 1903, and while the policy was still in force, Dunne entered into an executory contract of sale by which he agreed to convey to one Harvey 0. Dobson, or his assigns, a parcel of land containing upwards of forty-three acres, divided, according to the map attached to the contract, into 660 lots, upon one or more of which the insured buildings stood, for a consideration of 8109,521.51, $15,000 of which was paid when the contract was signed; $44,463.60, existing mortgage indebtedness, to be assumed by Dobson, and interest thereon from March seventeenth, four months prior to date of the contract, paid by him; a second mortgage of $10,297.15 to be given Dunne, and the balance, $39,760.76, to be paid in cash on July 16, 1904, at which time the deed was to be delivered. The agreement contained the following clauses: "And the said party of the second part hereby agrees to pay all taxes and assessments levied against and becoming a lien upon the said real property, subsequent to the deUvery of this contract; . . . and the party of the second part shall have the right to occupy any part of the real property hereunder and before passing title, as tenant of the party of the first part, without any pay or rent thereof, and possession of the said real property shall be so given to the party of the second part on the expiration of the ex- isting tenancy on January 1, 1904." On the day following the execution of this contract, Dobson assigned all his right, title and interest therein to the appellant, who went into the pos- session of the property, in accordance with the contract provisions, and there- after and before the commencement of this action paid the full purchase price and took title to said property. On February 9, 1904, fire destroyed the building, and on November fourth following, Dunne assigned to the plaintiff said policy of insurance and all his rights therein. It appears that defendant had no notice of the contract, or of any change of possession or interest in the insured property, until after the loss. Rich, J. The decisions of courts of sister States unite in the proposition that one in possession of real property under a vahd contract of purchase is the sole and unconditional owner thereof, subject only to the enforcement of payment of the price agreed upon by the holders of the legal title; while the courts of this State have held such a vendee to be the equitable owner of the premises, vendible as his, chargeable as his, capable of being incumbered as his; they may be devised as his; they may be assets; they would descend to his heir and while he was living be insurable as his. (Pelton v. West- chester Fire Ins. Co., 77 N. Y. 605, and cases cited; Stewart v. Long Island R. R. Co., 102 id. 601, 624; Beckrich v. City of North Tonawanda, 171 id. 292, 299; WiUiams v. Haddock, 145 id. 144.) It can hardly be maintained that there can be two sole and unconditional owners of the same property, or two owners legally entitled to exercise the CHAP. XIIl] BRIGHTON B. R. ASSN. V. HOME INS. CO. 243 same sole and exclusive rights therein at the same time; and it is clear that such a change of title was effected by possession given the appellant under the contract of sale as to have avoided the policy of insurance. Again, it appears beyond reasonable contention that a change in the "in- terest" and "possession" of Dunne in the insured property accomplished the same legal result. The word "interest" is broader and more compre- hensive than the word "title"; it embraces both legal and equitable rights. (Southern Cotton Oil Co. v. Prudential Fire Association, 78 Hun, 373.) The doctrine contended for by appellant, that when the condition is against a change in the "title" there is no breach unless there is a change in the legal title, and that as long as the insured retains the legal title the pohcy is not avoided by a transfer of the equitable title, cannot be apphed to a condition against a change of "interest." The terms are not synonsrmous. The true test is whether the vendor has parted with the absolute control and dominion over the property insured. If he has, a change in "interest" has been effected, and the policy is void. I am of the opinion also that there was a change in "possession" within the meaning of that word as used in the policy. While it is true that the agreement designates the occupancy of the vendee as that of a tenant of the vendor without pay or rent, it is apparent that the contract gave and se- cured to him more than the rights and interests of a tenant. He was charged with the liabUities of, and entitled to enforce the rights of, a purchaser in possession and could not be ejected as a tenant regardless of such rights. The possession of the vendee was absolute, and exclusive of the vendor, so long as he performed his contract. AH the rights of possession of the insured property, held and exercised solely and exclusively by Dunne when he ob- tained the policy of insurance, he divested himself of by executing the con- tract and giving plaintiff possession under it. From the time such posses- sion was taken by plaintiff Dunne had no possession or right of possession while the former performed the contract provisions, and the attempted characterization in the contract of the occupancy of the vendee as that of a tenant, did not take from plaintiff its legal rights thereunder, as the equitable owner in possession, or have the legal effect of reserving to Dunne the sole and exclusive possession he owned and exercised when the contract of insur- ance was made with the respondent. As the learned trial justice aptly says: "Names cannot do away with the nature and substance of things." It may also be observed that by the policy of insurance, which was a per- sonal contract, the respondent undertook to indemnify Dunne against loss or damage by fire to his buildings as long as his ownership, interest and posses- sion thereof remained exactly the same as they then were, and no longer. This obligation cannot be extended beyond a time when Dunne voluntarily gave such right of possession to the appellant and changed his interest and the nature of his title in and to the insured property, without the consent of the respondent, who never imdertook to insure the buildings for the benefit of the appellant, or if they were to be possessed by the appellant, or if any interest therein, owned by Dunne at the time the policy was issued, was 244 BRIGHTON B. R. ASSN. V. HOME INS. CO. [cHAP. XIII thereafter acquired by the appellant as the result of Dunne's act. (Lett v. Guardian Fire Ins. Co., 125 N. Y. 82.) It follows that the right to enforce the poUcy of insurance terminated with the execution and the surrender of possession of the insured buildings, with- out the knowledge or consent of the respondent, and the judgment must be affirmed, with costs. HiRSCHBEBG, P. J., WooDWAED and Jenks, JJ., concurred. Jvdgment affirmed, with costs.^ > Brickell r. Atlas Aasur. Co. (Cal., 1909), 101 Pac. 19; Skinner ShipbuUding Co. v. Houghton, 92 Md. 68, 48 Atl. 85; Gibb v. PhU. Ins. Co., 59 Minn. 267, 61 N. W. 137, 50 Am. St. R. 405; Davidson v. Hawkeye Ins. Co., 71 Iowa, 532, 32 N. W. 514; Cotting- ham V. Ins. Co., 90 Ky. 439, 14 S. W. 417, 9 L. R. A. 627; Granauer v. Westchester Fire Ins. Co., 72 N. J. L. 289, 62 Atl. 418. AasiQNMENT OP PoLiCT. — Or if the policy be assigned before loss. Even without express prohibition in the poUcy, it has been held that a fire policy is not assignable except with the consent of the insurer, since it is pecuUarly a personal contract, and no new party assured can be introduced into it without the consent of the insurer. New England Loan & Tr. Co. v. Kenneally, 38 Neb. 895, 57 N. W. 759; Lett v. Guardian Fire Ins. Co., 125 N. Y. 82, 25 N. E. 1088. This warranty must not be disregarded, on pain of forfeiture. Miles Lamp Chimney Co. v. Erie Fire Ins. Co., 164 Ind. 181, 73 N. E. 107; and except as waiver may be established the consent of the company must be obtained in writing. New v. German Ins. Co., 5 Ind. App. 82, 31 N. E. 475; but there is no necessity that the assignment itself be evidenced by a written instru- ment. Cannon v. Farmers' Mut. Ins. Co., 58 N. J. Eq. 102, 43 Atl. 281. The com- pany's indorsement consenting to the assignment of the poUcy carries with it an im- plied consent to the transfer of interest in the property insured, Benninghoff v. Agricultural Ins. Co., 93 N. Y. 495; Goulds. Dwelling House Ins. Co., 134 Pa. St. 570, 590, 19 Atl. 793. A mere pledge or deposit of the policy as collateral security without assignment is not prohibited by this clause, Griffey v. N. Y. Central Ins. Co., 100 N. Y. 417, 3 N. E. 309, 53 Am. Rep. 202. Nor does the assured violate the terms of the standard policy by accepting from a common carrier a bill of lading containing as one of its provisions that the carrier is to have full benefit of any insurance upon the prop- erty, Jackson v. Boylston Mut. Ins. Co., 139 Mass. 508, 2 N. E. 103, 52 Am. Rep. 728. Where the policy has been transferred by the insured as collateral security, either with or without the consent of the insurer, the assignee is usually merely an appointee or payee to receive any insurance money to the extent of the debt, and subject to any defenses available as against the assignor, the insured, Illinois Mut. F. Ins. Co. v. Fix, 53 111. 151. In such a case it is not necessary that the assignee should show any title or insurable interest in the property itself. An equitable assignee of the proceeds to be derived from insurance need have no interest in the property insured, Merrill v. Colonial Fire Ins. Co., 169 Mass. 10, 47 N. E. 439; Baughman v. Camden Mfg. Co., 65 N. J. Eq. 546, 56 Atl. 376. Where the property or subject of the fire insurance, as well as the policy, are transferred to a purchaser with the assent of the company, a new contract is thus formed between the company and the assignee which will not be disturbed by any subsequent breach of condition by the assignor, Donnell v. Don- nell, 86 Me. 518, 30 Atl. 67; Fogg v. Middlesex Mut. F. Ins. Co., 10 Cush. (Mass.) 337; or by any agreement between him and the company, Georgia Co-operative Fire Assn. V. Borchardt, 123 Ga. 181, 51 S. E. 429. As to whether the insurers can avail them- selves of prior breaches of contract unknown to them at the time of the assignment, or whether the contract, though evidenced by the same policy and without further con- sideration, is to be regarded as a wholly independent contract, there is lack of harmony in the decisions. By the weight of authority the new owner seems to be given a fresh start, precisely as though a new policy were issued to him; and he is held to be relieved CHAP. XIIl] McFAELAND V. ST. PAUL F. & M. INS. CO. 245 McFAELAND v. ST. PAUL FIRE & MARINE INSURANCE CO. Supreme Cottrt of Minnesota, 1891. 46 Minn. 519 Prohibition of keej/in^, using or allowing certain hazardous articles. Action on a fire insurance policy on plaintiff's dwelling house. Defense, breach of warranty iu that plaintiff used gasoline without permit. Collins, J. Although the policy of insurance upon which plaintiff seeks to recover in this action, for loss caused by the explosion of a gasoline stove, contained a clause which pro'V'ided that, if the assured should keep or use gasoline upon the insured premises — a dwelling house — without the written permission of the defendant company, the policy should be void, it is con- tended by him that as the house was insured without an appKcation in writ- ing, and without any representations being made, after the company's agent had fuU opportunity to examine the premises, by which examination he would from the consequences of past forfeitures incurred by the assignor; for example, Virginia-CaTolina Chem. Co. v. Ins. Co., 108 Fed. 451; Continental Ins. Co. d. Munns, 120 Ind. 30, 22 X. E. 7S; Eines v. German Ins. Co., 78 Minn. 46, 80 N. W. 839; Hall V. Niagara Ins. Co.. 93 Mich. 184, 53 N. W. 727; Steeu v. Niagara Ins. Co., 89 N. Y. 315, 327. This conclusion is defended by the argument that the company would presumably, if requested, cancel the old and issue a new policy, but only at greater inconvenience to itself, and that, therefore, the method adopted is for the benefit of the company exclusively. A weak point in this line of reasoning conies from the fact that the assured can compel cancellation of the policy only at short rates, which means that the insurer in that event retains more than the projwrtionate amount of premium. Accordingly, other decisions enforce the more logical but harsher rule that the assignee will take only such rights as belong to the assignor at the time of the assignment; for example, Wilson v. Hakes, 36 111. 539; McKluskey v. Prov. Wash. Ins. Co., 126 Mass. 306; Citizens' Ins. Co. v. Doll, 35 Md. 89; Wilson r. Mutual Ins. Co., 174 Pa. St. 554, 34 Atl. 122; Reed r. Windsor Mut. Ins. Co., 54 Vt. 413. If, however, with the knowl- edge of past forfeitrire, the company gives written consent to a change of interest or to an assignment of the policy, whether to a purchaser of the property or to a mort- gagee or other party in interest, then a clear ground of estoppel is established in favor of the assignee of the policy, Hayea v. Saratoga Ins. Co., 81 App. Div. 287, 80 N. Y. Supp. 888, afPd 179 N. Y. 535, 71 N. E. 1131; Home Mut. Ins. Co. s. Nichols (Tex. Civ. App., 1903), 72 S. W. 440. No one except the company can make objection to the assignment from the original insured to the assignee, on the ground that the com- pany's consent has not been obtained, Leinkauf v. Caiman, 110 N. Y. 50, 17 N. E. 389. After a loss by fire has occurred, the claim of the assured for damages is a choae in action, which he has a right to assign, in spite of this clause, without asking permission of the company, Frels v. Little Black Farmers' Ins. Co., 120 Wis. 590, 98 N. W. 522; and the assignee then takes, subject to all defenses avEulable to the insurer as against the assignor, Johnston ji. Phoenix Ins. Co., 39 Md. 233. He also takes all rights, for instance, any right to a reformation of the policy, Benesh v. Mill Owners' Ins. Co., 103 Iowa, 465, 72 N. W. 674. But any excess of insurance over and above the fire loss still belongs to the assured assignor, and as to the residue of insurance he can no more assign the policy without consent than he could do so before the fire. 246 McFARLAND V. ST. PAXIL F. & M. INS. CO. [CHAP. XIII have discovered that the gasoline stove was in common use for cooking pur- poses, it was chargeable with such knowledge as an investigation would have disclosed; and that therefore it assumed the risk as it actually existed when the policy was issued, subject to any use as a dwelling house not so exceptional and pecuhar that the defendant company could not be supposed to have anticipated. To put the plaintiff's proposition in another form, it is that when an insurance company issues a fire policy without inquiry, or without application or representations, it consents to any existing use of the insured property which it could have ascertained by reasonable investiga- tion, although by the terms of the policy such a use is expressly prohibited, and there is nothing about the description of the property which necessarily implies or indicates that it may be used in the prohibited manner. On the trial testimony was offered and received in plaintiff's behalf which tended to prove that the practice of using gasoline stoves in dwelling houses had become quite prevalent in the city wherein the insured property was located. Undoubtedly, the purpose of this testimony was to show that the use of the forbidden article in dwellings was not exceptional or peculiar, but on the contrary had become estabhshed by custom. Its sufficiency in this respect we need not stop to consider, for all of this class of testimony should have been excluded as immaterial. The policy, which had gone into plain- tiff's hands, and the contents of which he is presumed to have known, was unequivocal on this point, and declared that if gasoline was used on the premises the contract for insurance should be void. There was no language in the instrument from which a different or contrary intention — an intent to permit the use of gasoline — could be gathered. The clause wherein its use was forbidden was not repugnant to any other provision, nor were there elsewhere terms or conditions from which it could be implied that the defendant company waived the prohibition. The plaintiff has not brought his case within an appUcation of the rule laid down in Phoenix Ins. Co. v. Taylor, 5 Minn. 393 (492), in which it was held that printed conditions in an insurance policy prohibiting the keeping of gunpowder in the building containing the merchandise insured were controlled and governed by the written portion, describing the property covered by the policy as a "stock of goods consisting of ... , and such goods as are usually kept in a general retail store;" it having been shown that gunpowder was usually kept in such a store. By the use of general terms in the written part of the policy, — terms which would ordinarily include the forbidden article, — the insurance company was deemed to have waived the invahdating printed clause as ef- fectually as if the article had been expressly insured. We think it may be said safely that none of the well-considered cases go beyond this, proceeding strictly upon the principle that the written portion of the contract must be given the controlling force, where a conflict or want of harmony arises be- tween it and a printed stipulation. But in the case at bar there was no con- flict or want of harmony. The defendant insured the plaintiff's dwelling house upon an express condition that the use of gasoline should terminate the contract. The defendant did not use ambiguous language, or insert in CHAP. XIIl] FAUST V. AMERICAN FIRE INS. CO. 247 one portion of its policy a clause at variance with or repugnant to a clause found elsewhere, and thus mislead the insured as to the burdens or restric- tions imposed upon him; but, on the other hand, it emphatically notified him that if he used gasoline, as well as other well-known hazardous articles, his policy became void. The cases cited by appellant where there were ambiguous and conflicting clauses and terms in the policies, in line with Phcenix Ins. Co. r. Taylor, surpra, have no application to the facts now be- fore us. Order affirmed. FAUST, APPELLANT, v. THE AMERICAN FIRE INS. CO., RESPONDENT Stjpheme Cotjet of Wisconsin, 1895. 91 Wis. 158 The general printed prohibiiion as affected by the vrritten or printed description of the mihject-matter insured. Policy covered a building occupied as a furniture store and repair shop, together with the contents. IMaeshall, J. The main question presented on this appeal is whether the presence of a small amount of benzine on the premises for use in the re- pair shop rendered the contract of insurance void. Keeping in mind the un- disputed e\'idenoe that the prohibited article was not kept as an article of merchandise for sale, but as an article usually and necessarily kept in operat- ing the business of the repair department of the furniture store, which the poUcy expressly covered, we find abundant authority to support the general rule, which we adopt, that where a contract of insurance, by the written portion, covers property to be used in conducting a particular business, the keeping of an article necessarily used in such business will not avoid the policy, even though expressly prohibited in the printed conditions of the con- tract. It must be recognized that there is some conflict in the authorities on this subject, but the great weight of authority fiilly sustains the rule as above stated. In the light of the foregoing, obviously the contract of insurance which covered the building to be used as a repair shop in connection with the furniture store permitted all things necessary to the enjoyment of the prop- erty for such use. The clause in the written portion of the policy, "Four hundred dollars on the stock of furniture, upholstery goods, and other mer- chandise, not more hazardous, usual to a retail furniture store," must be construed to cover merchandise kept in the trade in the furniture store, and the words "not more hazardous" to refer to such merchandise only and have no reference to the necessary articles kept for use in the repair shop. 248 YOCH V. HOME MUT. INS. CO. [CHAP. XIII The words "any usage or custom of trade or manufacture to the contrary notwithstanding," contained in the printed portion of the policy, so far as they would otherwise prohibit the necessary use of benzine in the repair shop, must be held to be controlled by the written portion of the policy, which expressly insures the building in part as a repair shop; this upon the presumption that must exist, that the parties intended that the repair shop as it was, and as it must necessarily continue to be if it continued at all, must be carried on with all usual and necessary incidents, and that as such it was protected by the contract of insurance; also by force of the well- established rule, the written special description of the particular subject- matter, wherever inconsistent with the printed clauses of the policy, must control. Citizens' Ins. Co. v. McLaughlin, 53 Pa. St. 485; Cushman v. N. W. Ins. Co., 34 Me. 487; Archer v. Merchants' & M. Ins. Co., 43 Mo. 434. The construction we thus give the pohcy renders the contract just and reasonable, and carries out the obvious intention of the parties to it. Any other con- struction would lead to the absurd result that the prohibitory clause of the poUcy would absolutely prevent the carrying on of the business expressly permitted in the written portion. No such absurdity can be held to have been contemplated by the parties, unless the terms of the contract are such as not to permit of any other reasonable construction. As said in Carlin V. Western Ass. Co., 57 Md. 515: "Where the contrary is not expressly made to appear, it is not to be presumed that, when an insurance is effected with reference to an established and current business, whose protection is really the object of the insurance, such a narrow and stringent construction of the provisions of the policy was intended as wiU necessarily cause its serious embarrassment or suspension." It follows from the foregoing that the judgment of the Circuit Court must be reversed and a new trial granted. By the Court: The judgment of the Circuit Court is reversed, and the cause remanded for a new trial. YOCH, RESPONDENT, v. HOME MUTUAL INS. CO., APPELLANT Supreme Court of California, 1896. Ill Cal. 503 Effect of the written description as a ■permit. The policy covered a building occupied as a country store and the stock of merchandise "such as is usually kept in country stores." Testimony was given at the trial tending to show that gasoline is one of the articles of merchandise usually kept in country stores. Harrison, J. A contract of insurance is to be interpreted by the same rules as is any other contract. It must be so interpreted as to give effect to the mutual intention of the parties, as it existed at the time of contracting, CHAP. XIIl] YOCK V. HOME MTJT. INS. CO. 249 SO far as the same is ascertainable. If it is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible; the whole contract Ls to be taken together; when it is partly written and partly printed, the written parts control the printed parts, and, if there is any repugnancy between the two, the printed part must be disregarded; it may be explained by reference to the circumstances under which it was made: in cases of un- certainty, it is to be interpreted most strongly against the party who caused the imcertainty to exist. (Civ. Code, §§ 1636-1654.) Applying these rules to the contract in the present case, it must be held that it was the intention of the defendant to insure gasoline, if it was an article usually kept in country stores, and that, if such was its intention, it was no violation of the policy for the insured to keep gasoline upon the premises as a part of the stock of merchandise. When the defendant agreed to insure a stock of merchandise, "such as is usually kept in country stores," it must be presumed to have known the character of the merchandise which is usually kept in country stores, and that gasoline was one of these articles, and, consequently, that its poUcy covered all such merchandise. Harper v. Albany Mut. Ins. Co., 17 N. Y. 194; Pindar v. Kings County Ins. Co., 36 N. Y. 648, 93 Am. Dec. 544. The court would have no judicial knowledge of the character of merchandise which is usually kept in country stores and it was therefore competent to offer evidence on that point, for the purpose of enabling it, when interpreting the language of the policy, to understand the matter to which it related and the circumstances under which it was made. When it was shown that gasoline is one of the articles which usually is kept in country stores, the court correctly held that it was a part of the subject of the insurance, and that the insured did not violate the pohcy by keeping it in stock. The de- fendant, when it issued the pohcy in question, knew the character of a country store, and that Mrs. Brooks kept it for the purpose of retailing to her cus- tomers aU of the articles kept by her, and that the gasoline which she kept was to be disposed of by retail in the same way as the other portion of her stock. To give to the pohcy the construction now claimed by the defendant would be to hold that, although it agreed with her to insure all the stock she usually kept in her store, yet, if she continued to keep that stock she for- feited all rights under the pohcy. The clause in the pohcy above quoted, and which is relied on by the appellant, cannot be construed as having this effect. The qualification therein which excepts the pohcy from becoming void, viz., "unless otherwise provided by agreement indorsed hereon," is found in the pohcy itself. The subject-matter of the risk — the stock of merchandise "such as is usuaUy kept in country stores"- — was written on the pohcy by the insurer, and as the defendant must be deemed to have intended thereby to insure all such articles as are usually kept in a country store, it must be held that this was an "agreement indorsed" upon the poUcy, which removed the exemption from liabihty that would otherwise have existed, Niagara Fire Ins. Co. v. De Graff, 12 Mich. 124. If there be any repugnance between the written phrase "such as is usuaUy kept in country stores" and the printed clause "any usage or custom of trade or manufacture to the 250 MOORE V. PHCENIX INS. CO. [CHAP. XIII contrary notwithstanding," the former controls the latter, as being the more deliberate expression of the contracting parties, Fraim v. National Ins. Co., supra; Civ. Code, § 1651. The judgmemi and order are affirmed. Gaboxjtte, J., and Van Fleet, J., concurred.' MOORE V. PHCENIX INS. CO. Supreme CoiraT of New HAMPSHraE, 1882. 62 N. H. 240 Unoccupancy for more than ten days, vrithout permit; reoccupancy btrfore the fire. Assumpsit on a policy of insm-ance which prohibited unoccupancy for more than ten days, without written permit. At the time the policy issued, 1 Firat Cong. Church v. Holyoke Ins. Co., 158 Mass. 475, 32 N. E. 572; Fraim v. National Fire Ins. Co., 170 Pa. St. 151, 32 Atl. 613. A policy in the Michigan standard form was procured on the Eaton county courthouse. Like the New York policy, it provided against increase of hazard, also against the keeping, using or allowing of gasoline or other explosives on the premises; but permitted repairing by mechanics for fifteen days at any one time. A committee appointed by the board of supervisors took charge of the repainting of the building, and, in connection with the work, a five-gallon can of gasoline was kept in the bvulding by the painters for at least twenty- four days. From this can torches were filled with gasoline and were then used to bum off or blister the old paint on the outside of the building. The court allowed the verdict of the jury in favor of the insured to stand. Justice Grant writing a strong dissenting opinion. The majority of the court decided that painters are not "mechanics," that "keeping, using or allowing" explosives refers only to an habitual keeping or storage, and that repairs by painters, deemed by the jury to be a reasonable and necessary incident to the use of the property, though continued for more than fifteen days, would not avoid the policy. Smith v. German Ins. Co., 107 Mich. 270, 65 N. W. 236, 30 L. R. A. 368. The New Jersey Court of Errors and Appeals, with the Michigan case before it, was unable to construe the same clause of the standard policy with like liberality to the insured; but left a verdict for the plaintiff undisturbed, based on a different state of facts. The court, in an opinion by Justice Swayze, concludes that painters are "mechanics," within the meaning of the poUcy; but holds that mechanics are impliedly allowed by the express privilege for repairs to make repairs in "a reason- able, proper and usual way," although the hazard may thereby be temporarily in- creased, and although the use of the generally prohibited article, gasoline, may be necessitated, but all within the limits of the specified period of fifteen days, Garrebrant I. Continental Ins. Co., 75 N. J. L. 577, 67 Atl. 90. The North Carolina court on the other hand, in construing the later memorandum clause of the New York standard policy, concluded that there was no necessary inconsistency between the language of the printed exception and the language of the written description of the plaintiff's policy. The written description covered "stock of cloth, C£issimeres, clothing, trim- mings, and all other articles usual in a merchant tailor's establishment." "Patterns" are named in the printed memorandum clause, and excepted from the scope of the in- surance unless liability is specifically assumed thereon. A witness for the plaintiff testified, "all tailors usually keep patterns; can't well get along without them." The court, however, held that effect might be given both to the written and printed parts of the policy, and excluded from the plaintiff's recovery the value of the patterns, Johnston v. Niagara Fire Ins. Co., 118 N. C. 643, 24 S. E. 424. CHAP. XIIl] ilOORE V. PHCENIX INS. CO. 251 the insured premises were occupied by the plaintiff's tenant, who, without giving the plaintiff notice, vacated the premises for more than ten days. Subsequently, and before the fire, the plaintiff put two men into occupancy of the buildings. Smith, J. The defendants are liable only in accordance with the terms and stipulations expressed in their contract as the conditions of their Ua- bility. The contract is in writing, and is contained in the poUcy of insurance. The contract was, not that the poUcy should be void in case of loss or dam- age by fire during the period of unoccupancy, but that vacancy and un- occupancy should terminate the policy. It is contended by the plaintiff upon the authority of State v. Richmond, 26 N. H. 232, that the policy had not become absolutely void at the expira- tion of ten days from the time the house became unoccupied, but was void- able only at the election of the defendants. In the construction of contracts, words are to be understood in their ordinary and popular sense, except in those cases in which the words used have acquired by usage a peculiar sense different from the ordinary and popular one. In this case the word "void" has not acquired by usage a different signification from the ordinary and popular one of a contract that has come to have no legal or binding force. Whether the cessation of the executorj' contract of insurance was temporary and conditional, or perpetual and absolute, is a question; but "void" means that on the eleventh day of continuous nonoccupation, the plaintiff was not insured. The defendants might have waived the condition altogether, or might have waived its breach; but having had no opportunity before the loss to make their election to waive the breach, their refusal to pay, when notified of the loss and unoccupancy, was an effectual election that they insisted upon the condition in the policy. The duty of obtaining the consent of the defendants to the changed con- dition of the buildings rested with the plaintiff. By his neglect to comply with this requirement of the contract, it came to an end by force of its own terms. The contract being once terminated, it could not be revived without the consent of both of the contracting parties. It is immaterial, then, whether the loss of the buildings is due to unoccupancy or to some other cause. The strict and literal meaning of the stipulation that the policy shall be void if the premises remain unoccupied more than ten days is not that the insurance wUl be suspended merely during nonoccupation after the ten days, and will revive when occupation is resumed. In ordinary speech a void policy is one that does not and wUl not insure the holder if the insurer sea- sonably asserts its invalidity. It might be argued that this clause should be so construed as to accomplish no more than the purpose for which it was inserted; that its sole purpose was to protect the insurer against the risk resulting from nonoccupation; and that if this risk was terminated by re- oecupation, the parties intended the insurance should be suspended only dming the existence of the cause of a risk which the company did not assume. 252 INSURANCE CO. OF N. A. V. PITTS [CHAP. XIII On the other hand, it might be argued that such an intention would have been manifested by words specially and expressly providing for a suspension and resumption of the insurance, and would not have been left to be inferred from the general agreement that the policy should be void; that a final termination of the insurance at the end of ten days of nonoccupation is plainly expressed by the provision that the policy shall then be void; and that the parties would not think it necessary to go further, and provide that the void policy should not become valid on reoccupation. Verdict set aside. Blodgett and Cabpentee, JJ., did not sit; Stanley, J., dissented; the others concurred.^ INSURANCE CO. OF NORTH AMERICA v. PITTS Supreme Cotjbt or Mississippi, 1906. 88 Miss. 587 Unoccuparwy followed by reoccupancy. The insured house, belonging to Pitts, was unoccupied for more than ten days, but after vacancy, it was reoccupied by a tenant, and his occupancy continued to the time of the fire. Calhoon, J. On the second contention the facts are that, pending the policy, the premises were at one time vacant for more than ten days, but actual possession was resumed, and some time afterwards, and while oc- cupied, the fire occurred. If the loss had occurred during the prohibited vacancy, there could be no recovery. This is everywhere held and so de- cided by our own court in Insurance Co. v. Scales, 71 Miss. 975 (15 South. Rep. 134). Authorities are not wanting to sustain the views of learned counsel for aj^peUant, and they are sustained also by Mr. Ostrander on Fire Insurance (2d ed., 1897), § 145, and the numerical weight of the decisions he cites in note 5. We prefer to stand on the manifest trend and weight of modem authority. Bom v. Home Ins. Co., 110 Iowa, 379, 81 N. W. Rep. 676, and on Freeman's note to that case in 80 Am. St. Rep. 310; Elliott on Insurance, § 205, and the other citations of the briefs for appellee. If the insurance had been for three years or more, and the premium paid, and the vacancy during the first month, and the fire afterwards and during occupancy, it would be very unfair to deprive the insured of protection. The common people who insure should not be entrapped by a harsh construction of a technical word. The insurance is revived by occupancy, though suspended during the vacancy. Affirmed.^ I Couch V. Fanners' Fire Ins. Co., 64 App. Div. 367, 72 N. Y. Supp. 95. * In case of doubt the question whether the premises were unoccupied must go to the jury. The plaintiff's house insured was on a farm and situated about ten miles from the city of Menominee. Although the plaintiff was engaged in cultivating this CHAP. XIIl] HUSTACE V. PHCENIX INS. CO. 253 HUSTACE V. PHCENIX INSURANCE CO. Court of Appeals of New Yohk, 1903. 175 N. Y. 292 Loss by explosion where fire precedes and cavses explosion. Action on a policy of fire insurance in standard form, insuring "against all direct loss or damage by fire, except as hereinafter provided for," and providing that "this company shall not be liable for loss caused directly or indirectly by invasion or (unless fire ensues, and in that event for damage by fire only) by explosion of any kind.'' The controversy was submitted upon an agreed statement of facts. A conflagration, originating in the Tarrant building in New York City, in course of the burning and within less than half an hour after starting, reached a large stock of explosive drugs and chemicals stored in the building. In consequence of their ignition a terrific explosion ensued which wrecked neighboring buildings, including the buUding belonging to Hustace the plaintifiF, and inisured by the defendant. This building was distant fifty-six feet, eleven inches from the Tarrant building, and was separated from it by two buildings, and an alleyway about eight feet wide. These two inter- vening buildings were also wrecked by the explosion, but the conflagration from the Tarrant building subsequently swept over this space and con- sumed the ruins of the plaintiff's buildiag. Paekee, Ch. J. Now, this building was destroyed by explosion of some kind; and inasmuch as the poUcy expressly provides that "this company shall not be hable for loss caused directly or indirectly ... by explosion of any kind" "unless fire ensues, and in that event for the damage by fire only," it would seem as if — reading this provision of the contract according to the rule laid down by this court in Schoonmaker v. Hoyt (148 N. Y. 425), Judge Martin writing: "Contracts and statutes are to be read and under- stood according to the natural and obvious import of the language without resorting to subtle and forced construction for the pxu'pose of either limiting farm, yet she spent more than half her time in her city home; but she or members of her family were on the insured premises, so a witness testified, "a few days in every week." They slept and ate in the farmhouse while so staying on the farm, and the plaintiff's husband was in the insured building when the fire occurred. From this testimony the jury was allowed to infer that both city and farmhouse were occupied as dwelling houses ; and the judgment in favor of the plaintiff was affirmed on appeal, Maas B. Anchor Fire Ins. Co., 148 Mich. 432, 111 N. W. 1044. In a Virginia case a policy for $3,000 covered sixteen tenement houses, $187.50 being apportioned to each house. During the life of the policy, eight of the buildings became unoccupied, and so remained for more than ten days. The court held that the insurance was valid as to the occupied houses and void as to those unoccupied, Connecticut Fire Ins. Co. v. TiUey, 88 Va. 1024, 14 S. E. 851, 29 Am. St. R. 770. 254 HUSTACE V. PHCENIX INS. CO. [CHAP. XIII or extending their operation. Courts may not correct suspected errors, omissions or defects, or by construction vary the contract of the parties"— the conclusion would be reached that an explosion on other premises which produced such a violent concussion as to destroy a building fifty-seven feet distant, would be plainly within the terms of such provision of the policy. Plaintiffs contend that the language employed indicates that the exemp- tion was not intended to apply to an explosion caused by a preceding fire, whether in distant premises or not, and argue that if the legislature had intended to exempt from explosion whether caused by fire or not, it would have omitted the words "unless fire ensues," etc., and merely said that the "company shall not be liable for loss sustained directly or indirectly by ex- plosion of any kind." Thus, according to their view the clause should be construed as if it read: "or (unless fire ensues, and in that event for the damage by fire only) by explosion of any kind, excepting explosion caused by fire." Such a clause should not, of course, be read into a contract that is plain and unambiguous, particularly when it has been framed pursuant to a direction of the legislatuie, and when necessarily care has been observed to select language which should aptly express the scope of the contract, as well as the limitations upon the liability of the insurer. The occasion for the insertion of this exemption clause in the standard policy wa.s found in the decisions of the courts holding the insurer liable for loss caused indirectly by invasion, insurrection, riot, etc., for loss by order of civil authority directing that a building be blown up to stop the spread of a fire, for loss by theft, by lightning, and in some jurisdictions for loss by explosion. In view of these authorities, the insertion of this exemption provision must have been for the purpose of overcoming the decisions. ' And fixe in- surance companies had the right to limit their risks to loss or damage by fire direct if they so chose, rather than against damage by riot, theft, explosion, lightning and all other causes by which property could be accidentally destroyed. It should be noted that the insuring clause is "against all direct loss or damage by fire, except as hereinafter provided for." Plaintiffs argue that this phrase does not convey the same meaning as would a phrase "against all loss or damage by fire direct;" and their argu- ment is that the adjective "direct" refers to and quaUfies the noun "loss" and not the noun "fire." It would seem as if the adjective "direct" in the connection in which it is employed qualifies not alone "loss" but also "dam- age by fire," and, hence, the phrase has precisely the same meaning as if the insurance was "against loss or damage by fire direct." And to meet situations where explosions might occur, it provided against liability unless ' Was not the explosion clause of the standard policy intended rather to meet such cases as Scripture ti. Lowell Mut. F. Ins. Co., 10 Cush. (Mass.) 356, in which the in- surer was held liable although explosion and not a conflagration was the primarj' catastrophe? CHAP. XIIlJ HUSTACE V. PHCENIX INS. CO. 255 fire ensued, and in that event for the damage occasioned by the fire, and not for damage resulting from the explosion. This provision of the contract is in substantially the same language and has precisely the same meaning as a clause in an insurance contract that was before this court m Briggs v. N. A. & M. Ins. Co., (53 N. Y. 446). That policy contained this provision: "This company shall not be liable for loss caused by invasion, insurrection, riot, civil commotion, military or usurped power, nor for loss caused by Ughtning or explosions of any kind, unless fire ens^ues and then for the loss or damage by fire only." The building insured was used in rectif;>-ing spirits. A person repairing the machinery brought in a lamp. The vapor coming into contact with the burning lamp resulted in an explosion which did great damage. Fire resulted from the explosion, but the damage by fire was shght as compared with that caused by the explo- sion. Under the direction of the court, the jury found separately the dam- ages caused by the explosion and the fire. The General Term granted a new trial unless plaintiff deducted the damages caused by the explosion. This court affirmed the judgment of the General Term, holding that plain- tiff was not entitled to recover for the explosion, and it said: "If it was in fact an explosion, then the policy provides that defendant shall not be liable for damages caused thereby. The plaintiffs insist, however, that an explo- sion caused by a fire is a fire, and, therefore, defendant is hable for the ex- plosion as for a fire. But that reasoning gives no force to the exception. It allows a recoverj' for the eJcplosion when the pohcy expressly stipulates that the defendant will not be hable for that. It may be conceded that in the absence of this exception a recovery could have been had for the whole damage as for loss by fire. The authorities referred to by the plaintiff's counsel tend to that result. I do not think that position will aid the plain- tiffs. An explosion without this exception, if it came under the general head of fire, might have afforded ground for recovery, but defendant guarded against that result by this express stipulation. The exception too, is general, including explosions by fire as well as others." As will be seen by comparison of the exemption clause in that pohcy with the one under consideration, that decision, as well as the argument of the court, in which all concurred, is equally apphcable to the clause in this pol- icy and to this situation. The Briggs case is the only authority in this court precisely in point as to the construction to be given to this exemption clause, and in that case the fire followed the explosion; but the court said of the exemption clause that it included explosions caused by fire as weU as others. There are authorities that both in reasoniug and decision tend otherwise, but attention is not called to them in detail because the position of this court as to that question is settled. Our object in calling attention to a few of the other authorities in other jurisdictions has been to show that this court is not alone in the position taken. Counsel for plaintiffs insists that the wreck of plaintiff's building by the explosion in the Tarrant building was direct loss or damage by fire within the 256 HUSTACE V. PHCENIX INS. CO. [CHAP. XIII meaning of the policy and that the situation calls for precisely the same dis- position as if the question was presented in an action upon a policy covering the Tarrant building where the fire had been raging for something like thirty minutes before the explosion. The fact that the courts prior to the insertion of the explosion exemption clause held that under the policy the insurer was liable as for a loss by fire does not make it a loss by fire direct if it is in reality a loss by explosion. Where a policy contains a provision that there shall be no liability for ex- plosion of any kind, as well as a provision for liability for direct loss by fire, each provision must be given full force and effect unrestrained by decisions made before the explosion exemption clause became a feature of the contract. So, while it may be that but for the explosion clause we should feel con- strained to follow those earlier decisions to which reference was made gen- erally in the Briggs case, and hold defendant liable because a fire in another building was the cause of the explosion, we are not permitted to do that in view of the exemption clause, reUeving defendant from liability from ex- plosions of any kind; and so we held that in the Briggs case charging the in- surance company with the loss by fire, which in that case, followed the ex- plosion and compelling plaintiff to bear the loss caused by the explosion. A similar construction was given to the Hghtning provision of an insurance contract in Beakes v. Phcenix Ins. Company (143 N. Y. 402), Judge Baet- tETT writing. In that case a policy of insurance contained a clause declaring that " this policy shall cover any direct loss or damage caused by lightning, (meaning thereby the commonly accepted use of the term hghtning, and in no case including loss or damage by cyclone, tornado or wind-storm)." The plaintiff's buildings were struck by hghtning and immediately thereafter a high wind came up which substantially damaged the buildings. Defendant claimed it should not be charged with damages occasioned by the wind: but the trial court charged that if the jury found that the buildings were struck by lightning and this was the proximate cause of the loss, plaintiff was entitled to recover the whole loss, although the wind subsequently in- creased the damage; and refused to charge as requested that "the jury must strictly confine their verdict to the actual damage done by the lightning." The plaintiff had judgment; in this court it was reversed on the ground that under the policy the recovery should have been limited to the direct loss or damage done by lightning. The construction placed upon this clause is in harmony with the construction placed upon the explosion clause in the Briggs case. The judgment should be reversed and judgment ordered for defendant on submission, with costs to defendant in both com*ts. - Gkay, O'Brien, Haight, Vann, JJ. (and Mahtin, J., in result), concur; Bahtlett, J., dissents. Judgment reversed, etc.' ' Five judges below decided the other way. Compare the doctrine approved by the United States Supreme Court in The G. R. Booth, 171 U. S. 450, 19 S. Ct. 9, 43 L. Ed. 234. And see Brown v. St. Nicholas Ins. Co., 61 N. Y. 332. The insured, named Mitchell, had a policy for $5,000 on his stock of stoves and CHAP. XIV] VAN TASSEL V. GREENWICH INS. CO. 257 CHAPTER XIV Clauses of the Standard Fire Policy — Continued Cancellation, Mortgagee Clauses, etc. VAN TASSEL v. THE GREENWICH INS. CO. OF THE CITY OF NEW YORK SxjPBEME CouBT OF New York, 1893. 72 Hun, 141. See 151 N. Y. 130; 161 N. Y. 413, reversing 28 App. Div. 163; 184 N. Y. 607 What is an effectual notice of cancellation? Action on a fire insurance binder. Defense, that insurance had been canceled bj' the company, by notice. tinware in Georgetown, D. C. His clerk went down into the cellar of the store and lighted a match there, because it was dark. The lighted match came in contact with the vapor of gasoline kept in the cellar, and a \'iolent explosion at once followed, causing a collapse of the building. The damage to the insured stock was due to the falling of the building and the crushing of the stock. The jury ha%-ing found these facts, the court held that the loss was by explosion and that the insured could not recover under this policy since here the explosion was the first or primary catastrophe, MitcheU t. Potomac Ins. Co., 183 U. S. 42, 22 S. Ct. 22, 46 L. Ed. 74. La Force had a policy on his dwelling, which like the standard policy, excepted loss caused by ex- plosion on any kind unless fire ensued, and then included the loss by fire only. His housekeeper, for the purpose of driving away cockroaches, poured some gasoline on different parts of the kitchen floor. Some of the gasoline dripped through the cracks and evaporated, the vapor being confined between the floor and the ground underneath. There was no vapor in the kitchen, though on the kitchen floor there was liqmd gaso- line, which is not exjflosive. About half an hour later the housekeeper dropped a lighted match on the floor, which caused a fire, but no immediate explosion. After the fire had extended entirely around the room, and had burned the gasoline from three to five minutes, and after the wainscoting around the wall had been ignited, the flames came in contact with the vapor beneath the floor, and it exploded, blowing the floor up and shaking the walls down. The court held that the damage done to the building, both by reason of the actual burning and by reason of the concussion, was occasioned by fire within the meaning of the policy, since the fire was the first or primary catas- trophe, and that the exception in favor of the insurer was not applicable. La Force v. The Williams City Ins. Co., 43 Mo. App. 518. The peril of fire insured against, though the primary cause in point of time may, however, be too remotely connected with the damage in question to be accepted as the responsible cause. For instance, where fire starting in a vessel which was Ij-ing temporarily in the River Mersey re- sulted in a -i-iolent gunpowder explosion aboard, which in turn shattered the windows of buildings on the banks, it was conceded that the explosion must be deemed the responsible cause of the damage to the windows. Here was a casual exposure which perhaps the underwriters could hardly have been expected to take into their calcula- 17 258 VAN TASSEL V. GREENWICH INS. CO. [CHAP. XIV January 1st, 1891, Beecher & Benedict, brokers for the plaintiff Van Tassel, procured from the defendant the following binding slip. "Beecheb & Benedict, "New York, 189... "Insure E. M. Van Tassel, "$10,000 for 12 months at "On " Building N. E. comer 13th Ave. & W. 11th Street, N. Y. City. " In store "Binding this 1 day of January at noon. " (This memo, to be void on delivery of the policy at the office of Beecher & Benedict.) "Company Amount Accepted "Greenwich $10,000 "Wm. Adams." tions, and which certainly was not to be found scheduled upon theirinsurance maps and surveys. It must be observed, however, that the issue in the case arose between stockholders of the insurers, and the insurers, who, it was claimed, had made payment ultra vires to the insured on account of the loss. The court rendered judgment adverse to the contention of the stockholders, The Lottie Sleigh case, Taunton v. Royal Ins, Co., 2 H. & M. 135, 10 Jur. N. S. 291, 33 L. J. Ch. 406, 10 L. T. N. S. 156. Even in that case the underv.Titers saw fit to settle, Bunyon, Ins. (5th ed., 1906) 79. Loss of cargo by fire may include loss of goods by the sinking of the vessel contain- ing them and though no fire touch them, provided the fire is the cause of the sinking, N. Y. & B. Despatch Exp. Co. v. Traders' & M. Ins. Co., 135 Mass. 221. Falling Building. — Or if a building or any part thereof fall, excerpt as a result of fire, all insurance on such building or its contents shall immediately cease. If ftny sul> stantial portion of the structure falls, except as the result of antecedent fire, the in- surance forthwith terminates, Kiessel s. Sun Ins. Office, 88 Fed. 243, 31 C. C. A. 515; Foster v. Home Ins. Co., 74 C. C. A. 445, 143 Fed. 307; Nelson v. Traders' Ins. Co., 181 N. Y. 472, 74 N. E. 421; but the rule is otherwise, if only a trifling portion falls, London & L. Ins. Co. v. Crunk, 91 Tenn. 376, 23 S. W. 140; Home Mut. Ins. Co. u. Tomldns, 96 Tex. 187, 71 S. W. 814. If, however, the fall is caused by an explosion and fire ensues, then, as is manifest, the company is liable for the fire loss, by virtue of the explosion clause of the policy, Leonard v. Orient Ins. Co., 109 Fed. 286, 48 C. C. A. 369, 54 L. R. A. 706; Friedman v. Atlas Assur. Co., 133 Mich. 212, 94 N. W. 757; Davis v. Ins. Co., 115 Mich. 382, 73 N. W. 393; Dow x. Faneuil Hall Ins. Co., 127 Mass. 346. The burden of proof rests on the insurance company to show that the fall preceded the fire. Western Assur. Co. v. Mohlman, 83 Fed. 811, 51 U. S. App. 577, 28 C. C. A. 157; Ermentrout v. Girard P. & M. Ins. Co., 63 Minn. 305, 65 N. W. 635, 56 Am. St. R. 485, 30 L. R. A. 346. Earthquake and Volcano Clause. — In California and in other localities an earthquake clause is sometimes employed. Its purpose is to relieve the company from loss caused by a convulsion of nature. A defense under this exception often presents an issue of fact for the jury as to whether the fire in question may not have been proximately due to some other cause than the earthquake. The burden of proof is on the insurer, Board of Education v. Alliance Ins. Co., 159 Fed. 991; Williamsburgh City F. Ins. Co. c. V.'illard, 164 Fed. 404; McEvoy ». Security F. Ins. Co. (Md., 1909), 73 Atl. 157. c::.\r. XI v] VAN tassel v. Greenwich ins. co. 259 ^lore than five days before the fire, the defendant wrote to Beecher & Benedict as follows: "The Greenwich Insubance Company, "161 Broadway, "New York, Jan. 7, 1891. "Beecher & Benedict, 145 Broadway. "Gentlemen: — Your application for renewal of insurance for E. M. Van Tassel at n. e. cor. 13th Ave. & West 11th St. is declined for $10,000; would renew for So,000 if wanted. "You will, therefore, consider that the risk is not held binding by this company for more than $5,000. "Very truly yours, "M. A. Stone, 'Secretary.' " No poUcy or renewal receipt was ever delivered or premium paid. The standard policy provides "this policy shall be canceled at any time at the request of the insured, or by the company, by giving five days' notice of such cancellation," etc. As usual in dealing through brokers, the company gave credit for the premium. The fire occurred on the night of January 13th, and destroyed the grain warehouse mentioned in the binding sUp. FoLLEiT, J. The binding sUp of January 1, 1891, continued the original policy for 310,000 in force subject to "the original stipulations" therein contained. It was provided in the policy that any renewal of it should be subject to its provisions, which is the legal effect of a "binding slip," Lipman V. The Niagara Fire Insurance Co., 121 X. Y. 454; Karelsen v. The Sun Fire Office, 122 N. Y. 545; May on Ins. (3d ed.), §§ 44-59. By the binding sUp the defendant contracted to continue its policy in force for 810,000 during the year 1891. This slip bound the company as effectually as the usual renewal receipt issued by insurers, and there was no way in which the de- fendant could, without the plaintiff's assent, terminate its contract except in the mode provided in the policy. This it failed to do. The letter of January 7th was not effectual as a notice of cancellation, and at most it simply informed the insured that vmless he consented to accept a policy for $5,000 and surrender the contract which he than held, the insurance would be canceled. To give this letter greater effect would be permitting the de- fendant to put an end to its contract in a way not provided for. The letter amounted only to a proposition by the defendant to the plaintiff to consent to a reduction of the amount insured. He had the right to accept the pro- posal or to stand by the contract then existing. He was not bound to take further action in the matter. Until the policy was canceled in accordance with its provision, it was in force and the plaintifif was liable for the premium earned while the risk was covered. V.\N Brunt, P. J., and Parker, J., concurred. On another ground the Appellate Di\'ision decided in favor of the defendant. The Court of Appeals 260 TISDELL V. NEW HAMP. FIRE INS. CO. [CHAP. XIV approved the portion of the opinion above reported, and as to the other point reversed in favor of the plaintiff. TISDELL V. THE NEW HAMPSHIRE FIRE INSURANCE COMPANY Court of Appeals of New York, 1898. 155 N. Y. 163 Whether notice of cancellation by the insurance company is effectual withovi tender oj the amount of unearned premium. Action on a standard policy of fire insurance the cancellation clause of which is as follows: "This poUcy shall be canceled at any time at the re- quest of the insured, or by the company, by giving five days' notice of such cancellation. If this poUcy shall be canceled, as hereinbefore provided or become void, or cease, 'the premium having been actually paid, the unearned portion shaU be returned on surrender of this policy or last renewal, this company retaining the customary short rates, except that when this poUcy is canceled by this company by giving notice, it shall retain only the pro rata premium.'' More than five days before the fire, the defendant through its agent had served upon the plaintiff a written notice of cancellation but made no payment back or tender of any part of the premium. Nor had the plaintiff returned or surrendered the policy. Babtlett, J. The question presented on this appeal is no longer an open one in this court. It was decided in the case of Nitsch v. American Central Insurance Company (152 N. Y. 635), affirmed in this court without an opinion. In that case, as in this one, the question presented was, whether the pro- vision of the New York standard policy of fire insurance, relating to the cancellation of a policy at the instance of the company, requires that, in addition to giving the five days' notice, the company must return or tender the unearned premiums in order to effect a cancellation.- The answer was in the affirmative. The order should be affirmed, with costs. Parker, Ch. J. (dissenting). This controversy must be settled by the contract between the parties. The standard policy has been prepared under authority of law by men experienced in insurance contracts, and it is, therefore, fair to assume that the agreement may be treated as one prepared by men competent to use language adequate to convey clearly and distinctly the views of the parties. In such case it is the rule that if the language of a statute or contract, read in CHAP. XIV] TISDELL V. NEW HAMP. FIRE INS. CO. 261 the order of its clauses, presents no ambiguity, courts will not attempt, through transposition of clauses or ingenious argument as to the general intent, to quaUfy by construction its meaning. (Doe v. Considine, 6 Wallace, 458.) The first sentence provides for the cancellation of a pohcy. It declares that "it shall be canceled ... by the company by giving five daj's' notice of such cancellation." In other words, the underwriter, by its contract, reserved to itself the right to cancel the contract of insurance by a notice of five days. Nothing else is provided to be done. Xotice alone shall be suffi- cient says the contract. The language is unambiguous. It admits of no debate and requires no construction. Words more apt to accomplish the cancellation of a policy by the giving of the five days' notice cannot well be imagined. Having provided for a cancellation of the policy, either by the request of the insured or upon notice given by the company, the next clause of the agreement proceeds to make disposition of the imearned premiums, in the event of the exercise of the option to cancel by either of the parties. The opening phrase of the clause shows that what follows proceeds upon the assumption that the poMcy shall have been canceled before occasion arises for acting under its provisions. It reads, "If this poUcy shall be can- celed as hereinbefore provided" — referring necessarily to the company's five days' notice — "the imeamed portion of the premiums shall be returned." When? At the time of the giving of the five days' notice of cancellation? Not at all; "on the surrender of the pohcy" is the occasion fixed by the con- tract for its return. The scheme of this portion of the contract, then, is to provide, first, for the cancellation of the poUcy — that is to be accomplished by the simple request of the insured, if he desires to cancel it, or by a five days' notice on the part of the company if it desires to terminate its obliga- tion under the pohcy. The pohcy having been put an end to by cancella- tion, at the insistence of one party or the other, then the situation of the parties is such that the company has in its possession certain premiums which it has not earned, and which it does not desire to earn, and the other party has in his possession the policy of insurance, no longer, of course, of use to him, and of no particular value to the company, except that when it finally comes into the company's possession it of itself furnishes evidence that the xmeamed premiums have Deen paid to the insured. With this situation, then, the agreement undertakes to deal, and it provides that upon the surrender of the pohcy the unearned premium, whether at short rate or pro rata premium, depending upon which party brought about the cancella- tion, shall be returned to the insured. Practically, it says to the insured: You return the pohcy to the place where you got it from and the company wUI at once turn over the unearned premium to which you are entitled under this contract. This agreement is so clearly expressed that there does not seem to be opportunity for insisting that the language means something quite different from what is suggested to the mind upon the first reading. And still other readings will not prompt the thought that there is possibly any ambiguity. 262 TISDELL V. NEW HAMP. FIRE INS. CO. [CHAP. XTV It is suggested in the opinion of the learned trial judge in the case of Nitsch V. American Central Insurance Company, subsequently affirmed in this court without an opinion (152 N. Y. 635), that, under such a reading of the contract as on its face it is apparent it should have, "a man might pay $1,000 for insurance to-day, receive a notice from the insurance company to-morrow which would have the effect to cancel his policy in five days, and at the end of the week have no remedy except an action at law against the company." Such a case could happen undoubtedly, but it is not likely to. Courts cannot assume that insurance companies will act arbitrarily, or that they are so lacking in business prudence as to be willing to acquire a reputa- tion for practicing a wrong of that character upon customers. On the con- trary, we must assume that corporations, as well as individuals, intend faithfully to keep their contracts. But were it our duty to indulge in a totally different presumption, the situation would not be changed, for the court is without authority to make contracts for the parties. The lawmaking power of the State, the legislature, has undertaken to provide for the creation of a standard policy of &e insurance for the protec- tion alike of the insured and the insurer, and if the standard policy needs further amendment, relief must be sought from that source. Prior to the passage of chapter 488 of the Laws of 1886, providing for a uniform contract of fire insurance to be used by fire underwriters within the State, there were two cases in this court, namely: Van Valkenburgh v. Lenox Fire Ins. Co. (51 N. Y. 465) and Griffey v. New York Central Insurance Co. (100 N. Y. 417), holding that the cancellation clause was not operative unless the company should tender or return to the insured the amoimt of the imearned premium. The cancellation clause in those contracts differs very materially from the one in question. It reads as follows: "This insurance may be terminated at any time at the request of the assured, in which case the company shall retain only the customary short rates for the time the poUcy has been in force. The insurance may also be terminated at any time at the option of the company on giving notice to that effect, and refunding a ratable proportion of the premium for the un- expired time of this pohcy." Now, clearly, that agreement did provide, as the courts held, that two things were required to terminate the pohcy — first, the giving of the notice, and, second, the refunding of the unearned premium. Now, after these decisions were made, the cancellation clause of the present pohcy was prepared, and it does not seem to be an intemperate use of the imagination to draw the inference that it was prepared in view of the decisions to which I have referred, and to meet them by establishing a con- tract which should make cancellation by the company less difficult. It is certainly difficult to see how they could have used language more appropriate to accomplish that result. The order should be reversed and a new trial granted, with costs to abide the event. Babtlett, J., reads for affirmance; Haight, Maetin and Vann, JJ., con- CHAP. XIV] SCHWARZCHILD, ETC., CO. V. PHCENIX INS. CO. 263 cur; Paekeh, Ch. J., reads for reversal; O'Brien, J., concurs; Gray, J., absent. Order affirmed and judgment absolute ordered for plaintiff on stipulation, with costs. SCHWARZSCHILD & SULZBERGER CO. v. PHCENIX INS. CO. OF HARTFORD CiECUiT CouBT OF APPEALS, 1903. 124 Fed. 52 Same subject. The material facts and the form of cancellation clause were the same as in the last case. TowNSEND, Circuit Judge. The language of the foregoing provision de- mands a construction fatal to plaintiff's claim. It provides specifically for the absolute cancellation of the policy at any time by the company by giving five days' notice thereof. It further provides in express terms that on sur- render of the pohcy after such cancellation, the unearned premium shall be returned. It is diflScult to conceive how language more definite could have been employed to show that the right to claim such imeamed premium could only accrue after cancellation by the insurer and surrender by the insured. In support of its contention, counsel for plaintiff relies upon the case of Tisdell V. The New Hampshire Fire Insurance Company, 155 N. Y. 163, 49 N. E. 664, 40 L. R. A. 765. It is true that in said case the Court of Appeals of the State of Xew York by a divided coiu^, held that such repajrment was a condition precedent to cancellation. We are not unmindful of the great weight which should ordinarily be given to the decisions of said court, es- pecially upon a question involving the construction of a form of policy fixed by the statute of said State. But in the Tisdell case we are wholly without any sufficient or satisfactory guide as to the process of reasoning by which a majority of the court reached its conclusion. The opinion states that: " The question presented on this appeal is no longer an open one in this court. It was decided in the case of Nitsch v. American Central Insurance Company, 152 X. Y. 635, 46 X. E. 1149, affirmed in this court without an opinion." The memorandum of the decision in the Nitsch case only shows that it af- firmed a judgment of the Supreme Court, General Term, reported in 83 Hun, 614, 31 X. Y. Supp. 1131, which affirmed a judgment in favor of plain- tiff entered upon a verdict by the trial court. Reference to 83 Hun, 614, 31 N. Y. Supp. 1131, shows that the General Term wrote no opinion. We are, therefore, without anything in the reports to show, what questions were decided, or even what issues were presented. Chief Justice Parker, however, in his dissenting opinion in the Tisdell case, shows that the Court of Appeals 264 SCHWARZCHILD, ETC., CO. V. PHCENIX INS. CO. [cHAP. XIV was required to affinn a judgment of the General Term in the Nitseh case upon another and unquestioned ground of waiver by defendant. In these circumstances, we are unable to accept the conclusions of the Court of Ap- peals in the Tisdell case. Upon the facts found herein, we must hold that notice of cancellation was duly given by defendant, and acquiesced in by plaintiff, and that no further action on the part of defendant was necessary until after the surrender of the policy. The judgment is affirmed with costs.^ ' Davidson v. German Ins. Co., 74 N. J. L. 487. The authorities on both sides of this practical question are thoroughly considered in Taylor v. Ins. Co. of N. A. (Okla., 1909), 105 Pac. 354. Notice by the Insuber to Be Served Upon Whom. — As to whether the insurance company must serve the notice of cancellation upon the insured himself, or whether service upon the broker is sufficient, see Grace v. Am. Cent. Ins. Co., 109 U. S. 278, 3 S. Ct. 207, 27 L. Ed. 932; Standard Leather Co. v. Ins. Co., 224 Pa. St. 186; Snyder V. Commercial Ins. Co., 67 N. J. L. 7, 50 Atl. 509; Hermann v. Niagara Fire Ins. Co., 100 N. Y. 411; Karelsen v. Sun Fire Office, 122 N. Y. 545, 25 N. E. 921. Mortgagee Provision of the Policy. — A mortgagee may employ various methods for protecting his interest by insurance, Palmer Savings Bank v. Ins. Co., 166 Mass. 189. He can take out insurance upon the property for his own benefit exclusively, paying the premiums himself. He is then the sole insured, Boyd ». Thuiingia Ins. Co., 25 Wash. 447, 65 Pac. 785. Hia interest and right of recovery are hmited to the amount of the indebtedness; and the debtor cannot claim the benefit of the insurance. Carpenter v. Ins. Co., 16 Pet. 495, 10 L. Ed. 1044. If the debt is paid the insurance falls, since the mortgagee then loses his insurable interest, Reynolds v. London & Lan. Fire Ins. Co., 128 Cal. 16, 60 Pac. 467. This method, however, is seldom satisfactory to the mortgagee, who prefers to take his interest accruing from the mortgage free and clear of any expense of insurance. If the mortgagor has contracted to give the mortgagee the benefit of insurance, the mortgagee will have an equitable lien upon the proceeds, Wheeler ». Ins. Co., 101 U. S. 439, 25 L. Ed. 1055; but in the absence of some contract with the mortgagor he has no interest whatsoever in the mortgagor's pohcies. Farmers' Loan & Tr. Co. v. Penn. Plate Glass Co., 186 U. S. 434, 22 S. Ct. 842, 46 L. Ed. 1234 (in which it was also held that a covenant by mortgagor to insure for the benefit of mortgagee would not run with the title to a purchaser). likewise as before stated, unless there is some agreement between mortgagor and mortgagee to that effect, the mortgagor cannot avail himself in any way of the proceeds of in- surance which the mortgagee has taken out independently and exclusively for his own security. Palmer Savings Bk. v. Ins. Co., 166 Mass. 189. Though he contract with the mortgagor so to do, the mortgagee may not, for the benefit of himself and the mort- gagor, take out insurance in his own name exclusively in the New York standard form of policy and without disclosure of the facts, since he would thereby violate the con- dition of sole and unconditional ownership contained in the policy. Accordingly, the usual method of securing to a mortgagee the benefit of insurance is by the addition of a special provision in his favor, inscribed upon the face of the mortgagor's policy, and accompanied by the delivery of the original policy or a dupUcate to the mortgagee. A special clause, for this purpose, in former years usually consisted simply of an in- dorsement on the face of the policy of the words, "Loss, if any, payable to A. B., mortgagee," or to "A. B., mortgagee, as his interest may appear," or some similar phrase, and such phrases are still in common use. A mortgagee, however, should not be content with a mere payee clause in New York and in most of the States, since this form of indorsement leaves him too largely at the mercy of his debtor. Syndicate Ins. Co. V. Bohn, 65 Fed. 165, 173, 12 C. C. A. 531. In most jurisdictions, in such a. case, CHAP. XIV] SCHWARZCHILD, ETC., CO. V. PHCENIX INS. CO. 265 he is held to be entitled to recover only subject to any defenses available to the com- pany against the insured mortgagor. Hence if th^ mortgagor has violated any con- dition of the contract, the mortgagee, a mere payee, will take nothing, Bates v. Equita- ble Ins. Co., 10 Wall. (U. S.) 33; Jaskulski v. Ins. Co., 131 Mich. 603, 92 N. W. 98; Moore n. Hanover F. Ins. Co., 141 N. Y. 219, 36 N. E. 191; Krith v. Royal Ins. Co., 117 Wis. 531, 94 N. W. 295. Thus an award is binding on the mortgagee as payee, though he has not been made a party to it, CoUinsville Sav. Soc. v. Boston Ins. Co., 77 Conn. 676, 60 Atl. 647. And so is an election on the part of the company to rebuild or reinstate, although the payee may not even have knowledge that the company has chosen this method of fulfilling its contract, Heilmann v. Westchester F. Ins. Co., 75 N. Y. 7. In several jurisdictions, however, a mere payee clause, construed in con- junction with the mortgagee provision of the standard policy, is held to create an in- dependent contract with the mortgagee, or other interested payee, and to relieve the mortgagee of the effect of forfeitures by the mortgagor. Queen Ins. Co. v. Dearborn Sav. Loan Assoc., 175 lU. 115, 51 N. E. 717 (one-year limitation to begin suit) ; Christen- son V. Fidelity Ins. Co., 117 Iowa, 77, 90 N. W". 495 (foreclosure proceedings); East v. New Orleans Ins. Assoc, 76 Miss. 697, 26 So. 691 (conveyance of title); Senor ». Western Millers' Ins. Co., 181 Mo. 104, 79 S. W. 687 (additional insurance does not forfeit as to mortgagee) ; Henton v. Farmers' Ins. Co. (Neb.), 95 N. W. 670 (foreclosure proceedings) ; Boyd v. Thuringia Ins. Co., 25 Wash. 447, 65 Pac. 785 (alienation and subsequent insurance). These cases last cited exhibit a strained construction in favor of the appointee and would seem to make the standard policy with such an indorse- ment a well-nigh unconstitutional agreement to indemnify him. The real purpose of the framers of the policy is illustrated by the similar clause relating to mutual com- panies. There is a conflict of opinion as to whether the mortgagee thus named as payee will forfeit his interest by commencing foreclosure proceedings without written consent, Delaware Ins. Co. v. Greer, 120 Fed. 916, 57 C. C. A. 188, 61 L. R. A. 137 (held avoided); Henton v. Far. & Merchants' Ins. Co. (Neb.), 95 N. W. 670 (held not avoided). Not being the insured, however, a mere payee by assigning his interest in the policy does not violate the clause prohibiting an assignment of the policy. Whiting V. Burkhardt, 178 Mass. 535, 60 N. E. 1, 52 L. R. A. 788. Where the loss is made payable to the mortgagee as sole payee, and he collects it, he must hold any balance beyond his interest, in the capacity of trustee for the mortgagor, the insured, Ermen- trout V. Am. Ins. Co., 60 Minn. 418, 62 N. W. 543; but where the loss is made payable to a mortgagee as his interest may appear, he is entitled to collect only the amount of his interest. Palmer Sav. Bank v. Ins. Co. of N. A., 166 Mass. 189, 44 N. E. 211. By the terms of the poUcy the insured, and not a mere payee, should make the proof of loss, Armstrong v. Agricultural Ins. Co., 130 N. Y. 560, 567. The Standard Mortgagee Clause. — The policy as modified by the addition of the standard mortgagee clause is held to include two separate contracts largely independ- ent of each other, one in favor of the mortgagor, and the other in favor of the mort- gagee. By the terms of the rider, "the insurance, as to the interest of the mortgagee, shall not be invalidated by any act or neglect of the mortgagor or owner," and, there- fore, a forfeiture as against the mortgagor does not defeat the interest of the mort- gagee, Pheenix Ins. Co. *. Trust Co., 41 Neb. 834, 60 N. W. 133, 25 L. R. A. 679; Eddy v. London Assur. Co., 143 N. Y. 311, 62 N. Y. St. R. 316; Breeyear v. Rocking- ham Farmers' M. F. I. Co., 71 N. H. 445, 52 Atl. 860. A concrete illustration will greatly clarify the situation existing where there are two or more mortgages. Brown owns a house worth $15,000. He borrows S5,000 from the Bowery Savings Bank, for which he gives to the bank a finst mortgage on his house. Another loan of like amount he procures from his bankers, J. P. Morgan & Co., to whom he gives a second mort- gage on the same property. In pursuance of his mortgage covenants, he takes out a policy from the Home Insurance Company for $5,000, with full mortgagee clause in favor of the savings bank; and another policy from the Royal Insurance Company of like amount with similar clause in favor of Morgan & Co. The house, thereafter, is damaged by fire to the extent of $4,000. The savings bank promptly collects $4,000 266 SCHWARZCHILD, ETC., CO. V. PHCENIX INS. CO. [CHAP. XIV as soon as due from the Home Insurance Company, and credits the payment on the first mortgage. Morgan & Co. simultaneously collect $4,000 from the Royal Insur- ance Company, and credit the payment on the second mortgage. At this stage of the transaction, it is manifest, the owner of the house, having lost $4,000 and gained $8,000 has made a profit of $4,000 out of his insurance. But in legal theory the extreme limit of a fire insurance contract is to indemnify. Hence the two insurance companies hav- ing paid the fire loss twice over, must become subrogated to claims of $4,000 against Brown, $2,000 in favor of each company, representing in their relations to Brown, though not to the mortgagees, excess payments. Accordingly, after collection of these claims, the net aggregate loss of the insurers is reduced to $4,000, the precise amount oi the fire damage, for which amount also in the aggregate they would have been liable to the mortgagor under the same policies if there had been no mortgagee clauses attached to them. Brown has thus in fine sustained a fire loss to his property of $4,000 for which his insurers, by diminishing his net indebtedness to that extent, have exactly in- demnified him. But if Brown is insolvent at the time of the fire, and his house has depreciated in value to less than $10,000, obviously the insurers, upon failing to collect their claims against him under subrogation, may, after meeting their several obliga- tions to the mortgagees, be out of pocket considerably more than $4,000. CHAP. XV] PEABODY V. SATTERLEE 267 CHAPTER XV Clauses of the Staxdarb Fike Policy — Concluded Service of Proofs, Magistrate's Certificate, Examinaiion Under Oath, Appraisal, Contribution, Limitation of Time to Sv£, etc. PEABODY V. SATTERLEE ET AL. CouHT OF Appeals of New York, 1901. 166 N. Y. 174 Under the provisions of the standard fire policy, must proof of loss be actiudly received by the insurance company vnthin sixty days after the fire? Bartlett, J. A single question is presented under the provisions of the policy, the material portions of which read as follows: "If fire occur the insured shall give immediate notice of any loss thereby in writing to the attorneys of the underwriters, . . . and withia sixty days after the fire, unless such time is extended in writing by the attorneys of the imderwriters, shall render a statement to the attorneys of the underwriters, signed and sworn to by said insured, stating the knowledge and belief of the insured as to the time and origin of the fire; ..." Here follow the usual requirements in proofs of loss. The contention of the plaintiff is that his assignor has fuUy complied with this provision as to proofs of loss, and he is, therefore, entitled to recover. It remains to consider the undisputed facts in order to determine whether this contention can be sustained. The fire occurred on the 22d day of August, 1896. On the 23d day of September, 1896, Edward S. Hawley, as attorney in fact for Mr. Hamlin, the insured and plaintiff's assignor, prepared and verified proofs of loss and mailed them to the defendants, the attorneys for the underwriters in the city of New York. On the 30th day of September, 1896, the proofs of loss were returned to Mr. Hamlin, the insured, by the defendants, with a letter, which, after acknowledging receipt of the alleged proofs, reads: "These papers were signed and sworn to by Edward S. Hawley as your attorney. We cannot accept these papers as proofs of loss, not having been signed by you personally and sworn to by you. We reject these papers for reason as above stated and return them to you to be properly executed by yourself and not by an attorney." 268 PEABODY V. SATTERLEE [CHAP. XV On the 21st day of October, 1896, proofs of loss sworn to by Mr. Hamlin, the insured, were sent to the defendants by registered mail and were received in the post office in New York city on the 22d day of October, 1896, at eight- thirty p. M., sixty-one days after the fire occurred, they having been mailed in Buffalo on the sixtieth day after the fire. These are the facts upon which is raised the question whether the insured, according to the provisions of the policy, did, within sixty days after the fire, render a statement to the attorneys of the imderwritcrs, signed and sworn to by him. In other words, can it be held, as matter of law, that the insured rendered these proofs of loss to the defendants by depositing them in the post office in Buffalo on the sixtieth day after the fire. As already pointed out, the poUcy provides that the assured within sixty days shall render this state- ment. The Century Dictionary defines the word "render" as meaning "to give; furnish; present." Webster's gives its meaning as "to furnish; state; deliver." A proper reading of the quoted provision of the policy is that the insured is to furnish or deUver to the defendants these proofs of loss, and this clearly means that the papers shall be so furnished to the defendants personally, or to their duly authorized agent if they have one. In cases of this kind substituted service or service by mail is either matter of statute or contract. In this case the contract is silent, and the depositing of the proofs of loss in the mail at Buffalo on the sixtieth day after the ffi'e occurred can- not be held a comphance with the provisions of the pohcy. This view was adopted by the trial court, but the Appellate Division re- versed the judgment and ordered a new trial. The opinion of the Appellate Division, in part, is as follows: "While there are numerous cases reported in which it is held that it is necessary to comply with the provisions of the clause requiring that proof of loss shall be rendered to the attorneys of the under- writers within sixty days of a fire, as a condition precedent to the right of recovery, we are unwUling to say as matter of law that where the plaintiff has compUed with all the requirements of the policy within the time given him by its terms to act and deposited it in the mails, that he has forfeited his right to maintain an action for the recovery of the insurance for which he has paid the premiums." The very question to be decided at this time is whether the plaintiff has complied with all the requirements of the pohcy within the time given him by its terms. If he has he should recover, and if he has not, this court in deciding against him declares no forfeiture of his legal rights, but construes a written contract according to its plain pro- visions. The use of the standard policy in this State was made compulsory in order to protect both parties to the contract of insurance from unnecessary and wasting htigations over questions having their origin in the varying forms of policies issued by the different companies. It is important alike to the insiu-er and insured that the standard poHcy should be fairly construed in order that an instrument, which came from the hands of its creators pre- senting many questions for construction, be rendered clear and easily im- derstood. In the case at bar the insured had nearly three weeks in which to correct his proofs after they were returned by the defendants, and it is CHAP. XV] PEABODY V. SATTERLEE 269 due solely to his own negligence that they did not reach the company in time. It is far more important that there should be a clear and settled rule as to the manner of rendering proofs of loss than that plaintiff should recover in this particular case. The duty of the court in the premises is in no way affected by the fact that the defendants have seen fit to avail themselves of a technical defense. The judgment appealed from should be reversed and judgment of Trial Term affirmed, with costs. Pakkeb, Ch. J., Gray and Werneb, JJ., concur; O'Beien, Maetin and ^^Ajnsr, JJ., dissent. Ordered accordingly.^ ' A considerable number of tribunals, however, have allowed to the insured under the Xew York standard policy twelve months less sixty days within which to serve his statement or proof of claim basing this conclusion on the ground that while service of proofs sixty days before action is unmistakably made a condition precedent, the policy nowhere expressly states that forf jiture will be incurred as a result of a failure to render the proof within the period named, Southern Ins. Co. v. Knight, 111 Ga. 622, 624, 36 S. E. 821, 78 .\m. St. R. 216, 52 L. R. A. 70; St. Paul F. & M. Ins. Co. v. Owens, 69 Kan. 602, 77 Pac. 544; Allen v. Mil. Mech. Ins. Co., 106 Mich. 204, 64 N. W. 15; Continental Ins. Co. v. Whittaker, 112 Term. 151, 79 S. W. 119, 64 L. R. A. 451. Magistrates' Cektificate. — If affirmatively required to do so the insured must furnish a magistrate certificate, McNally v. Phoenix Ins. Co., 137 N. Y. 389, 33 N. E. 475; Lane n. St. Paul Ins. Co., 50 Minn. 227, 52 N. W. 649, 17 L. R. A. 197; KeUy v. Sun Fire Office, 141 Pa. St. 10, 21 Atl. 447, 23 Am. St. R. 254. But see, ccmtra, Home Ins. Co. t. Hammang, 44 Xeb. 567, 62 N. W. 883; German-Am. Ins. Co. v. Norris, 100 Ky. 29, 37 S. W. 267. Examination. — Likewise the assured must submit to a personal examination under oath and produce his books and bills on demand so far as it lies within his power to do so, Clafin 71. Commonwealth Ins. Co., 110 U. S. 81, 3 S. Ct. 507; Firemen's Fund Ins. Co. v. Sims, 115 Ga. 939, 42 S. E. 269. Under such clauses of the policy, however, the insured is not required to perform impossibilities, L. & L. & G. Ins. Co. v. Kearney, 180 U. S. 132, 45 L. Ed. 460, 21 S. Ct. 326. Appraisal. — Likewise the assured must submit to the terms of the standard ap- praisal clause, Hamilton v. L. & L. & G. Ins. Co., 136 U. S. 242, 10 S. Ct. 945, 34 L. Ed. 419; Chainless Cycle Co. v. Security Ins. Co., 169 N. Y. 304, 62 N. E. 392; Kersey v. Phoenix Ins. Co., 135 Mich. 10, 97 N. W. 57; but a clause referring all matters of differ- ence to arbitration would be illegal and against public policy as ousting the courts altogether of their jurisdiction, Sanford v. Conn. Trav. Mut. Ace. Assoc, 147 N. Y. 326, 41 N. E. 694. The appraisal clause is of great value to the insurance companies and there are many decisions of the courts relating to it. Appraisers Competent, Disinterested. — The appraisers and umpire must be competent and disinterested, Bradshaw v. -Agricultural Ins. Co., 137 N. Y. 137, 32 N. E. 1055; Produce Refrig. Co. v. Norwich Union Fire Ins. Co., 91 Minn. 210, 97 N. W. 875. They are a quasi court. Hall i. Western Assur. Co., 133 Ala. 637, 32 So. 257; Goodwin v. Merchants' Ins. Co., 118 Iowa, 601, 92 N. W. 894; Schoenich v. Am. Ins. Co., 109 Minn. 388. Scope of the Appraisal. — The scope of the appraisal should be held to include the entire loss and not simply the damage to property some remains of which are left in sight, Rutter v. Hanover Fire Ins. Co., 138 Ala. 202, 35 So. 33 (1903); Adams v. N. Y. Bowery Ins. Co., 85 Iowa, 6, 51 N. W. 1149; Chippewa L. Co. v. Phoenix Ins. Co., 80 Mich. 116, 44 N. W. 1055; Schrepfer v. Rockford Ins. Co., 77 Minn. 291, 79 N. W. 1005; Conn. F. Ins. Co. v. Carnahan, 63 Ohio St. 258, 58 N. E. 805; contra, Lang i'. Eagle Fire Co., 12 App. Div. 39, 42 N. Y. Supp. 539. 270 PEABODY V. SATTERLEE [CHAP. XV Conduct of Appraisal. — No very definite code of regulations for the guidance of umpire and appraisers can be deduced from the many decisions upon the subject. The rigid common-law rules of evidence and court procedure do not apply, Vincent V. German Ins. Co., 120 Iowa, 272, 94 N. W. 458. Nor is the appraisal precisely the same as an ordinary common-law arbitration. Stout v. Phcenix Ins. Co., 65 N. J. Eq. 566, 570; but it is rather intended to afford a simple, informal, and speedy remedy, Farrell u. German Ins. Co., 175 Mass. 340, 347, 56 N. E. 572, to be applied prior to the removal of the remains of the property damaged. Nevertheless the umpire and appraisers occupy very much the same position, and owe substantially the same duty, as common-law arbitrators; therefore, above all things, they must act fairly, without bias, and in good faith. Kaiser v. Hamburg-Brem. Fire Ins. Co., 59 App. Div. 525, 69 N. Y. Supp. 344, aff'd 172 N. Y. 663, 65 N. E. 1118. The policy does not dictate as to the character of evidence that may be received, Strome v. London Assur. Corp., 20 App. Div. 671, 47 N. Y. Supp. 481. Consequently in proper cases the arbitrators, if left to ptirsue their own methods, may content them- selves with a personal inspection of the damaged property without further evidence. Hall V. Norwalk Fire Ins. Co., 57 Conn. 105, 17 Atl. 356; Ins. Co. v. Ries, 80 Ohio St. 272 (1909); but must not arbitrarily decline to receive proffered testimony. Conti- nental Ins. Co. v. Garrett, 125 Fed. 589, 60 C. C. A. 395; Harth Bros. Grain Co. v. Continental Ins. Co., 31 Ky. L. R. 180, 102 S. W. 242; Carlston v. St. Paul F. & Mar. Ins. Co., 37 Mont. 118, 94 Pao. 756. Unfinished Appraisals. — If an appraiser or umpire declines to act or to proceed, a new appointment should promptly be made, Westenhaver v. German-Am. Ins. Co., 113 Iowa, 726, 84 N. W. 717; but if, through the connivance or fault of the company, no award is reached, its absence furnishes no defense to it, Uhrig v. Williamsburgh City Fire Ins. Co., 101 N. Y. 362, 4 N. E. 745 (for the jury) ; Western Assur. Co. v. Hall, 120 Ala. 547, 24 So. 936, and in such a case the assured need not make an attempt at a second appraisal. The rule also, in most jurisdictions, seems to be substantially the same as just stated, where the award fails solely because of the fault of the com- pany's appraiser, to some extent an appraiser being thus regarded as the representative of the party appointing him. Agricultural Ins. Co., 137 N. Y. 137, 32 N. E. 1055; Chapman v. Rockford Ins. Co., 89 Wis. 572, 62 N. W. 422, 28 L. R. A. 405. Where the appraisal drops through no fault of either party, the question is not uniformly de- cided whether the insured must do anything more, though it is not easy to see how a mere attempt to comply with an important condition of the contract can be taken as an equivalent for performance. Some courts accordingly enforce the condition more rigorously, holding in effect that the assured must pursue his efforts, including if need be a fresh appointment, until it appears that through no fault or omission of his own it is impracticable to furnish an award, Vernon Ins. Co. v. Maitlen, 158 Ind. 393, 63 N. E. 755 (appraisers could not agree on umpire, held, no excuse for breach of condi- tion); Westenhaver v. German-Am. Ins. Co., 113 Iowa, 726, 84 N. Y. 717 (failure to agree on umpire no excuse for lack of award); Fisher v. Merchants' Ins. Co., 95 Me. 486, 50 Atl. 282 (must arbitrate or give good legal excuse). Other courts construe the condition more liberally towards the assured. Regarding the provision as inci- dental and collateral to the main contract, they are more disposed to consider that iu once selecting a suitable appraiser, and in standing ready to furnish in aid of an appraisal all pertinent testimony within his control, the assured has performed the full measure of his obligation under this clause of the policy. Western Assur. Co. v. Decker, 98 Fed. 381, 39 C. C. A. 383 (Sanborn, J., dissenting); Western Assur. Co. ». Hall, 120 Ala. 547, 24 So. 936; Bemhard ». Rochester German Ins. Co., 79 Conn. 388, 05 Atl. 134; Conn. Fire Ins. Co. v. Cohen, 97 Md. 294, 55 Atl. 675 (no umpire ever selected); Pretzfelder v. Merchants' Ins. Co., 116 N. C. 491, 21 S. E. 470; Fire Assn. v. .ippel, 76 Ohio St. 1, 80 N. E. 952; Fritz v. Brit.-Am. Assur. Co., 208 Pa. St. 268, 57 Atl. 573. The Michigan court declares: "It is the established rule in this state that no right of action on the part of an insured exists until an appraisal provided for in the policy has been made." And the court held that if an appraiser failed to act CHAP. XV] PEABODY V. SATTEELEE 271 another should be chosen, Baumgarth ». Firemen's Fund Ins. Co., 152 Mich. 179, 116 N. W. 449. If the appraisal extends beyond the limit of time for beginning ac- tion such period is by implication extended until sixty days after award. Setting Aside Awaed. — Where the arbitrators are governed by proper methods and act in good faith, much discretion is vested in them. Their award will not be vacated merely because it is in fact either excessive, or inadequate, Kearney v. Wash- tenaw Ins. Co., 126 Mich. 246, 85 N. W. 733. In general, an award is conclusive as to the amount of loss, Billmyer v. Ins. Co., 57 W. Va. 42, 49 S. E. 901 ; but, where the error is so great as to be indicative of gross partiaUty, undue influence, or corruption, then there exists ground for setting aside the award. Kaiser v. Ins. Co., 59 App. Div. 525, 69 N. Y. Supp. 344, aff'd 172 N. Y. 663, 65 N. E. 1118; Ins. Co. of N. A. v. Hege- wald, 161 Ind. 631, 66 N. E. 902 (award less than one-half the loss); Vincent v. Ger- man Ins. Co., 120 Iowa, 272, 94 N. W. 458; Produce R. Co. v. Ins. See., 91 Minn. 210, 97 N. W. 875. The same is true, if the award "is obviously and extremely unjust," Perry v. Greenwich Ins. Co., 137 N. C. 402, 49 S. E. 889 (award $73.50; loss S750), though there be no evil intent or improper motive on the part of any person con- cerned, Prov. Wash. Ins. Co. v. Board of Education, 49 W. Va. 360, 38 S. E. 679. Where the methods of arbitrators, acting as judicial officers, are shown to be unjust or unlawful, the award will be the more readily annulled. Thus the refusal to take pertinent and material testimony, Misness v. German-Am. Ins. Co., 50 Minn. 341, 52 N. W. 932; Stemmer v. Scottish V. Ins. Co., 33 Oreg. 65, 53 Pac. 498; or an estunate of the damage on an improper basis, Prov. Wash. Ins. Co. v. Board of Education, 49 W. Va. 360, 38 S. E. 679 ; or a neglect to allow one of the appraisers a fair participation in the proceedings. Hills v. Home Ins. Co., 129 Mass. 345 (in which two out of three prejudged the case on ex parte testimony) ; Springfield F. & M. Ins. Co. v. Payne, 57 Kan. 291, 46 Pac. 315; or an omission to afford proper opportunity to one of the par- ties to present his case, Redner v. N. Y. Fire Ins. Co., 92 Minn. 306, 99 N. W. 886; or the fraudulent concealment of books and inventory or other evidence, Stockton, etc., Works V. Glens Falls Ins. Co., 98 Cal. 557, 33 Pac. 633; or the failure to include in the estimate a part of the property submitted, Adams v. N. Y. Bowery Ins. Co., 85 Iowa, 6, 51 N. W. 1149, will be good ground for upsetting the award and defeating the plain- tiff altogether, or for relegating the parties to the verdict of a jury to determine the actual amount of loss, as the case may be. But the legal presumptions are in favor of the validity of the award. Consequently, in the absence of fraud, misconduct or gross mistake it is a final adjustment of the amount of loss, Hanover Fire Ins. Co. t. Lewis, 28 Fla. 209, 10 So. 297; Bates v. Brit.-Am. Ins. Co., 100 Ga. 249, 28 S. E. 155; Townsend v. Greenwich Ins. Co., 86 App. Div. 323, 83 N. Y. Supp. 909, aff'd 178 N. Y. 634, 71 N. E. 1140; Am. Cent. Ins. Co. v. Bass, 90 Tex. 380, 38 S. W. 1119. Pko Rata Clause — Othek Instjkancb. — To admit of the application of the pro rata or contribution clause there must be more than one policy to contribute, and the total concurrent insurance must exceed the general loss, Lesure Lumber Co. i>. Mutual Ins. Co., 101 Iowa, 514, 70 N. W. 761; PencU v. Home Ins. Co., 3 Wash. 485, 28 Pac. 1031. What Is Othek Contributing Insubance. — Policies of fire insurance, to come into the apportionment or contribution, must insure the same interest, and be upon the same property or some part thereof, Niagara F. Ins. Co. ». Scammon, 144 111. 490, 28 N. E. 919; Lowell Mfg. Co. v. Safeguard Ins. Co., 88 N. Y. 592, 597. They must also be subsisting, unexpired, or uncanceled at the time of the loss. Farmers' Feed Co V. Scottish U. & N. Ins. Co., 65 App. Div. 70, 72 N. Y. Supp. 732, reversed on another point, 173 N. Y. 241, 65 N. E. 1105. Thus, if a mortgagor insures his interest, and a mortgagee, either by a separate policy or by a mortgagee clause attached to the mort- gagor's policy, insures his interest on the same property, there is no double or other insurance. Home Ins. Co. v. Koob, 113 Ky. 360, 68 S. W. 453; Eddy v. London Assur. Co., 143 N. Y. 311, 38 N. E. 307, 25 L. R. A. 686. But if the mortgagor's policy is simply made payable to the mortgagee without a mortgagee clause, and the mortgagor should take out another policy upon the same property and against the same risk, it 272 PEABODY V. SATTERLEE [CHAP. XV would in most juriadictions constitute a case of double insurance, Hine v. Woolworth, 93 N. Y. 75. To constitute other or contributing insurance, however, it is not neces- sary that the persons insured under the different policies should be named by the same description. For example, if a common carrier, warehouseman, or commission mer- chant, takes out insurance upon goods "his own or held by him in trust," or "on account of whom it may concern," or by any designation for the benefit of himself and others interested in the same property, provided such other persons have either given original authority for the procuring of the insurance or have subsequently ratified it, the policy covers their interest as well as the interest of the party named as insured, Kellner v. Fire Asso., 128 Wis. 233, and in that case a policy by the owners or the other persons in interest will constitute other or double insurance, and both sets of policies will come into any apportionment, California Ins. Co. v. Union Compress Co., 133 U. S. 387, 10 S. Ct. 365. Nor is it essential in most jurisdictions that the properties de- scribed in the different policies be altogether identical; it is enough, if they are in part the same, Corkey v. Security Ins. Co., 99 Iowa, 382, 68 N. W. 792. The other insurance may cover less, N. J. Rubber Co. v. Commercial Union Ins. Co., 64 N. J. L. 580, 582, 46 Atl. 777, or it may cover more, Washburn, etc., Co. v. Merchants', etc., Ins. Co., 110 Iowa, 423, 81 N. W. 707, but, unfortunately for the assured, policies that have been avoided for breach of warranty must be included in the category of other insur- ance, Bateman ti. Lumberman's Ins. Co., 189 Pa. St. 465, 42 Atl. 184, and so must those of insolvent companies. NoNCONCURRBNT APPORTIONMENTS. — Where under the contribution clause non- concurrent policies are called upon to contribute to the loss, the adjustment often becomes a matter of great complication. The folloT^ng cases may profitably be studied; Page v. Sun Ins. Co., 74 Fed. 203, 20 C. C. A. 397, 33 L. R. A. 249; Cromio v. Kentucky, etc., Ins. Co., 15 B. Mon. (Ky.) 432; Meigs v. London Assur. Co., 126 Fed. 781 {contra on same facts 205 Pa. St. 378, 54 Atl. 1053, the Hill School case, in which there was blanket insurance covering main building and addition, also blanket cover- ing their contents. The addition was covered by specific policies. Its contents were covered to a part of their value by specific) ; Schmaelzle v. London & Lan. Ins. Co., 75 Conn. 397, 53 Atl. 863; Chandler v. Ins. Co. of N. A., 70 Vt. 562, 41 Atl. 502. As to the rule where some policies contain and others do not contain a coinsxirance clause, see Farmers' Feed Co. v. Scottish U. & N. Ins. Co., 173 N. Y. 241, 65 N. E. 1105; Stephenson v. Ins. Co., 116 Wis. 277, 93 N. W. 19. Reinsuhance. — Liability for reinsurance shall be as specifically a^eed hereon. Re- insurance has already been described. It constitutes a new contract and is governed by the law of the place where it is made; but it largely rests upon the provisions of the original policy. Phoenix Ins. Co. v. Erie Transp. Co., 117 U. S. 312, 323, 6 S. Ct. 750, 29 L. Ed. 873. Its immediate subject-matter is not property, but the liability, or a share of the Uabihty, of the original insurer. The character of the risk should be the same as in the contract of original insurance; but it is said that, though the con- tract of reinsurance may involve a less hazard, it must not involve a greater, Loudon Assur. Corp. v. Thompson, 170 N. Y. 94, 62 N. E. 1066. While this is true, it not in- frequently happens, however, that, for a time, the amount or sum insured in the policy of reinsurance will be greater than the amount of the original insurance, where the latter has been reduced by indorsement on account of a diminution in the amount of property at risk; but the amount of liability under the policy of reinsurance must always be limited by the amount of liability under the original or straight insurance and can never exceed it, since the contract, in its nature, is essentially one of indem- nity, Illinois Mut. Ins. Co. v. Andes Ins. Co., 67 111. 362, 16 Am. Rep. 620. The statute of frauds is not applicable to the contract of reinsurance, inasmuch as it is not a collateral agreement of guaranty, made with a creditor, to answer for the debt of another. Commercial Mut. Ins. v. Union Mut. Ins. Co., 19 How. (U. S.) 318 15 L. Ed. 636, nor does it ordinarily constitute a novation in favor of the original in- sured, Barnes v. Heckla Ins. Co., 56 Minn. 38, 57 N. W. 314, 45 Am. St. R. 438. Inasmuch as the usual contract of reinsurance obligates the second or reinsuring CHAP. XV] PEABODY V. SATTERLEE 273 company to await, and be governed by, the terms of adjustment of loss as made be- tween the original insurer and the original insured, it is held that the provisions re- garding proofs of loss, ConsoUdated Real Estate Co. v. Cashow, 41 Md. 59, appraisal, and the contract limitation of time within which to sue, Jackson v. St. Paul, F. & M. Ins. Co., 99 N. Y. 124, 1 N. E. 539; Home Ins. Co. v. Victoria, etc., Ins. Co. (1907), App. Cas. 59, are not applicable; but the ordinary rules, for example those relating to material misrepresentation, Louisiana Mut. Ins. Co. v. New Orleans Ins. Co., 13 La. Ann. 246, or concealment. New York Bowery Ins. Co. a. New York Ins. Co., 17 Wend. (N. Y.) 359, may be invoked by the reinsuring company in aid of defense against the original insured. In the absence of affirmative misrepresentation made to itself, however, the reinsurer must not complain though the representations of fact con- tained in the original application, correct when made, have ceased to be true, since in that event the reinsurer is insuring a valid contract as it stands, Cahen v. Ins. Co., 69 N". Y. 300; Jackson v. Ins. Co., 99 N. Y. 124, 1 N. E. 539. The original insured cannot bring suit against the second or reinsuring company unless the contract of re- insurance expressly stipulates that he may do so, or such be the intent of the arrange- ment, since without such intent no privity of contract exists between them, Good- rich's Appeal, 109 Pa. St. 523, 2 Atl. 209; Ruohs v. Traders' Ins. Co., Ill Tenn. 405, 78 S. W. 85; Nelson v. Empress Assn. Corp. (1905), 2 K. B. 281. If, however, the policy of reinsiiranoe is made expressly for the benefit of the original insured, the latter may, at least in most jurisdictions, pursue his remedy upon either policy. Glen v, Hope Mut. Ins. Co., 56 N. Y. 379, or both, but can have only one satisfaction, Barnes ». Heckla Ins. Co., 56 Minn. 38, 57 N. W. 314. Any defense which is available to the original insurer may always be raised by the reinsuring company, for it is only the liability of the former that is reinsured, N. Y. State Marine Ins. Co. v. Protection Ins. Co., 1 Story, 458. But if, before having recourse to the reinsurer, the first insurer pays or adjusts its loss, or compromises it so as to fix its amount, this amount will control its right of recovery against the reinsurer, for the contract of reinsurance is one of Lndemnitj' only, and furthermore it is usually made expressly subject to ad- justments concluded by the original insurer, Illinois Mut. Fire Ins. Co. v. Andes Ins. Co., 67 111. 362, 16 Am. R. 620; Insurance Co. v. Insurance Co., 38 Ohio St. 11, 43 Am. Rep. 413. "Other insurance" in a pohcy of reinsurance means other reinsur- ance, Mut. Safety Ins. Co. v. Hone, 2 Comst. (N. Y.) 235. The contract of reinsurance, as has been obsen-ed, is an insurance of liability for loss, and consequently, as soon as the liability of the first insurer has actually accrued, it may bring suit against the reinsurer before an actual payment of the loss, Mutual Safety Ins. Co. v. Hone, 2 Comst. (X. Y.) 235. And so also the reinsurer may be obliged to pay the original insurer the amount of its liabUity, although the latter may have become insolvent, and although it may ultimately be unable to pay its indebtedness to the original in- sured under the original policy, Blackstone v. Alemannia F. Ins. Co., 56 N. Y. 104. The usual practice is for the original insurer, if sued by the original insured, to give the reinsuring company opportunity to come in and defend the suit at the expense of the latter. If the reinsuring company declines to do this, it will be liable for the reasonable costs of the suit, incurred by the original insurer, N. Y. State Mar. Ins. Co. D. Protection Ins. Co., 1 Story, 458; Faneuil Hall Ins. Co. ». L. & L. & G. Ins. Co., 153 Mass. 63, 26 N. E. 244, 10 L. R. A. 423. Limitation of Timb to Site. — Likewise the insured is bound to institute action within the period of limitation specified in the standard policy, Southern F. Ins. Co. a. Knight, 111 Ga. 622, 36 S. E. 821, 78 Am. St. R. 216, 52 L. R. A. 70; Garrestson v. Merchants' Ins. Co., 114 Iowa, 17, 86 N. W. 32; Barry Lumber Co. v. Citizens' Ins. Co., 136 Mich. 42, 98 N. W. 761; contra, Omaha Ins. Co. v. Drennan, 56 Neb. 623, 77 N. W. 67. When tee Pehiod Begins to Run. — By the better authority the period of limi- tation begins to run, under the standard policy, from the date of the fire, as specifi- cally stated. For example, AUen v. Dutchess Co. Ins. Co., 95 App. Div. 86, 88 N. Y. Supp. 530; Hocking v. Howard Ins. Co., 130 Pa. St. 170, 18 Atl. 614; Hart v. Citizens' 18 274 PEABODY V. SATTEELBE [cHAP. XV Ins. Co., 86 Wis. 77, 56 N. W. 332, 21 L. R. A. 745, 39 Am. St. R. 880. Other courts hold that the period of limitation begins to run from the time when the cause of action on the policy accrues, for instance, often at expiration of sixty days after service of the proofs of loss. For example, Reade v. State Ins. Co., 103 Iowa, 307, 72 N. W. 665, 64 Am. St. R. 180; Sample v. Lond. & Lan. Ins. Co., 46 S. C. 491, 24 S. E. 334, 47 L. R. A. 696, 57 Am. St. R. 701. CHAP. XVl] A FORM OP APPLICATION AND POLICY 275 CHAPTER XVI Life Insurance Policy a form of application and policy A Form of Application I hereby apply for an assurance of S on the plan, premiums pay- able with the Life Insurance Company, on the life of , born at , on , 19 . . , at present and for years resident of I hereby warrant that he is not intemperate in the use of stimulants or narcotics. I agree that the answers given herewith to the questions of the Agent and Examiner, which I declare and warrant to be true, shall be the basis of my contract with the company, and that such contract shall at all times and places be held and construed to have been made in the City of I also agree that if within two years from this date, the Insured shall, without the written consent of the company, reside or travel elsewhere than in or to the United States, Canada, or Europe; or shall within such period and without such consent, be personally engaged in blasting, mining, submarine operations, or in the making of explosives, or in service on any railway train, or on a steam or sailing vessel, or in naval or army service in times of war; the policy herebj' applied for shall thereupon cease and determine. Dated at this day of 19 . . . WiTXESS Signature Questions to be asked by the Agent, and answered by the person to be insured: 1. A What is your full name? b Are you married? 2. What is your occupation? (Give kind of business and position held.) 3. Are you in good health? 4. A For whose benefit is the proposed insurance? B How related to you? 5. What is the total insurance now on your Ufe? 6. In what companies and for what amounts? 7. Have you any applications for insurance now pending? In what companies? 8. A Have you ever applied to any agent or sought insurance in any company which either postponed or refused to issue a Policy? b State companies and cause. 9. Are you engaged in or connected with the manufacture or sale of Malt or Spiritu- ous Liquors? The answers to the following questions must be written by one of the Company's Examiners: 10. Have you now any disease or disorder? If so, what? 11. A For what have you sought medical advice during the past seven years? B Dates? c Duration? n Physicians consulted? 12. A Have you had any personal injury or accident? B What? c When? d Re- sult? 13. A Have you had Rheumatism? B Number of attacks? c Dates? d Duration? E Severity? 14. A Are you or have you been subject to Dyspepsia? B Dates? c Duration? D Severity? 276 A FORM OF APPLICATION AND POLICY [cHAP. XVI 15. Have you ever had any of the following? Calculus or gravel, . . Difficulty in urinating, . Swelling of feet or face. Dropsy, Palpitation, . ■ Disease of heart or brain. Loss of consciousness. Habitual or chronic cough. Consumption Bronchitis, .... Asthma, Spitting of blood, . . . Bleeding piles, .... Pleurisy, Varicose veins, . . . Paralysis or palsy, . . Apoplexy, .... Nervous exhaustion, . . Fits Sunstroke, Dizziness or short breath, Pneumonia, . . Diabetes, . . Delirium Tremens, Vertigo, . . Insanity, . . Liver complaint. Jaundice, Colic, . . . Dysentery, . . Diarrhoea (chronic) Disease of spine. Gout Tumors of any kind, Swelling of glands. Ulcers or open sores. Fistula, . . Discharge from the ear, Rupture, ... Difficulty in swallowing, 16. Family record. Is your father living? . . Is your mother living? . How many brothers living? . (If none, so state.) How many sisters living? . (If none, so state.) Father's father living? . . . Father's mother living? . . Mother's father living? . . . Mother's mother living? . . Age Condition of Health Age Disease which Caused Death Duration Previous Health Is your father dead? ( (If none, so state.) ( ( How many sisters dead? .... 4 (If none, so state.) ( Father's father dead? Father's mother dead? Mother's father dead? Mother's mother dead? CHAP. XVl] A FORM OF -APPLICATION AND POLICY 277 17. Have any two members of the family, grandparents included, had consumption, cancer, paralysis or apoplexy, disease of heaxt, disease of kidneys? Siffned this day of , 19 . . . (Party to be insvred sign here) A Form of Policy This policy witnesseth that the Life Insurance Company, in consideration of the statements and agreements in the application tor this Policy which are hereby made a part of this contract and of the sum of dollars to it in hand paid by and of the annual premium of dollars to be paid at or before twelve o'clock, M., on the day of in every year during the continuance of this policy, does insure the life of in the amount of dollars, for the term of life, -payable to his executors, administrators or assigns, at its oflSce in the City of , upon due and satisfactory proof of interest and of the death of the said insured, deducting therefrom all indebtedness of the party to the company, together with the balance, if any, of the then current year's premium. Provided, that in case the said premiums shall not be paid on or before the several days hereinbefore mentioned for the payment thereof, at the office of the company in the City of , or to agents when they produce receipts signed by the President or Treasurer, then, and in every such case, this policy shall cease and determine, sub- ject to the provisions of the company's non-fokfeituke system as indorsed hereon, ivith accompanying table. This policy does not take effect until the first premium shall have been actually paid ; nor are agents authorized to make, alter or discharge this or any other contract in relation to the matter of this insurance, or to waive any forfeiture hereof, or to grant permits, or to receive for the cash due for premiums anything but cash. Any error made in understating the age of the insured will be adjusted by paying such amount as the premiums paid would purchase at the table rate. No assignment of this policy shall take effect until written notice thereof shall be given to the company. This policy, after two years, will he incontestable, except for fraud or non-payment of premium. In Witness Whereof, the said Life Insurance Company has, by its Presi- dent and Secretary, signed and delivered this contract, at the City of this day of , one thousand nine hundred and , Secretary. , President. non-fokfeittjhe provisions When after two full annual premiums shall have been paid on this policy it shall cease or become void solely by the non-payment of any premium when due, its entire net reserve by the American Experience Mortality and interest at four per cent, yearly, less any indebtedness to the company on this policy, shall be applied by the company as a single premium at the company's rates published and in force at this date, either, first, to the purchase of non-participating term insurance for the full amount insured by this policy, or, second, upon the written application by the owner of this policy and the surrender thereof to the company at within three months from such non-payment of premium, to the purchase of a non-participating paid-up policy payable at the time this policy would be payable if continued in force. Both kinds of insurance aforesaid will be subject to the same conditions, except as to pay- ment of premiums, as those of this policy. No part, however, of such term insurance shall be due or payable unless satisfactory proofs of death be furnished to the company within one year after death; and if death shall occur within three years after such non-payment of premium, and during such term of insurance, there shall be deducted from the amount payable the sum of all the premiums that would have become due on this policy if it had continued in force. 278 MUT. RES. FUND LIFE ASSN. V. COTTER [CHAP. XVI The following table shows the amount that the company agrees to loan (being one- half of the reserve) upon a satisfactory assignment of the policy as collateral security; also the additional time for which the insurance will be continued in fuU force after lapse by non-payment of premium; or the value of the policy in paid-up insurance upon surrender within three months from date of lapse. The figures given are based upon the assumption that the premiums (less current dividends) have been fully paid in cash. If there be any indebtedness upon the policy, the values as stated in the table would have to be reduced proportionally upon the principles stated in the policy. The indebtedness, if any, may be paid off in cash, in which case the figures in the table will apply: Company will Loan In Case of Lapse OF POLICT Number of Years' Premi- ums Paid Extended Insurance Paid-up Policy Yeara Daya $ * $ Certain States have either a standard statutory form of policy for life insurance or a statute defining certain clauses which must and certain clauses which must not be included in the policy. MUTUAL RESERVE FUND LIFE ASSOCM.TION v. COTTER SuPREjrE Court of Arkansas, 1904. 72 Ark. 620 Warranty as to good health and attending physician. This action was brought by W. M. Kennedy, as administrator of John Riffey, deceased, and by Arthur Cotter and W. D. Xewbum, against Mutual Reserve Fund Life Association and United States FideUty & Guaranty Company upon a policy of 81,000 issued by the Reserve Fund Life Associa/- tion on the life of John Riffey, for the benefit of Arthur Cotter and W. D. Xewbum, and bearing date the 30th of June, 1898; Riffey having died. The plaintiffs recovered judgment, and the defendants appealed. The policy was issued in pursuance of an appUcation by John Riffey, the insured, in the month of June, 1898, for the benefit of the appellees. Cotter and Newbum, in which it was expressly agreed that the answers and state- ments contained in parts I and II thereof, by whomsoever written, were warranted to be fuU, complete and true, and that if any of the answers or statements made are not full, complete and true, or if any condition or agreement shall not be fulfilled as required therein or by the policy then the policy issued thereon shall be null and void. These stipulations by the terms thereof and by the provisions of the policy, became a part of CHAP. XVl] MUT. RES. FUND LIFE ASSN. V. COTTER 279 the policy. In the application were the following questions and answers: " (Q) How long since you consulted or were attended by a physician? (A) Sep- tember 1897. (Q) State name and address of such physician? (A) Name, W. B. Snipes; address, Spring Creek. (Q) For what disease or ailment? (A) Malarial fever." The facts were: He was sick in September, 1897, at Spring Creek; had a slight attack of fever; was in bed one day; and Dr. Snipes attended him two days. In October, 1897, about two weeks, or longer, thereafter, he was very sick at Marianna; suffered intense pain; had two physicians, Drs. Drake and Freeman, attending him; and his wife and daughter were called to his bedside. His physicians visited him as often as twice a day, and made as many as thirty or forty professional visits. He was sick a month or longer. He failed to make known to the life association the sickness in October. Battle, J. In Mutual Reserve Fund Life Association v. Farmer, 65 Ark. 581, 595, cited by the appellees, the question asked the insured was, "has the applicant ever had any illness, local disease, injury, mental or nervous disease or infirmi ty, or ever had any disease, weakness of the head, throat, heart, lungs, stomach, kidneys, bladder or any disease or infirmity whatever? " It "was answered by the examining physician (whose answers the applicant made his own) by stating, in effect, that applicant had had none of the dis- eases mentioned within ten years." The facts were that the insured (the apphcant) in that case was foimd within the ten years, about one year or more before his death, in an insensible condition. The room in which he was at the time was filled mth the odor of chloroform. But he was not in a dangerous condition and soon recovered. He did not need the services of a physician. This court held that these facts did not estabUsh a breach of the insured's warranty of the truth of his answer to the question. In that case the sickness was sHght, and of very short duration. In the case at bar the sickness in October, 1897, was serious and of long duration. It demanded the constant attention of physicians, and the at- tendance of the wife and daughter. It was no slight indisposition or trivial or temporary ailment. It might well have demanded and received the in- vestigation and consideration of the life association before issuing the policy sued on, for the purpose of ascertaining its effect on the insurable character of the life proposed. The insured, Riffey, evidently thought that the question called for the disclosure of his sickness in September, 1897. We see no reason for withholding information as to the more serious sickness in the October following. The life association was entitled to the information, to the end that it might have any investigation it might desire before issuing the policy. Providence Life Assurance Society v. ReutUnger, 58 Ark. 528. The conceal- ment of it was calculated to deceive the insurer. The answers to the ques- tions propounded were not full, complete and true, and according to the stip- ulations of the parties, there was a breach of warranty, and the policy sued on is void on account thereof. Reverse and remand for a new trial. 280 CUSHMAN V. tr. S. life ins. CO. [chap. XVI CUSHMAN V. UNITED STATES LIFE INS. CO. Court of Appeals op New York, 1877. 70 N. Y. 72 Warranty; Meaning of terms "disease" and "usual medical attendant." Action upon a policy of life insurance issued by defendant upon the life of Birt Cushman, plaintiff's intestate. The defense was a breach of warranty. The case upon a former appeal is reported ia 63 N. Y. 404. At the close of the evidence defendant's counsel moved for a nonsuit, on the gromid that the evidence showed a breach of warranty in answers by the insured to the following questions in the application: "Has the party had . . . disease of the liver? " Answer, "No." " Or any serious disease? " Answer, "No." "Give name and residence of party's usual medical attend- ant." Answer, "Charles Purdy, M. D., Norwich." The motion was denied, and said counsel duly excepted. Earl, J. It is claimed that there was a breach of warranty in answering "No" to the question in the application whether the applicant "had ever had disease of the liver." Dr. Ormsby, a young physician, who was admitted to practice in 1868, attended the insured in July, 1870, for four, five, or six days, and he testified that he, in his judgment, had congestion of the Uver. It does not appear that his symptoms were very marked. He was not much sick, was dressed every day, and up and around more or less, and soon re- covered. He again attended him in July, 1871, for a similar sickness, still less serious, visited him two or three times, and treated him for congestion of the liver. In 1872, after the pohcy was issued, he treated him again, for five days, for the same complaint; and in 1873 he again attended him for a few days in his last illness, and testified that he then had, and died of, acute congestion of the Uver. The evidence tended to show that the assured was not much sick at any of the times when Dr. Ormsby visited him prior to his last sickness; that he was not confined to his bed; that he was up and aroimd; that he speedily recovered; and that, during all the years prior to his last sickness, he was capable of vigorous labor and great endurance, and was apparently a sound, healthy man. In November, 1871, Dr. Purdy, de- fendant's examining physician, who had known the assured for many years, examined him upon his application for insurance, and found his liver sound and free from disease. He was called to attend him in consultation with Dr. Ormsby, in his last sickness, shortly before his death, and testified that, from the symptoms detailed to him by Dr. Ormsby, he did not die of conges- tion of the liver, but of inflammation of the bowels, thus contradicting Dr. Ormsby as to the cause of death. Taking into consideration all the evidence it cannot be said that it was so conclusively shown that the assured had had congestion of the liver prior to the date of the policy as to leave nothing for CHAP. XVl] CrrSHMAN V. U. S. LIFE INS. CO. 281 the determination of the jury. Taking into consideration the symptoms of the sickness, the degree of skill and the extent of the examination of the doctor, the very shght nature of the sickness and the speedy and complete recovery, and all the other circumstances, it was for the jury to determine whether, prior to the insurance, the assured had had congestion of the liver. But, even if he had had such congestion, it does not follow that, within the meaning of the poUcy, he had had a disease of the hver. In construing con- tracts words must have the sense ia which the parties used them; and, to understand them as the parties understood them, the nature of the contract, the objects to be attained, and aU the circumstances must be considered. By the questions inserted in the application the defendant was seeking for information bearing upon the risk which it was to take, the probable duration of the life to be insured. It was not seeking for information as to merely temporary disorders or functional disturbances having no bearing upon gen- eral health or continuance of life. Colds are generally accompanied with more or less congestion of the lungs, and yet in such a case there is no dis- ease of the lungs which an appHcant for insurance would be bound to state. So most, if not all, persons will have at times congestion of the liver, causing slight functional derangement and temporary iUness; and yet, in the con- templation of parties entering into contracts of life insurance, and having regard to general health and the continuance of life, it may safely be said that in such cases there is no disease of the liver. In construing a policy of life insurance it must be generally true that, before any temporary ailment can be called a disease, it must be such as to indicate a vice in the constitution, or be so serious as to have some bearing upon general health and the con- tinuance of life, or such as, according to common understanding, would be called a disease; and such has been the opinion of text-writers and judges. 2 Park, on Ins. 933, 935; Chattock v. Shawe, 1 Moody & R. 498; Fowkes v. The M. & L. Life Ins. Co., 3 Foster and Fin. 440; Barteau v. The Phcenix Mut. Life Ins. Co., 3 T. & C. (N. Y. Sup. Ct. R.) 578; Peacock v. New York Life Ins. Co., 20 N. Y. 293; Higbie v. Guardian Mut. Life Ins. Co., 53 N. Y. 603; Fitch v. Am. Pop. Life Ins. Co., 59 N. Y. 557, 571. Hence, whether the assured had had congestion of the liver, and whether such congestion was of such a character as to constitute a disease of the liver within the meaning of the policy, were both questions properly submitted to the jury, and their determination thereon is conclusive. The assiu-ed also answered "No" to the question in the apphcation whether he "had had any serious disease." It can hardly be claimed that there was any evidence showing this answer to have been untrue. But whether it was true or not, for reasons above stated, it was at least a question of fact upon all the evidence for the jury. To the question as to the "name and residence of the party's usual medical attendant," the assured answered, "Dr. Charles Purdy," and it is claimed that his answer was untrue. In 1867 Dr. Greenleaf attended the assured when he was sick with some trouble of the bowels, from the 14th to the 30th day of August, and he never attended him before or after that time. Dr. 282 CUSHMAN V. U. S. LIFE INS. CO. [CHAP. XVI Ormsby attended him prior to the date of the policy only in July, 1870, and July, 1871, as above stated. The assured was a single man, who had always prior to his insurance lived in his father's family, and Dr. Purdy had for many years been the family physician. He had frequently attended different members of the family, but had never been called to the house to attend the assured except in his last sickness; but during many years the assured had called upon him every year, and sometimes several times a year, and con- sulted him as physician. It is quite evident that he knew more about the health and constitution of the assured than any other doctor. To constitute a medical attendance, it is not requisite that a physician should attend the patient at his home; an attendance at his own office is sufficient. Of these three physicians, then, who was the "usual medical attendant "? It certainly was not Dr. Greenleaf, who had attended him during but one brief illness, and never before or after. Was it Dr. Ormsby, who had attended him on two occasions, visiting him in aU probably not over half a dozen times? Or was it Dr. Purdy, the family physician in his father's family, upon whom he called yearly for many years for medical advice or treatment? I think Dr. Purdy could more properly be called the usual medical attendant; but, whether this be so or not, it was at least a question for the jury, and there was no error in submitting it to them. But the policy contained a clause in which the defendant promised to pay the amount insured "in three months after due notice and satisfactory proof of the death during the continuance of this policy of the ... as- sured . . . and proof of the just claim of the assured." After the death of the assured, the plaintiff deUvered to the defendant claim and proof of loss, signed and verified by hims elf. Annexed thereto was the statement of Dr. Ormsby, as physician in attendance upon the assured in his last iUness, as to the cause of his death; and in that statement, in answer to the question, "How long have you been the attendant or family physician?" he answered, "Five years." It is contended that this answer shows that Dr. Purdy was not "the usual medical attendant" of the assured prior to the date of the policy, and hence that there was a breach of warranty rendering the policy void, and that therefore there was no "proof of just claim" as required by the policy. To this contention there are several satisfactory answers. The answer made in August, 1873, that Dr. Ormsby had been the "attending physician'' of the assured for five years, does not necessarily show that the answer made at the time of the insurance in November, 1871, that Dr. Purdy had, prior to that time, been the "usual medical attendant," was absolutely imtrue. A party may have several "attending physicians" and one "usual medical attendant." But a stiU better answer is, that the plaintiff was not wholly responsible for the statements made by Dr. Ormsby. He had made his statement, showing a "just claim" against the defendant for the amount insured, and in that statement there was nothing in conffict with any war- ranty contained in the policy. This statement, we may infer from the form of blank furnished by the company, the plaintiff was required to procure from the physician who attended the assured in his last illness. The main CHAP. XVl] WILKINSON V. CONN. MUT. LIFE INS. CO. 283 object of ttds statement was to furnish the company e\idence of the death, and the cause and circumstances thereof. There can be no reason for hold- ing the plaintiff responsible for any misstatement contained therein not caused by Mm. He was responsible for the statement made by himself, but not for the statements which he was required to procure from the attending physician, the officiating clergyman, -and the undertaker. Such statements were procured at the request of the defendant for its information, and it must take Hiem for what they may be worth. The plaintiff had no means of compelling answers in such statements to suit himself. If the answers were not satisfactory, ot were in conffict with any answers contained in the application for the insurance, the defendant could have instituted further inquiries, or asked for further explanations from the plaintiff. This it did not do. So far as it appears, it made no objection to the proof of loss, and did not in answer, or at any prior time, allege the discrepancy now noticed as a reason for refusing to pay the amount insured. It cannot claim to have been misled by the statement of Dr. Ormsby into a defense of the action, even if that were material, as this defense was not alluded to in the answer, and other special defenses were, and were also litigated upon the trial, and there was no evidence that it was so misled. There was, therefore, nothing to prevent the plaintiff from proving upon the trial the truth as to who was the usual medical attendant of the assured. Life Ins. Co. v. Francisco, 17 Wall. 672. Jvdgment affirmed. WILKINSON V. THE CONNECTICUT MUTUAL LIFE INSURANCE CO. SuPKEME CoTJET OF lowA, 1870. 30 lowa, 119 Wananiy as to previous injuries. A QUESTION and answer in the application were as follows: "Has the party ever met with any accidental or serious personal injury? If so, what was it? No." By a stipulation in the policy, it was warranted that if the answers shall be found in any respect untrue, the policy shall be void. It appeared that the insured, formerly a slave, had accidentally fallen from a tree and had for a time been sick in consequence, but that the iajury was only tem- porary, and had passed off entirely in the course of a few days. Cole, Ch. J. The defendant claims that if the insured "ever met with any accidental . . . injury," that will bar a recovery, because the applica- tion is a warranty that she never did. In this construction we do not con- cur. The language of the question is to have a reasonable construction, in view of the purposes for which the question was asked. It must have ref- 284 WILKINSON V. CONN. MITT. LIFE INS. CO. [cHAP. XVI erence to such an accidental injury as probably would or might possibly have influenced the subsequent health or longevity of the insured. It could not refer, and could not be understood by any person reading the question for a personal answer to refer, to a simple bum upon the hand or arm, m infancy; to a cut upon the thumb or finger, in youth; to a stumble and fall- ing, or the sprain of a joint, in a more advanced age. The idea is that such a construction is to be put by the courts upon the language as an ordinary person of common understanding would put upon it when addressed to him for answer. The strict construction or hypercriticism of the language, which would make the word "any" an indefinite term, so as to include all injuries, even the most trifling, would bring a just reproach upon the courts, the law, the defendant itself and its business. The language of the question must have a fair construction, and in the words of our statute (Rev., § 3994), "that sense is to prevail against either party in which he had reason to suppose the other understood it." This construction is not only in accord with reason and justice, but it has the support of the authorities in hke cases. Thus, in Chattuck v. Shawl, 1 Moody & Rob. 498, where the insured declared that "he had not been af- flicted with nor subject to fits," Lord Abinger, C. B., held this to mean, not that he never accidentally had had a fit, but that he was not a person habit- ually or constitutionally afilicted with fits; a person Uable to fits from some peculiarity of temperament, either natural or contracted from some cause during life. And the poUcy was held not to be vitiated by the circumstance that, in consequence of a fall, the person whose life was insured had, several years before the date of the policy, two epileptic fits within a short interval, which the jury were satisfied had never recurred. So, in the case of Ross v. Bradshaw, 1 Wm. Black. 312, the warranty was that the party is in good health. The fact that twelve years before, the party had received a wound which produced partial paralysis of the organs of retention of the urine and faeces, but not such an injury as was calculated to shorten life or affect the vital fimctions, was held not to invalidate the policy; and Lord Mansfield told the jury that all that was necessary was proof that the life was in fact a good one, and so it might be though he had a particular infirmity; and the only question was, whether he was in a reasonably good state of health, and such a life as ought to be insured on common terms. Affirmed.^ ' For definition of life insurance and its nature, see Hitter ». Mut. L. Ins. Co., 169 U. S. 139, 151, 18 S. Ct. 300. At p. 151, the court says: "Life insurance imports a mutual agreement, whereby the insurer, in consideration of the payment by the as- sured of a named sum annually or at certain times, stipulates to pay a larger sum at the death of the assured. The company takes into consideration, among other things, the age and health of the parents and relatives of the applicant for insurance, to- gether with his own age, course of life, habits and present condition; and the premium exacted from the assured is determined by the probable duration of his life, calcu- lated upon the basis of past experience in the business of insurance. The results of that experience are disclosed by standard life and annuity tables showing at any age the probable duration of life." CHAP. XVl] WILKINSON V. CONN. MUT. LIFE INS. CO. 285 Designation of Beneficiary. — Payable to the insured, his executors, adminia- trators, or assigns. A policy taken out in this form is the property of the insured, is subject to the claims of his creditors, except in so far as exempt by some statute, and upon his death is collectible by his executors or administrators hke any other per- sonal assets of his estate, unless he has previously assigned it, Washington Central Bk. V. Hume, 128 U. S. 195, 208, 9 S. Ct. 41, 32 L. Ed. 370; Kelley v. Mann, 56 Iowa, 625, 10 N. W. 221. Otheh Beneficiaries. — Oftentimes the policy is made payable to others than the insured, who may be designated by such general terms that it is not easy to determine to whom the description is intended to be applicable under the circumstances as they happen to exist at the time of the decease of the insured. In such cases the descrip- tive words are given a. popular rather than a technical significance, and, especially where the appointment is gratuitous, parol evidence is freely received to arrive at the real meaning of the insured, Griswold v. Sawyer, 125 N. Y. 411, 26 N. E. 464. Thus the words, "heirs" or "heirs at law" or similar phrases have often been held to include all the distributees under the statutes of distributions, Mullen v. Reed, 64 Conn. 240, 29 Atl. 478, 24 L. R. A. 664, 42 Am. St. R. 174; Britton v. Supreme Council, 46 N. J. Eq. 102, IS Atl. 675, 19 Am. St. R. 376. And the term " child " may be extended to include an adopted child. Virgin v. Marwick, 97 Me. 578, 55 Atl. 520. And chil- dren bom after the making of the contract may be held included. Scull v. .^tna L. Ins. Co., 132 X. C. 30, 43 S. E. 504, 60 L. R. A. 615, 95 Am. St. R. 615; or children bom by a subsequent wife, Helmken v. Meyer, 118 Ga. 657, 45 N. E. 450. Where a policj- is payable to wife and children or other beneficiaries, they all divide the pro- ceeds equally, and not in accordance with the statutes of distributions, unless statutes or by-laws so provide. Bell v. Kinneer, 101 Ky. 271, 40 S. W. 686. To constitute a "dependent" occasional presents to a beneficiary are not enough. There must be dependence in a material degree for assistance or support, Alexander v. Parker, 144 111. 355, 33 X. E. 1S3. In a Massachusetts case, the household consisted of Wilber, the insured, his "ndfe and her two unmarried sisters. One of the sisters and the insured earned the needed funds for the common support while the wife and the remaining sister cared for the house. Wilber took out a benefit certificate after the death of his wife to aid the sisters in the event of his own death, making one of them beneficiary by the terms of the policy. The court concluded that a jury might find from the evidence that the beneficiary was "dependent" upon the assistance of Wilber to support herself and sister in his lifetime in the same degree of comfort in which they had theretofore lived, and that an obligation to furnish such assistance, although perhaps not enforceable at law, might have rested upon moral and equitable grounds, Wilber v. Supreme Lodge, 192 Mass. 477, 78 N. E. 445. A designation of beneficiaries in fraternal societies, however, can be made only from the classes specified and in accordance with statutes and with the charter and by-laws of the company, so far as they may govern the subjer*, Masonic Mut. Ben. Assoc, v. Severson, 71 Conn. 719, 43 Atl. 192; Norwegian Old People's Home Soc. c. Wilson, 176 111. 94, 52 N. E. 41; Smith v. Supreme Tent, 127 Iowa, 115, 102 N. W. 830; Car- son V. Vicksburg Bank, 75 Miss. 167, 22 So. 1, 37 L. R. A. 559. Other courts some- times approach this matter from a different point of view. Thus in a New York case, John M. Irvine, named the plaintiff, who was his sister-in-law, beneficiary in his certificate of membership in the Knights of Pythias. The association with the full knowledge of the relationship, which indeed was disclosed upon the face of the cer- tificate, issued the certificate and received payment of dues thereunder. On the trial, however, it contended that the appointment was not lawful within the meaning of its by-laws. The Court of Appeals, reversing the court below, held that the associa- tion was estopped from raising this defense. Strange v. Supreme Lodge, 189 N. Y. .346, 82 N. E. 433. If no beneficiary is .sufficiently.or legally designated, the insurance reverts to the estate of the insured, Boyden v. Mass. Masonic L. Assn., 167 Mass. 242, 45 N. E. 735; Mayher v. Manhattan L. Ins. Co., 87 Tex. 169, 27 S. W. 124. But see Warner v. Modern Woodmen, 67 Neb. 233, 93 N. W. 397. Where a subsequent 286 WILKINSON V. CONN. MUT. LIFE INS. CO. [CHAP. XVI designation of beneficiary fails for invalidity, the previous valid designation remains in force, Grand Lodge v. Lemke, 124 Wis. 483, 102 N. W. 911. Anticipatokt Breach. — By the weight of authority, if the insured renounces the continuing contract of insurance, upon his part, and unequivocally refuses in advance of its maturity, to perform it, the insured may at his option take the insurer at his word. The insured is then relieved of the duty of further performance on his part, and may maintain an action at law for damages, before the specified date of expira- tion, Roehm v. Horst, 178 U. S. 1, 20 S. Ct. 780, 44 L. Ed. 953; O'NeiU r. Supreme Council, 70 N. J. L. 410, 57 Atl. 463; Mutual Res. Fund L. Assn. ». Taylor, 99 Va. 208, 37 S. E. 854. On the other hand, the courts of New York and Massachusetts hold that an attempted reduction of the face of a policy by an unwarranted by-law, or a refusal to accept a premium, will give no present right of action for damages against the insurer. Porter -o. Supreme Coxmeil, 183 Mass. 326, 67 N. E. 238; Kelly r>. Security Mut. L. Ins. Co., 186 N. Y. 16,. 78 N, E. 584. Anticipatoet Breach — Remedies Available. — By the prevailing rule, where the insurer renounces the contract prior to date of performance, the policy holder may take the insurer at his word and presently sue for damages, or he may bring an equi- table action to preserve the contract, or he may tender the premium and upon ma- turity of the contract bring action on the policy. Day v. Conn. G. Life Ins. Co., 45 Conn. 480; Krebs b. Security Trust & Life Ins. Co., 156 Fed. 294. History op Family and Relatives. — It is hardly to be expected that the appli- cant for insurance can carry around on the tip of his tongue full and accurate statistics regarding the ages at death, causes of death, and physical and mental health during life, of his ancestors and relatives, and the courts are reluctant to defeat a policy, be- cause an answer made in good faith to such collateral lines of inquiry turns out to have been erroneous. While in some cases the binding force of such a warranty has been recognized, McGowan n. Supreme Court, 104 Wis. 173, 80 N. W. 603, other courts have evaded a fatal result in the absence of bad faith and have sustained the poUcy by construing the statements as representations, or as matters of belief only. Globe Mut. Life Assn. v. Wagner, 188 111. 133, 58 N. E. 970, 52 L. R. A. 649, 80 Am. St. R. 169. Statements as to Other Insurance. — Inquiry is often made in the application both as to other subsisting policies of life insurance and as to any rejected or post- poned applications. The importance of the warranty is obvious, Clapp v. Mass. Ben. Assoc, 146 Mass. 519. Where the policy in suit is issued by a regular insurance com- pany, the question arises whether the inquiries relating to other insurance include applications to fraternal societies or beneficiary associations and to certificates issued by them. The decisions on this point are not altogether in harmony and they some- times turn upon the phraseology of statutes. Fidelity Mut. L. Assn. v. Miller, 92 Fed. 63, 34 C. C. A. 211. Statements as to Age. — The rate of premium being based upon the age of the in- sured, it is quite material that the response to this question should be correct, Preuster V. Supreme Council, 135 N. Y. 417, 32 N. E. 135. The policy was held void where the applicant erroneously warranted his age to be fifty-nine instead of sixty-four. Sweet ». Citizens' Mut. Relief Society, 78 Me. 541. And where the true age was thirty-five and the application represented it to be thirty, it was held to be fatal variation,. yEtna Life Ins. Co. ». France, 91 U. S. 510, 23 L. Ed. 401, 94 U. S. 561, 24 L. Ed. 287.' Statements as to Family Relationship. — The untrue statement of the applicant that he was a widower was held to be fatal to a recovery under a policy. United Brethren Mut. Aid Soc. V. White, 100 Pa. St. 12. So also the erroneous statement that the lady with whom he had gone through the form of marriage was his wife, Gaines r. Fidelity & Cas. Co., 188 N. Y. 411, 81 N. E. 169 (she had a prior husband living). So also a breach of the warranty that the insured was a single man, when in reality a married man, forfeited the policy, although the risk was not thereby increased, Jeffries d. Life Ins. Co., 22 WaU. 47, 22 L. Ed. 833. Habits. — The warranty that the applicant is of temperate habits does not mean that CHAP. XVl] WILKINSON V. CONN. MUT. LIFE INS. CO. 287 he totally abstains from drinking wines or liquors, Van Valkenburgh v. Amer. Popular Life Ins. Co., 70 N. Y. 605. But the warranty must be true, since a statement of habits is matter of fact, rather than opinion, Langdeau v. John Hancock Mut. L. Ins. Co., 194 Mass. 56, 80 N. E. 452. Statements as to Occupation. — The warranty as to the occupation of the insured is often a most important matter, since some occupations are far more hazardous than others. The statements relating to this subject, if warranted, must be true, Dwight u. Germania L. Ins. Co., 103 N. Y. 341, 8 N. E. 654, 57 Am. R. 729. Statements or Reqijirements as to Residence and Travel. — Statements in the application as to residence must be true, but ambiguities are to be construed favorably to the insured, Hann v. Nat. Union, 97 Mich. 513, 56 N. W. 834, 37 Am. St. R. 365; Pitch v. Am. Pop. L. Ins. Co., 59 N. Y. 557, 17 Am. Rep. 372. Similarly, restrictions contained in the policy relating to residence and traveling must be com- plied with. In this connection the phrase "settled limits of the United States," means within the boundaries of the Union, and not the portions of the country that are thickly settled, Casler v. Conn. Mut. Life Ins. Co., 22 N. Y. 427. If a permit is given to travel by a particular route or to remain in a hazardous region for a partic- ular time, the limitation must be strictly observed, Hathaway v. Trenton Mut. L. & F. Ins. Co., 11 Cush. (Mass.) 448. Inability to return will be no excuse for a breach of warranty, Evans v. U. S. Life Ins. Co., 64 N. Y. 304. But the company or its rep- resentative may waive such requirements of the policy, Germania Life Ins. Co. v. Koehler, 168 HI. 293, 48 N. E. 297; Mut. Ben. Life Ins. Co. «. Martin, 108 Ky. 11, 55 S. W. 694. Statements about Bodily Injuries or Infirmities. — Breach of warranty avoids the poUcy, see ^tna Life Ins. Co. v. France, 91 U. S. 510, 23 L. Ed. 401 (hernia) ; Stand. L. & Ace. Ins. Co. v. Sale, 121 Fed. 664, 57 C. C. A. 418. Trivial injuries or infirmities undisclosed do not avoid the policy, Mfrs. Ace. Ind. Co. v. Dorgan, 58 Fed. 945, 7 C. C. A. 581, 22 L. R. A. 620 (ansemie murmur of heart); Bernays ». U. S. Mut. Ace Assn., 45 Fed. 455 (erysipelas) ; Cotton v. Fidelity & Cas. Co., 41 Fed. 506 (near-sightedness) ; Stand. L. & Ace. Ins. Co. v. Martin, 133 Ind. 376, 33 N. E. 105 (injuries to left foot and right leg causing slight limp); Tyler v. Ideal Ben. Assn., 172 Mass. 536, 52 N. E. 1083 (sprained ankle) ; Maryland Cas. Co. v. Gehrmann, 96 Md. 634, 54 Atl. 678 (curvature of leg) ; Bancroft v. Home Ben. Assn., 120 N. Y. 14, 30 N. Y. St. R. 175, 23 N. E. 997, 8 L. R. A. 68 (blow on windpipe from fencing causing blood to flow); Brink v. Guaranty Mut. Ace. Assn., 55 Hun, 606, 7 N. Y. Supp. 847, affd 130 N. Y. 675, 29 N. E. 1035 (unconsciousness from falls from buggy); Home Mot. L. Assn. v. Gillespie, 110 Pa. St. 84, 1 Atl. 340 (wound by shell at Cold Harbor, question for jury) ; but a stricture is " a local infirmity," and must be disclosed, Hanna D. Mut. L. Assn., 11 App. Div. 245, 42 N. Y. Supp. 228. So also as to severe concus- sion of brain from a fall, Snyder v. Mut. Life Ins. Co., 22 Fed. Cas. 740, aff'd 93 U. S. 393, 23 L. Ed. 887. The omission to recollect a temporary injury to an eye, caused by sand which was thrown into it and inflamed it, was not considered necessarily fatal to the policy where the applicant had answered in the negative the question whether he had ever had any illness, local disease, or injurj"^ in any organ. Fitch v. American Popular Life Ins. Co., 59 N. Y. 557, 17 Am. Rep. 372. In another case, an applicant warranted that he had never had any bodily or mental infirmity. As mat- ter of fact he had received a gunshot wound in the back of his head by which the ex- ternal table of the skull was fractured, and a piece about one-half inch square taken out, on the strength of which also he had received a pension from the government, and the pension had subsequently been increased on account of vertigo and impaired vision which he claimed were the result of the wound. Nevertheless, the court held that the issue of breach of warranty was one for the jury to determine, Black v. Trav- elers' Ins. Co., 121 Fed. 732, 58 C. C. A. 14, 61 L. R. A. 600. 288 PENN MUT. LIFE INS. CO. V. NORCKOSS [CHAP. XVII CHAPTER XVII Life Insueance Policy — Concluded PENN MUTUAL LIFE INS. CO. v. NORCROSS Supreme Couet of Indiana, 1904. 163 Ind. 379 Delivery of the policy as related to the condition that it is not to take effect until the first premium is actually paid. Among the conditions in the poUcy were the following: "This pohcy does not take effect until the first premium shall actually have been paid. No alteration of this contract or waiver of any of its conditions shall be valid unless made in writing and signed by an officer." An agent of the company, however, dehvered the policy and accepted from the insured a promissory note in lieu of cash. GiLLBTT, J. If a court is called on to interpret a writing purporting to be a contract, and the evidence shows that it was actually delivered as such by the person whose instrument it is, the court will not fail to consider the fact of deUvery, if it be material, as an element in the intent of the parties. The provisions of a formal contractual writing, which a corporation has caused to be signed and placed in the hands of an agent for delivery, may be waived by the act of the agent himself, if he have sufficient power in the premises, or it may be the result of sUence on the part of the officers of the corporation after it had constructive knowledge of its agent's act in de- liveriDg the contract, at least where resolute good faith required a timely disaffiirmance of his act. Notwithstanding the hmitations contained in the policy in suit, it pur- ported to be a present contract; and if such a policy had been executed by a natural person, and dehvered by his own hand, the holder would have been warranted in indulging the inference that the limitations which it contained were not intended to be operative as conditions precedent to deUvery, or else that, as conditions precedent, they had been waived. In Trustees, etc., v. Brooklyn Fire Ins. Co. (1859), 19 N. Y. 305, we find the following language: "A provision in a poUcy already executed and de- livered so as to bind the company, declaratory of a condition that premiums must be paid in advance, manifestly has no eif ect except to impart convenient information to persons who may wish to be insured. As such a provision in the policy in question could have no effect upon the delivered and perfect CHAP. XVIl] PENN. MUT. LIFE INS. CO. V. NORCROSS 289 contract in which it was contained, so it could have none to prevent the same parties from making such future contract as they pleased. In any subse- quent agreement for a renewal or continuation of the risk, it was competent for the parties to contract by parol and to waive the payment in cash of the premium, substituting therefor a promise to pay on demand or at a future day. Proof of such an agreement would have no tendency to contradict or to change the written policy already in force between the parties, and which would be whoUy spent before the new agreement could take its place." A valuable discussion of the subject is found in Van Schoick v. Niagara Fire Ins. Co. (1877), 68 N. Y. 434, where it was said that it "has been thought that the fact that the insurer delivered to the insured the written contract as the consummated agreement between them and did not then exact present pajTnent of the premium as a necessary precedent to delivery, was too plainly in contradiction with the condition for prepayment, for it is not to be supposed that it was meant by the insurer or supposed by either party that it was intended to make that condition a potent part of the contract. Such a provision, it is said, could have no effect upon the deUvered and perfect contract in which it was contained. . . It would be imputing a fraudulent intent to the defendant in this case, to say or to think that they did not mean, when they delivered this policy to the plaintiff, to give him a vaUd and binding contract of insurance, or that they did not mean that he should believe that he had one, or that they did not suppose that he did so be- lieve. And such imputation can be avoided, only by supposing that it had overlooked this condition, and so forgotten to express the fact as to the building, in writing, upon the pohcy; or that it waived the condition, or held itself estopped from setting it up. The condition of prepayment of premium is, like this under consideration, one at the threshold of the making of the contract, and if it is not observed, no valid contract is made unless it is stepped over or thrust aside. It is consistent with fair dealing and a freedom from fraudulent purpose, to hold that one or the other was done; that is, that there was a waiver, or an estoppel." In a later New York case, the court stated: "It is so obviously just that a party to a written contract should be precluded from defeating it by asserting conditions and stipulations con- tained in it which would prevent its inception and which he knew at the time he delivered it and accepted the benefits were contravened by the actual facts, that any statement of the reasons upon which the rule rests is no longer necessary." See Wood v. American Fire Ins. Co. (1896), 149 N. Y. 382, 44 N. E. 80, 52 Am. St. 733. In view of the fact that the pleadings of appellant present no question as to the delivery of the policy it must be presumed that it was delivered by some officer or agent who represented the power of the company to waive all conditions precedent, or else that the circumstances were such that as against appellee, the company had become estopped to deny the validity of the instrument. If an insurance company delivers a policy under such circumstances that it goes into force at once, and accepts in lieu of cash the promissory note of 19 290 PENN MUT. LIFE INS. CO. V. NORCROSS [CHAP. XVII the person insured, made payable to the company, and the note is delivered and accepted as payment, the failure to pay the note will not forfeit the policy. Kline v. National Ben. Assn. (1887), 111 Ind. 462, 60 Am. Rep. 703; Stewart v. Union Mut. Life Ins. Co. (1898), 155 N. Y. 257, 42 L. R. A. 147. We find no error. Judgment affirmed.'- 1 Griffith V. N. Y. Life Ins. Co., 101 Cal. 627, 36 Pac. 113, 40 Am. St. R. 96. Pay- ment of the premium on the date as required is in general, of the essence of the life insurance contract, Klein v. Ins. Co., 104 U. S. 88; Crook v. N. Y. Life Ins. Co. (Md., 1910), 75 Atl. 388; Koehler v. Modern Brotherhood (Mich., 1910), 125 N. W. 49 (assessments). But the insurance company may waive its right to pajrment of the premium in cash, or it may waive the forfeiture for nonpayment of a premium on the date specified in the policy, Miesell v. Globe Ins. Co., 76 N. Y. 115. Kimbro, upon signing his application, gave his note for the first premium to Haynes, local agent for the defendant. The defendant, on receiving the apphcation, decided not to issue the policy in the form applied for, but sent to the agent a different form of policy to be submitted to Kimbro. The agent, however, made no mention of the alteration, but simply notified Kimbro by letter of the receipt of the policy, stating that he would deliver it on the day the note became due. Kimbro was ignorant of the company's declination, nor did he know that the policy by its terms was not effective without prepayment of premium. Meanwhile, he was taken sick and died before maturity of the note. During his illness, his wife tendered payment of the premium in cash to the agent and demanded delivery of the policy, which was refused. The court held that the act of its agent Haynes in accepting a note in place of cash, and his representation that the policy was received and was being held for Kimbro were, in legal effect, the act and representation of the insurance company, and that Kimbro accordingly had the right to assume that his application was accepted as proposed and that the contract was closed. The judgment for the plaintiff was affirmed, Kimbro V. N. Y. Life Ins. Co., 99 Minn. 176, 108 N. W. 861. In a case in South Carohna, the insured, Hill by name, had given his note for the first premium, and this had been duly accepted by the agent of the insurance company, and after its maturity, had been transferred to Doyle, the plaintiff, who brought action upon it against Hill. Hill defended on the ground that the policy was avoided from the inception of the con- tract, and that, therefore, there was no consideration for the note. He offered to show that the policy was void because of a false answer written in the application by tht medical examiner, but he admitted that he had given the correct answer orally to the medical examiner. The court held that the proffered testimony was not admissible and that the defense was not established, since the company was estopped from setting up forfeiture of the policy, Doyle v. Hill, 75 S. C. 261, 55 S. E. 446. STATnTOBT Notice of Premiums Due. — In many States it is provided that before claiming forfeiture for nonpayment of premium, the insurance company must send a specified notice to the insured, which is intended to operate as a reasonable warning, Mut. Life Ins. Co. v. Phinney, 178 U. S. 327, 20 S. Ct. 906, 44 L. Ed. 1088. In order to establish forfeiture of the policy for nonpayment of the premium, the burden is thrown upon the insurer to prove a compliance with the terms of the statute, Strauss V. Union Cent. L. Ins. Co., 170 N. Y. 349. The fact that the insured is financially unable to pay the premium and can derive no benefit from the notice, furnishes the company with no excuse for omitting to conform to the statutory requirement, Equita- ble Life Assur. Soc. v. Perkins, 41 Ind. App. 183, 80 N. E. 682. Assessments. — In mutual associations and beneficiary societies the premiums are often paid in the form of assessments, and it is in order on the happening of a death to call for an assessment with which to meet it, nonpayment of which ipso facto usually occasions suspension or forfeiture of all rights on the part of the insured member, Butler V. Grand Lodge, 146 Cal. 172, 79 Pac. 861. Such assessments are practically CHAP. XVIl] RUSSELL V. PRUDENTIAL INS. CO. 291 RUSSELL V. PRUDENTL\L INSURANCE COMPANY CoDET OF Appeals of New York, 1903. 176 N. Y. 178 Delivery of the -policy as related to the condition tliat it is not to take effect until the first premium is actually paid. Action on a policy of life insurance. Defense that the policy never had a valid iaception inasmuch as the premium was not paid. deferred premiums, levied upon members to meet losses of others occurring during the term of membership, and based, not upon estimated laws of average, but rather upon an amount of ascertained losses. Supreme Commandery v. Ainsworth, 71 Ala. 436, 443. They are a part of the consideration payable by the member to the asso- ciation in return for the benefit of insurance actually enjoyed by him, the balance of pecuniary consideration often consisting of small fees and dues or stated assessments for expenses. Therefore, by reason and by the great weight of authority, when prop- erly levied, assessments constitute a collectible debt in favor of the association, re- gardless of whether the member has expressly promised to pay them or whether their nonpayment occasions forfeiture of his rights and insurance. Calkins v. Angell, 123 Mich. 77, 81 N. W. 977; Ellerbe t. Barney, 119 Mo. 632, 25 S. W. 384, 23 L. R. A. 435; Re Globe Mut. Benefit Assn., 63 Hun, 263, 17 N. Y. Supp. 852, aff'd 135 N. Y. 280, 32 N. E. 122. In most instances an express promise to pay assessments can be deduced either from the statutes, by-laws, application, or certificate applicable to the case, Dettratt -c. Kestner, 147 Pa. St. 566, 23 Atl. 889; Fulton v. Stevens, 99 Wis. 307, 74 N. W. 803. Where, however, no express undertaking by the member to pay assessments can be found, several courts and several standard text-writers have con- cluded that if forfeiture is prescribed as a penalty for nonpayment of assessments no other result can be inferred: and that, therefore, the association cannot collect the assessment from che delinquent member, Lehman v. Clark, 174 111. 279, 51 N. E. 222, 43 L. R. A. 648. But the difficulty with these decisions is that they allow to the de- faulting member his own insurance for a period without exacting in return the proper consideration; and their authority is weakened by the course of reasoning adopted in the opinions rendered in their support. For in these, the conclusion seems to be in substance based upon the two propositions that the ordinary life policy is unilateral and that the assessment policy should be governed by similar doctrines. It is true that the regular life policy is in a sense unilateral. The instrument is executed by only one party. It is also true, that where, at the inception of the contract the as- sured has paid the entire premium for a year's insurance there is nothing more for him to do during the year, N. Y. Life Ins. Co. v. Statham, 93 U. S. 24, 23 L. Ed. 789. If, on the other hand, the applicant for insurance has failed to make advance payment of the first premium, the regular policy does not attach to the risk. There is no con- tract. The applicant pays nothing and gets nothing. The insurance company cannot sue for the premium, since no part of it has been earned. Cravens v. N. Y. Life Ins. Co., 148 Mo. 583, 599, 50 S. W. 519, 53 L. R. A. 305, 71 Am. St. R. 628. These well- established principles, however, furnish no sanction for a rule reliei-ing the insured member in an assessment company from the liability for assessment for deferred premium where the liability of the company has already attached, and where the member has been actually receiving the protection of his certificate for at least a por- tion of the corresponding period. Assessments Must Be Lawfully and Properly Levied. — The association can be compelled in equity to levy a mortuary assessment pursuant to its laws, or upon its failure to do so the member may sue for damages, Lawler v. Murphy, 58 Conn. 292 RUSSELL V. PRUDENTIAL INS. CO. [CHAP. XVII Baetlett, J. The facts are as follows: On the twenty-sixth day of De- cember, 1899, the plaintiff made a written application for the policy in suit. The material portions of that application read: "I hereby declare and war- 294, 20 Atl. 457, 8 L. R. A. 113. The officials lawfully entrusted with this power cannot delegate it to others. Miles v. Mut. R. F. Assn., 108 Wis. 421, 84 N. W. 159. Proper proofs of death must first have been received, Coyle v. Ken. Grangers' Mut. Ben. L. Soc, 8 Ky. L. R. 604, 2 S. W. 676, and the requirements of the charter and by- laws must be observed, Grand Lodge v. Bagley, 164 111. 340, 45 N. E. 538. The assess- ment upon a member must not include losses occurring before he became a member. Capital City Mut. Fire Ins. Co. v. Boggs, 172 Pa. St. 91, 33 Atl. 349; but may include losses occurring during membership, although assessment therefor is not assessed until membership has ceased, Ionia, etc., Mut. Fire Ins. Co. v. Ionia Judge, 100 Mich. 606, 59 N. W. 250, 32 L. R. A. 481. Illegal assessments need not be paid to avoid forfeiture, Benjamin v. Mut. R. Fund Assn., 146 Cal. 34, 79 Pac. 517. It is said that the burden is upon the association to show the legality, regularity, and necessity of the assessment. Shea v. Mass. Ben. Assn., 160 Mass. 289, 35 N. E. 855, 39 Am. St. R. 475; Hartford Ins. Co. v. Hyde, 101 Tenn. 396, 48 S. W. 968. The member must not he assessed for more than his just proportion of the loss, U. S. Mut. Ace. Assn. v. Mueller, 151 111. 254, 37 N. E. 882 (incorrect amount named in notice) ; Ebert v. Assoc, 81 Minn. 116, 83 N. W. 506 (must not discriminate between classes, though rate may be changed); nor for future prospective losses, VandaUa Mut. Co. Fire Ins. Co. v. Beasley, 84 111. App. 138. While a reasonable discretion must be left to the directors or other officials levying the assessment, because of contingencies, and in view of the fact that sometimes members may default, Ionia, etc., Mut. Fire Ins. Co. v. Ionia Judge, 100 Mich. 606, 59 N. W. 250, 32 L. R. A. 481, yet an assessment for twice the indebtedness was held void, Lawler v. Murphy, 58 Conn. 294, 20 Atl. 457, 8 L. R. A. 113. PowEB TO Change Rate of Assessments. — The nature of the contract in an assessment association is such as naturally to call for a varying rate of assessment. A power to change the rate equitably from time to time will be inferred, Ebert v. Mut. R. Fund L. Assn., 81 Minn. 116, 83 N. W. 506; Messer v. Grand Lodge, 180 Mass. 321, 62 N. E. 252 (adoption of new by-law, valid), unless the plain meaning of the contract prohibits. Covenant Mut. L. Assn. u. Kentner, 188 lU. 431, 58 N. E. 966 ; but such change must not be unreasonable, or repugnant to vested rights, Strauss V. Mut. R. Fund L. Assoc, 126 N. C. 971, 36 S. E. 352, 54 L. R. A. 605, 83 Am. St. R. 699. Contra, Gaut v. Mut. R. Fund L. Assoc, 121 Fed. 403. A member often expressly agrees to be bound by future by-laws and regulations by which, in that event, the rate may be changed pursuant to the charter, Fullenwider v. Supreme Council, 180 111. 621, 54 N. E. 485, V2 Am. St. R. 239; Miller v. National Council, 69 Kan. 234, 76 Pac. 830. A change even from assessments to regular premiums may not be in violation of the Constitution of the United States, Wright o. Minnesota Mut. L. Ins. Co., 193 U. S. 657, 24 S. Ct. 549. Notice of Asses8.ment to In-suheh. — Until notice of the amount of a mortuary assessment is duly given to a member, no obligation to pay is imposed upon him, Wright V. Supreme Commandery, 87 Ga. 426, 13 S. E. 564, 14 L. R. A. 283; Cronin v. Supreme Council, 199 111. 228, 65 N. E. 323, 93 Am. St. R. 127. A subsequent by- law, rescinding a provision for such notice before forfeiture, would be unreasonable and inoperative, Thibert v. Supreme Lodge, 78 Minn. 448, 81 N. W. 220, 47 L. R. A. 136, 79 Am. St. R. 412. If the testimony admits of doubt the jury determines whether the notice has been received. If not received there is no forfeiture, Garbutt v. Assn., 84 Iowa, 293, 51 N. W. 148; McCorkle v. Texas Ben. Assoc, 71 Tex. 149, unless the contract provides that sending or mailing of the notice is sufficient service, Modem Woodmen i. Tevis, 117 Fed. 369, 54 C. C. A. 293. Contracts of insurance with assessment companies have been the occasion of much litigation. CHAP. XA'Il] RUSSELL ('. PRUDENTIAL INS. CO. 293 rant that all the statements and answers to the above named questions, as well as those made or to be made to the company's medical examiner, are or shall be complete and true, and that they, together with this declaration, shall form the basis and become a part of the contract of insurance hereby applied for. And it is further agreed that the policy herein applied for shall be accepted subject to the conditions and agreements therein contained, and said policy shall not take effect until the same shall be issued and delivered by the said company and the first premium paid thereon in full," etc. This application was signed by the applicant and duly witnessed. Upon receipt of the apphcation the policy was sent to the general agent at SjTacuse. On January 6, 1900, the general agent, in company with a subagent, went to the house of the deceased and had an interview with him. Plaintiff swears in substance that after her husband had stated his in- ability to pay the first premium at that time, the general agent informed him that he might have thirty days additional time in which to pay the first premium and that the insurance would go into immediate effect. The gen- eral agent and the subagent denied this conversation in toto and say that deceased was distinctly informed that the policy, as stated therein, would not go into effect until the first premium was paid in fuU. The receipt for the first premium was thereupon signed by the general agent and delivered to the insured and by him handed to the subagent, who was to hold it until the payment was actually made. This transaction as to the receipt is not disputed. The policy contained the following, among other, provisions; it is headed, "Regarding agents:" "No agent has power in behalf of the company to make or modify this or any contract of insurance, to extend time for paying the premium, to waive any forfeiture, or to bind the company by making any terms, or making or receiving any representation or information. These powers can be exercised only by the president, one of the vice-presidents or the secretary, and will not be delegated. Modifications, etc. Xo provision of this policy can be modified or waived in any case except by indorsement hereon signed by the president, one of the ^dee-presidents or the secretary." The general agent was appointed to his position under a wi'itten contract, which is in evidence, and contains this provision, among others: "4. It is understood and agreed that said general agent has no authority on behalf of the Prudential Insurance Company of America, to make, alter or destroy any contract, to waive forfeitures, nor to receive any moneys due or to be- come due to said company, except on policies or renewal receipts signed by the president, secretary or manager of the ordinary branch and sent to him for collection." These facts constitute, substantially, the plaintiff's case, and the defendant thereupon moved for a nonsuit, on the ground that the plaintiff had failed to make out a cause of action. The court denied the motion. The defendant swore the general agent and subagent as witnesses and each positively denied that the conversation testified to by plaintiff ever occurred between the general agent and the insured. 294 RUSSELL V. PRUDENTIAL INS. CO. [CHAP. XVII At the close of the evidence the defendant again moved for a nonsuit and for a directed verdict, specifying, among others, the ground that upon the plaintiff's own evidence, and upon the uncontradicted evidence in the case, the general agent had no authority to make or modify the contract of insur- ance as testified by plaintiff. The learned trial judge, in denying this motion, said: "I deny the motion and give you an exception. The one question I am going to submit to the jury, is this: whether on January 6, 1900, Mr. Tennant, at the time he de- hvered the policy to Mr. Russell, agreed that the time for payment of the premium should be extended, as is claimed by plaintiff, and that the policy could, in the meantime, remain in force. That is the only question I am going to submit to the jury. If they find in favor of the plaintiff upon that state of facts the verdict will be for plaintiff. If they find for defendant upon that proposition the verdict will be for the defendant." To this limitation the defendant excepted. The trial judge, in one of his rulings, said: "I hold as matter of law that if Mr. Tennant did what plaintiff claims he did on the 6th of January, then there can be a recovery in this case.'' To this ruling the defendant excepted. The defendant contended that if there was any evidence that Tennant had apparent authority to put the policy in force and waive its express conditions, and any evidence of estoppel, the questions were for the jury, but the court adhered to its view that it was a question of law upon the contract of insur- ance. The important question presented ia this case, therefore, is. Can an insurance company so draw the various papers constituting its contract of insurance as to prevent general and local agents from exercising powers to the detriment of the company, when the substantial provisions of that con- tract are brought home to the insured prior to the alleged delivery of the policy. This case may be regarded as a test one on the point, as it is apparent that the contract of insurance now before the court is as strong in favor of the company as language can make it. In the case before us we have a contract that distinguishes it from a large number of cases which hold that the provision of the policy to the effect that only certain officers of the company can waive payment of premiums when due and that agents cannot do so, does not apply to the initial premium. This distinguishing feature is found in the fact that the apphcation, which is made a part of the poUcy, contains the express condition that the policy shall not take effect until the same shall have been issued and delivered by the company and the first premium paid thereon in full. In this connection it is to be observed that not only is the application made a part of the policy by its terms, but the policy opens with this provision: "In consideration of the application for this poUcy, which is hereby made part of this contract, and of the quarterly annual premium of seven and two one-hundredths dollars which it is agreed shall be paid to the company in exchange for its receipt on the delivery of this policy," etc. The above quotation from the policy gives added significance to the man- ner in which the receipt was treated at the interview between the agents and CHAP. XVIl] RUSSELL V. PRUDENTIAL INS. CO. 295 the insured, to which reference has already been made. The pohcy states that it is to be given in exchange for the receipt, and it rests upon the un- disputed evidence that the receipt was left in the custody of the subagent, not to be surrendered until the first premium was paid. In many of the cases cited, where insurance companies were held liable, the agent having waived the payment of the first premium contrary to the provisions of the policy and without authority from the company, the de- cision was based upon the fact that the policy had never been delivered to the insured, and, consequently, he could not be charged with notice of its contents at the time of the agent's waiver of pajonent. It was argued that to hold otherwise would practically permit the company, through its agent, to work a fraud upon the insured by leading him to believe that he had se- cured insurance when such was not the fact. We have been cited to a multitude of cases by the respondent which it is quite impossible to review in detail within the limits of an ordinary opinion. Many of these are within the class to which reference has already been made, in regard to waiving the payment of the initial premium, and others deal with waiver in various forms, such as resting on the general course of busi- ness viWh the insured; knowledge of the agent before issuing the policy that propertj' was subject to mortgage or other lien; that the title was in a third person; that there was other and undisclosed insurance, or various conditions which would render the policy void, by its terms, if the company were not chargeable with the knowledge of its agent, by reason of information im- parted to him by the insured during the preliminary negotiations. In the case at bar there is no evidence of a course of business between the company and the insured, nor was it shown that the general agent had power to waive payment of the first premium. On the contrary, the plaintiff put in evidence the contract between the company and its general agent, which showed, afiBrmatively, that he possessed no such power. We thus come to the important and controlling question in this case, whether the insured is to be charged with notice of the contents of the writ- ten appUcation which he executed, making the same a part of the contract of insurance. The legal presumption is, in the absence of fraud, that the in- sured read or had read to him the application before signing it. This being so, he was advised that the policy could not issue or take effect until the first premium was paid thereon in full. The legal effect is that the insured covenanted with the company directly and not through its agent, that the policy was not to be binding upon the company until the first premium was paid in fuU. Is this contract to be enforced as clearly written, or is it to be ignored for the reason that men enter into contracts without reading them and assume that a vague and unproven custom exists permitting a local agent to give life and validity to the pohcy without reference to the terms of the contract of insurance? The question may be put in another form. Can an insurance company enter into a contract with a person applying for insurance, which can so fix the precise conditions under which the policy shall issue, that the 296 RUSSELL V. PRUDENTIAL INS. CO. [cHAP. XVII agent, in the absence of express authority, cannot abrogate it? It would seem that the mere statement of the foregoing questions would compel an answer in favor of the company without argument. An insurance company is entitled to liave its contract enforced by the courts as written unless, as has been stated in many cases, to strictly construe it as against the insured would work a fraud upon him. As already pointed out, this might be the case in reference to the pajrment of the initial pre mium , where the only provisions in regard to the same are contained in the policy. It cannot be said in this case, in the teeth of the express covenant of the insured contained in his ap- plication and carried into the pohcy with due reference to the same, that he would be subjected to a fraud if the waiver of the agent, made without authority, is held not to abrogate the contract between him and the com- pany, of which he is chargeable with fuU notice. We are of opinion that it was error for the learned trial judge to instruct the jury that if they found that at the interview between the agents and the insured the general agent delivered the pohcy to the insured and agreed with him that the time of the payment of the first premium should be extended, and that in the meantime the pohcy should be in force that their verdict should be for the plaintiff. The order and judgment appealed from should be reversed and a new trial ordered, with costs to abide the event. Haight, J., dissented on the ground that the act of the general agent in delivering the policy was the act of the company, and that therefore it was within the scope of his actual authority to determine whether he should exact a cash payment of the first premium as provided by the pohcy or whether he should extend credit therefor; and that if the intention of the company through its general agent had been to postpone the time of the inception of the contract until the first premium should be paid, then he would not have presently delivered the policy but would have retained it in his own possession until he should have received such payment.^ 1 Seidel v. Equitable L. Assur. Soc, 138 Wis. 66. Reserve. — That portion of the premiums of a policy with the interest thereon which is required to be reserved or set aside as a fund for the payment of the life in- surance policy when it becomes due is called the "reserve." The mean or average duration of the life of an individual after any specified age, according to a given table of mortality, is called the "expectation of life." Statistical observations on the dura- tion of human life point to the conclusion that, after the period of extreme youth is passed, the death rate among any given body of persons increases gradually with advancing age; and where the annual premium is fixed at a uniform rate during the life of the policy, as is customary in fife insurance, it is evident that if the policy is surrendered by the insured before its expiration, the insurers can generally afford to make a return of a portion of the premiums which have been paid. Of the reserve value which the policy is estimated to have at the time of surrender, a part called "the surrender value," the company offers to pay to the insured in return for the can- cellation of the policy before its natural expiration. From these same considerations it appears, also, that in the event of the insolvency and winding up of a life insurance company, there is a basis for calculating the present value of the unexpired policies, by which an equitable distribution of assets may be CHAP. XVIl] ACCIDENT INS. CO. V. CRANDAL 297 ACCIDENT INSURANCE COMPANY v. CRANDAL Supreme Court of United States, 1886. 120 U. S. 527 What is suicide? The policy pro^dsion exempting from liability for suicide, did not contain the further phrase "sane or insane." Mb. Justice Gray. The single question to be decided, therefore, is whether a policy of insurance against "bodily injuries effected through ex- ternal, accidental and violent means," and occasioning death or complete disabUity to do business; and providing that "this insurance shall not extend to death or disabihty which may have been caused whoUy or in part by bodily infirmities, or disease, or by suicide, or self-inflicted injuries;" covers a death by hanging one's self while insane. The decisions upon the effect of a policy of life insurance, which provides that it shall be void if the assured "shall die by suicide," or "shall die by his own hand," go far towards determining this question. This court, on fuU consideration of the confhcting authorities upon that subject, has repeatedly and uniformly held that such a provision, not containing the words "sane or insane," does not include a self-killing by an insane person, whether his imsoimdness of mind is such as to prevent him from understanding the phys- ical nature and consequences of his act, or only such as to prevent him, while foreseeing and premeditating its physical consequences, from under- standing its moral nature and aspect, Life Ins. Co. v. Terry, 15 Wall. 580; Bigelow V. Berkshire Ins. Co., 93 U. S. 284; Insurance Co. v. Rodel, 95 U. S. 232; Manhattan Ins. Co. v. Broughton, 109 U. S. 121. In the last case, which was one in which the assured hanged himself while insane, the court, repeating the words used by Mr. Justice Nelson, when Chief Justice of New York, said that "seK destruction by a fellow-being bereft of reason can with no more propriety be ascribed to the act of his own hand than to the deadly instrument that may have been used by him for the purpose," and "was no more his act, in the sense of the law, than if he had been impelled by irre- sistible physical power." 109 U. S. 132; Breasted v. Farmers' Loan & Trust Co., 4 Hill, 73. In a like case, Vice Chancellor Wood (since Lord Chancellor Hatherley) observed, that the deceased was "subject to that which is really just as much an accident as if he had fallen from the top of a house," Horn V. Anglo-AustraUan Ins. Co., 30 Law Journal (N. S.) Ch. 511; s. c, 7 Jurist (N. S.), 673. And in another case, Chief Justice Appleton said, that "the in- sane suicide no more dies by his own hand than the suicide by mistake or accident," and that, under such a policy, "death by the hands of the insured, made to all the policy holders in accordance with the laws of priority, People v. Asso- ciation, 150 N. Y. 94, 45 N. E. 8 (reserve, how distributed on dissolution). 298 MALLORY V. TRAVEWIRS' INS. CO. [CHAP. XVII whether by accident, mistake, or in a fit of insanity, is to be governed by one and the same rule," Eastabrook v. Union Ins. Co., 54 Maine, 224, 227, 229. Many of the cases cited for the plaintiff in error are inconsistent with the settled law of this court, as shown by the decisions above mentioned. In this state of the law, there can be no doubt that the assured did not die "by suicide," within the meaning of this policy; and the same reasons are conclusive against holding that he died by "self-inflicted injuries." If self- killing, "suicide," "dying by his own hand," cannot be predicated of an in- sane person, no more can "self-inflicted injuries"; for in either case it is not his act. The death of the assured not having been the effect of any cause specified in the proviso of the policy, and not coming within any warranty in the ap- plication, the question recurs whether it is within the general words of the leading sentence of the policy, by which he is declared to be insured "against bodily injuries effected through external, accidental and violent means." This sentence does not, like the proviso, speak of what the injury is "caused by " ; but it looks only to the "means " by which it is effected. No one doubts that hanging is a violent means of death. As it affects the body from with- out, it is external, just as suffocation by drowning was held to be, in the cases of Trew, Reynolds and Winspear. And, according to the decisions as to suicide under policies of life insurance, before referred to, it cannot, when done by an insane person, be held to be other than accidental. The result is, that the judgment of the Circuit Court in favor of the plain- tiff was correct, and must be Affirmed.^ MALLORY v. TRAVELERS' INS. CO. Court of Appeals of New Yoek, 187L 47 N. Y. 52 Suicide: burden of proof. Appeal from judgment of the General Term of the second judicial dis- trict, affirming a judgment entered upon verdict in favor of plaintiff. ' In an interesting ease in the United States Supreme Court, although the insured, one Runk, had warranted and agreed in the application, "I will not die by my own act, whether sane or insane," etc., nevertheless as the company had omitted to attach the application to the policy, as provided for by the Pennsylvania statute, the warranty could not be considered as part of the contract or admitted in evidence, and, therefore, the question arose as though the contract had been altogether silent on the subject of suicide. There was no finding by the jury that the insured had taken out the policy in suit with the purpose of committing suicide. Their only finding was that Runk was sane when he committed the act. He had misappropriated large sums of money be- longing to his friends and relatives, and believed that out of the half million dollars of insurance on his life, which he was carrying, his obligations would be paid. The CHAP. XVIl] MALLORY V. TRAVELERS* INS. CO. 299 This action is brought upon an accident policy of insurance issued upon the life of W. S. Mallory for the sum of $2,000, for the benefit of and made payable to plaintiff. By the pohcy the defendant agreed to pay the sum insured, and "within ninety days after sufficient proof that the insured, at any time within the term of this pohcy, shall have sustained personal injury caused by any accident within the meaning of this policy and the conditions hereunto annexed, and such injuries shall occasion death within three months after the happening thereof." "And if the insured shall sustain any per- sonal injury which shall not be fatal, but which shall absolutely and totally court held that the death of the assured, if directly and intentionally caused by him- self when in sound mind, was rot a risk intended to be covered, or which could legally have been covered by the policies in suit, Ritter v. Mut. Life Ins. Co., 169 U. S. 139, 18 S. Ct. 300, 42 L. Ed. 693. Degree op Insauitt Required to Save the Insurance. — As to the degree of insanity which will operate as an excuse to the insured to prevent the application of a suicide clause not containing the words "sane or insane," the English, New York, and Massachusetts courts, and others, have adopted a view somewhat at variance with the rule announced in the principal case. This view may be thus expressed; that to relieve from the suicide clause on the ground of insanity, the insured must have been so mentally disordered as not to understand that the act he committed would cause his death, or he must have committed it under the influence of some un- controllable insane impulse. These courts hold that in order to escape forfeiture, it is not sufficient to show that he was unconscious merely of the moral obliquity of the act, Borrodaile v. Hunter, 5 M. & G. 639, 44 E. 0. L. 335; Cooper v. Mass. Mut. Life Ins. Co., 102 Mass. 227, 3 Am. Rep. 451; Van Zandt v. Mutual Benefit Ins. Co., 55 N. Y. 169, 14 Am. Rep. 215. Suicide and Self-Destkuction, Sane or Insane, Excepted. — To extend for their benefit the operation of the restriction, the insurers have generally added to the suicide clause the words "sane or insane," and with this addition the exemption covers all cases of intentional self-destruction, Bigelow v. Ins. Co., 93 U. S. 284, 23 L. Ed. 918. Under such an exception the insurers are relieved from responsibility unless the death of the insured was purely accidental, Moore v. Ins. Co., 192 Mass. 468, 78 N. E. 488. And it matters not whether the policy is payable to the insured or to his estate or to other designated beneficiaries, as, for instance, creditors. The vol- untary suicidal act avoids the policy altogether, Ellinger v. Mutual Life Ins. Co. (1905), 1 K. B. 31. But to produce forfeiture of such a policy there must be some- thing more than a mere accident, Clarke v. Equitable Life Assur. Soc, 118 Fed. 374, 55 C. C. A. 200; Scarth v. Security Mut. Life Ins. Co., 75 Iowa, 346, 349; there must be an intent, though not of necessity a rational one, to commit the act of self-destruction, Union Cent. Life Ins. Co. v. Hollowell, 14 Ind. App. 611, 43 N. E. 277. Such intent would seem logically to involve at least some consciousness of the physical nature or consequences of the act and this seems to be the prevailing and better doc- trine, Jenkins v. National Union, 118 Ga. 587, 45 S. E. 449; Supreme Lodge v. Gelbke, 198 HI. 365, 64 N. E. 1058; Hart v. Modem Woodmen, 60 Kan. 678, 57 Pac. 936, 72 Am. St. R. 380. If the destructive act be intended and its character be known by the insured to be destructive, it is clear that neither an irresistible insane impulse. Supreme Lodge v. Gelbke, 198 111. 365, 64 N. E. 1058; Manhattan Life Ins. Co. v. Beard, 112 Ky. 455, 66 S. W. 35, nor ignorance and unconsciousness of the moral aspect of the act will afford, any excuse to the insured or other beneficiary, where the suicide clause contains the phrase, "sane or insane," Bigelow v. Ins. Co., 93 U. S. 286, 23 L. Ed. 918; Hart ». Modern Woodmen, 60 Kan. 678, 57 Pac. 936, 72 Am. St. R. 380; Streeter v. West. Union Mut. Life Ins. Co., 65 Mich. 199, 31 N. W. 780, 8 Am. St. R. 883. 300 MALLORY V. TRAVELEES' INS. CO. [CHAP. XVTI disable him from the prosecution of business, then on satisfactory proof of such injury, compensation shall be paid to him," etc. "Provided always that no claim shall be made under this policy by the said insured in respect of any injury, unless the same shall be caused by some outward and visible means, of which proof satisfactory to the company shall be furnished," etc. Grover, J. The question whether the plaintiff had an insurable interest in the life of the deceased does not arise in this case. The insurance was upon the life of W. S. Mallory. The policy was procured by him, and he paid the premium therefor, and made the loss payable to the plaintiff (his daughter) or legal representatives. This, in effect, was a pohcy procured by him upon his own life, and an assignment thereof to the plaintiff. Gros- venor v. The Atlantic Fire Ins. Co., 17 N. Y. 391; Rawls v. American Mutual Ins. Co., 27 N. Y. 282. There was no error in denying the defendant's mo- tion for a nonsuit. No ground for such motion was stated, and in such a case the well-settled rule is, that there is no error committed by den3dng it, although there may be a defect in the plaintiff's proof, if the defect was such that it might have been suppUed if pointed out upon the motion. But there was no such defect. The proof showed that the deceased had been staying at his brother's at Bridgeport, Conn., for about a week; that he left the house on Sunday, and was last seen alive on that day, walking toward a railroad bridge over a culvert, across a stream emptying into the sound, where the waters of the sound set, to some extent, into the land and up the stream at high tide; that this bridge was used by pedestrians to cross the stream to a considerable extent; that the body of the deceased was found in the pond not far from the bridge, in a few days thereafter. The policy was one em- bracing cases only where the death was caused by an injury received from an accident. From the facts above it appeared either that the death was caused by such an injury or the suicidal act of the deceased; but the presump- tion is against the latter. It is contrary to the general conduct of mankind; it shows gross moral turpitude in a sane person. That it resulted from the former cause was to some extent rendered more probable by the wound upon the head of the deceased, and the break in the corresponding part of his hat. Although this wound might have been made after the deceased was in the water, or while falling in, yet it was for the jury to say how it was caused, and to determine its effect upon the question whether the death was the result of an accidental injury, or whether the deceased had destroyed his own life. The court did not err, in charging the jury, that the conversation between the president of the company and the deceased had no bearing upon this particular application. It was proved that the deceased at the time of death was, and for some time pre\'ious to procuring the policy had been, a canvasser for applications for insurance with the defendant; that in an inter- view with the president, the deceased remarked that he could procure a great number of applications in Newark: to which the president in substance replied, that he must be cautious, as the company did not wish to insure in- sane persons, or persons of habits of intoxication. This evidence was relied CHAP. XVIl] MALLORY V. TRAVELERS* INS. CO. 301 upon by the defendant to avoid the pohcy, in connection with the facts proved, that the deceased, twenty years before making the application, had a severe fever, during which he was more or less insane, but that after re- covering therefrom he was sane until three or four years before that time, when he was insane, from what cause did not appear, and was placed for about three months in a retreat for such persons, when he was discharged cured therefrom, from which time to his death he more or less attended to busi- ness, was sane, or at most the evidence of a want of sanity was so shght dur- ing any portion of this period as hardly warranted the submission of any question thereon to the jury; that the deceased did not state to the company, upon making apphcation for the policy, that he ever had been insane, but did state there were no circumstances which rendered him peculiarly liable to accident. This general conversation with the president some time be- fore the application had no tendency to show a fraudulent concealment of material facts upon making the application. There was no evidence tend- ing to show that he was then insane, or that he had been for some time be- fore, and this conversation did not convey to his mind the idea that the company regarded those that a long time before had been insane, as pecul- iarly liable to accidents. The construction put upon the contract in the charge was correct. That construction was, that the terms outward and visible means apphed only to injuries not causing death in three months, but to such only as entitled the deceased to certain sums from the company during their continuance, as provided by the policy. The part of the charge to the eflFect that if the wound led to the cause of his death, then it would be an accidental death, could have been understood only in the sense of the wound being produced by an accident, but that this, not causing death, did cause him to fall into the water, where he died from drowning, then the death was accidental; so understood, it was entirely correct. The judge was right in charging that, if the deceased did not conceal any fact which, in his own mind, was material in making the application, the policy was not void. Rawls V. The American Mutual Life Ins. Co., 27 N. Y. 282; Van Lindenau V. Desborough, 15 Eng. C. L. 290, and Valton v. National Fund Life Ins. Co., 20 N. Y. 32. Cases cited by counsel were cases where false answers were given to inquiries made, and have no application to this case. The counsel was mistaken in his exception to the charge, that if the deceased was insane so that he could not know right from wrong, his death in such a condition was an accident, which would entitle him to recover. The judge did not so charge. The judge did charge that if his condition at the time was such that he could not distinguish right from wrong, if it was such that he could not be held in his own mind to know that he was doing an act which would produce death, then he was an involuntary agent, and the result of that involuntary act producing death was an accident. This part of the charge was not excepted to. Hence no question arises thereon for review by this court. The defendant can sustain no injury from the want of a proper exception, even if right in its law, for the reason that there was no evidence tending to show that the deceased did not know that keeping his head under 302 MALLORY V. TRAVELERS' INS. CO. [CHAP. XVII water for a sufficient time would cause his death. It was wholly immaterial whether Lawton ever told Johnson that the deceased was insane, or when he told him so. The defendant could not have sustained any injury from this testimony. The judgment appealed must be affirmed, with costs. All concur. Judgment affirmed. Two late Minnesota cases on the subject of suicide, resting side by side in the reports are instructive. The Western Life Indemnity Company, the defendant, in- sured the life of Kornig, by a policy which provided that there should be no recovery in case of death by suicide, intentional or unintentional, and whether deceased was sane or insane at the time. Kornig who had been living happily and in good health was found dead one afternoon from a bullet in his head, with a pistol in his hand, in a room in Minneapolis, which he had leased from a woman, the principal witness for the insurance company. The woman testified that she had gone to the room in answer to Kornig's complaint that it was not in order, that without a word he shot and wounded her, and that she heard no second shot. The accuracy of this narrative WM slightly impeached. She denied improper relations with Kornig. The court refused to disturb a verdict in favor of the widow, Kornig ». Western Life Indemnity Co., 102 Minn. 31, 112 N. W. 1039. Zearfoss had a policy from the Switchmen's Union, containing a clause exonerating the association in case of deliberate suicide. He lived with his family and on good terms. He stopped working as a switchman on January 20, and took his pay. Two days later he went for a spree to a lodging house near his home, kept by the Fishers, where he drank and played cards in the saloon at night and took and occupied a bedroom above. He said he had had a little trouble in the family. The next evening about seven o'clock he was found dead in the bedroom, where a bottle with carbolic acid was also discovered. The post-mortem examination showed that the deceased had died from the effects of carbolic acid, but the surgeons testified that there were no burns apparent in his mouth or on his fingers. The proprietor of a neighboring drug store identified Zearfoss as without much doubt the man who had bought the acid, though the witness would not swear that he was sure of it. There was no evidence to show that the insured had been foully dealt with. A verdict in favor of the widow was set aside by the court, as unsupported by the evidence, the fair meaning of which was consistent only with an inference of deliberate suicide, Zearfoss V. Switchmen's Union, 102 Minn. 56, 112 N. W. 1044. In a New York case, the com- pany refused to pay the insurance on the ground that the insured, Louise L. Buxton, had committed suicide within a year after the policy was issued. Some time prior to her death the insured underwent an operation at St. Luke's Hospital, and thereafter suffered from hemorrhages, but was discharged as cured about two weeks before her death. The evening before her death she came downstairs appearing greatly excited and with hair somewhat disheveled. The next day she was found dead in her bed with both gas jets turned on, but not lighted. There was no evidence tending to show that anyone had entered the room from the time the insured retired until she was found dead, or that the bed was in a position where she could read, or that there had been a turning off and on of the gas supply from the outside room. By a divided court the judgment in favor of the plaintiff was reversed. White v. Prudential Ins. Co., 120 App. Div. 260. Cady, the insured, went to a hospital March 28, in very low spirits, and was put in charge of a trained nurse. His thoughts dwelt upon the subject of dying. The same day he executed a will. The night thereafter he was somewhat delirious. March 30th during the temporary absence of his nurse, who went at bis request to get him a glass of hot water, he ran up several flights of stairs, rapidly, in his night robe. On being hailed by a person, he quickened his pace, put his hands on a railing around an open shaft, leaped over, fell to the bottom and died in about three minutes. Judgment in favor of the beneficiary was affirmed, Cady v. Fidelity & Cas. Co. (1908), 134 Wis. 322, 113 N. W. 967. CHAP. XVIl] MURRAY V. N. Y. LIFE INB. CO. 303 MURRAY V. NEW YORK LIFE INS. CO. Court of Appeals of New York, 1884. 96 N. Y. 614 Exemption from liability if death is in consequence of violation of law. Andrews, J. The policies upon the life of Wisner Murray each contain a condition that, if the insured "shaU die in, or in consequence of, a duel, or of the violation of the laws of any nation. State, or province, " the policy shall be void. The assured died from a pistol shot from a pistol in the hands of one BerdeU, upon whom the deceased and his brother had committed a violent assault, and the defense is based upon this condition in the policy. It is an undisputed fact that the brothers, acting in concert, planned the assault upon Berdell. They stationed themselves in the waiting room of the station, awaiting his arrival, and, when he entered the room, Spencer Murray seized him by the arms from behind and held him, while his brother, Wisner Murray, standing in front, beat him over the head and face with a rawhide, striking from ten to twenty blows, inflicting severe and painful wounds from which the blood flowed profusely, covering his face and cloth- ing. The assault was a brutal one, and, so far as appears, without provoca- tion. BerdeU testified that in the struggle to escape from Spencer Murray his hand was involuntarily brought into contact with his hip pocket, con- taining a pistol. He drew it from his pocket, and it appears that Wisner Mmray, seeing the pistol, started toward the lunch counter, keeping his face toward BerdeU and calling on his brother to "hold him and not to let him shoot." Wisner Murray jumped over the lunch counter, and, as he was passing through a door into another room, the pistol in the hands of BerdeU was discharged, the baU hitting the assured in the forehead, causing his death. BerdeU, who was caUed as a witness by the defendant, testified, in sub- stance, that the firing of the pistol was accidental, and was caused by the sudden jerking of his arm by Spencer Murray, who was still holding him, and that he had no intention of firing at the deceased. It is established by the great preponderance of testimony that, until after the pistol was fired, BerdeU was in the grasp of Spencer Murray, and was struggUng to release himself. BerdeU also testified that the deceased, during the time he was re- treating, had a pistol which he pointed at the witness as if aiming at him. He is confirmed as to the deceased having a pistol by another witness, and a pistol was found, after the affray, on the floor near where the deceased fell, a distance of about thirty feet from the place where BerdeU was when the shot was fired. The witnesses differ as to the time which elapsed between the commencement of the affray and the firing of the pistol, the highest estimate given by any witness being thirty seconds. It is not disputed that the assault made upon BerdeU was a violation of 304 MUBRAY V. N. Y. LIFE INS. CO. [CHAP. XVII law. But it is contended that as, according to the evidence of Berdell, the firing was accidental and not intentional, and as it also appears that it hap- pened after the assured had abandoned the combat, his death was "not in, or in consequence of, a violation of law," and was not, therefore, a death excepted from the operation of the policy. The argument is that death imder such circumstances, from an accidental shooting, cannot, in a legal sense, be attributed to the violation of law which preceded it, so as to bring it within the condition of the poUcy. There must, no doubt, be a relation between the act causing the death and the violation of law to avoid the policy. In the case of Bradley v. Mutual Benefit Life Insurance Company, 45 N. Y. 422, involving the construction of a similar clause in a life poUcy, the court said: "It seems to be clear that a relation must exist between the violation of law and the death to make good the defense; that the death must have been caused by the violation of law." It may be that the proviso in the poUcy was primarily intended to exempt the company from the hazard of a death from violence to which persons engaged in the execution of criminal acts are exposed, and especially where the unlawful or criminal act is such as is likely to be met by forcible resistance. It is plain that a homicide committed in seK-defense would be a death within the condition; so, also, a death at the hands of justice in punishment for crime. The death in these cases would be the direct and legitimate result of the criminal act. Another case, a little further removed from the violation of law as its cause, would be one where a party assailed, in the heat of pas- sion engendered by the act of the assured, on the moment takes the life of the aggressor, although the provocation might not be a legal justification of the homicide. Such a death, we conceive, might be within the condition, depending upon circimistances. If the violation of law in which the deceased was engaged was trivial, although calculated to some extent to excite op- position or resistance, but the taking of Mfe was a result which no reasonable man could have contemplated as likely to follow from the imlawful act, there would be no such relation between the act and the death that the former could be said to be the cause of the latter. But if, on the other hand, the party killed was engaged in committing a violent assault, the natural result of which would be to arouse the passions and excite the anger of the party assailed, and in the heat of passion he killed his assailant, the death would, we think, be the result of the unlawful act within the meaning of the poUcy, although the party causing it exceeded the bounds of lawful re- sistance. As between the company and the assured, his violation of law ought justly to be treated as the cause of the death, because the deceased must be assumed to have known the danger he incurred, and that a party resisting an assault under such circumstances, and whose anger is naturally excited, does not mark with exactness the line which separates lawful defense from ex- cessive and unjustifiable force. We have so far had in view cases where the death of a person insured wer the result of the intentional act of another, or of the law. But while it is probable, as we have said, that cases of this kind were primarilj' in the con- CHAP. XVIl] MURKAY V. N. Y. LIFE INS. CO. 305 templation of the parties to the contract, the words of the condition are too broad to permit them to be confined to this narrow and rigid limitation. The proviso clearly exempts the company from all risks of life which attend the violation of law, which are the natural and reasonable concomitants of the transaction. Prize fighting is prohibited by law, and is attended with some danger. Suppose in such a friendly contest, by mishap one of the combatants strikes a blow which causes the death of the other. Would a death under such circumstances be a death ia the violation of law within the policy, although there was no mtention to kill? However this might be an- swered, we think it is clear that there may be a death in violation of law within the meaning of the poUcy, although not intentionally inflicted, and although it was not occasioned by the act of another. A burglar who, in consequence of a misstep, or to escape detection, falls or jumps from the roof of a house which he is attempting to enter, and is killed, dies in violation of law as plainly as if he had been shot by the owner in defense of his dwelling. In the former as in the latter case, the death results from the criminal act, within the policy, as a natural and reasonable consequence, because, although the immediate cause of the death was the fall, yet the exposure to the danger was encountered in the prosecution of the criminal purpose. Another case may be stated, of which there may perhaps be more doubt. Suppose the assured in this case, instead of having been killed by the pistol, had, in the struggle with BerdeU, ruptured a blood vessel, or, being predisposed to heart disease, it had been brought on by the excitement of the affray, and he had died from either of these causes in the midst of the struggle. Death from a rupture of a blood vessel, or from disease of the heart, occurring independ- ently of any violation of law, would be covered by the policy. The company assume the risk of death from these causes under ordinary circumstances. But do they assume such risk when the immediate, exciting cause of the death is a struggle originating in a criminal assault in which the deceased was engaged at the time? To exempt the company, must the death result from some peculiar and special risk connected with the commission of crime? It seems to us not, and that it is suiEcient to bring a case within the condition, if there is such a relation between the act and the death that the latter would not have occurred at the time if the deceased had not been engaged in the violation of law. In the case before us it is said that the shooting was accidental and not voluntary or intentional, and consequently was not a death, in or in conse- quence of a violation of law. What incidents would attend the assault by the Murrays could not be foreseen. They probably did not know that Ber- dell had a pistol, and if they had known it, they could not have anticipated that it would be discharged in the manner stated by him. But they took the risk of his resistance to any extremity. They took the risk of an injury which might happen to them in consequence of his handling a deadly weapon, whether such injury was intentional or accidental. The case is to be consid- ered under the actually existing circumstances of the assailants and assailed, and if the killing under these circumstances was not an unnatural result of 20 306 MURRAY V. N. Y. LIFE INS. CO. [CHAP. XVII the attack, the case is within the condition. Assuming that Berdell's state- ment that the shooting was unintentional was binding on the jury, and that the killing was accidental, yet the accident was the result of the struggle of BerdeU to free himself from the grasp of Spencer Murray, and the jerking of his arm by the latter. The accident, so called, was caused by the assault, and the risk of injury from the discharge of the pistol was occasioned by the criminal act of the Murrays. The claim that Wisner Murray had aban- doned the combat before the firing of the pistol, if true, does not meet the difficulty. He was a party to the original encounter. The struggle with Spencer Murray was continuing when the pistol was fired. If the shot had killed Spencer Murray, and he had been the person insured, there coiild, we think, be no doubt. It killed his brother, who was unfortunately within its range, but at a time when it is said he was attempting to escape from the scene. But he was not relieved from responsibility for the act of his con- federate in a crime jointly planned, who was continuing the assault, and the act of Spencer Murray in jerking the arm of Berdell, causing the ex- plosion, is as to the company the act of both. We are of opinion, assuming as true to its full extent the statement made by Berdell, that the defense was established. If, as there is some slight evidence to show, Berdell fired the pistol after he had escaped from Spencer Murray, the case is not changed. At all events the jury upon that theory of the case might well have found, and could not justly have found otherwise, that it was fired by Berdell in the heat of passion, and imder circumstances which, if they did not full}' justify him, made the firing and the consequent death a natural and reasonable consequence of the assault. Whether, there- fore, the firing of the pistol was intentional or not, or whether Wisner Murray had or had not abandoned the combat, the jury upon the evidence were justified in finding as they did by the general verdict, that the assured died in, or in consequence of, a violation of law. This conclusion answers the points made upon the exceptions to. the charge. Judgment affirmed. In Violation of Law. — The Massachusetts court in the leading case of Cluff v. Mutual Ben. Life Ins. Co., 13 Allen (Mass.), 308, 99 Mass. 318, concluded that a similar clause worded "in known violation of law," referred to known violation of criminal law. The New York court upon the same facts, in an action brought by an assignee of Cluff, refused to decide whether violations of criminal law alone were in- cluded in the exception, the judges differing in their views, Bradley v. Mut. Ben. Life Ins. Co., 45 N. Y. 422, 6 Am. Rep. 115. Both courts, however, found material issues of fact for the jury to pass upon. In this case, Cluff, the insured, attempted to un- hitch and take forcible possession of the horses of Cox, his debtor, when they were in charge of Cox's son, who was driving them with a wagon. During, or just after, the trespass or assault, the son shot and killed Cluff with a pistol. Bad feeling had previ- ously been engendered between the families which might have had influence in leading up to the shooting. The New York court, reversing a judgment obtained by the de- fendant, held it error to refuse to allow the jury to decide, whether the shooting was in consequence of the unlawful act of the insured, and whether the insured knew that it was unlawful. Crenshaw's certificate stipulated that "if death is caused or superinduced at the hands of justice or in violation of or attempt to violate any criminal law," only a di- minished amount would be payable. At the time of attempted or realized criminal CHAP. XVIl] WRIGHT V. MUT. BENEFIT LIFE ASSN. 307 WRIGHT V. MUTUAL BENEFIT LIFE ASSOCIATION OF AMERICA Court of Appeals of New York, 1890. 118 N. Y. 237 Incontestable clause. Tms action was upon a certificate of life insurance upon the life of Charles F. Wright, and payable to Byron D. Houghton, who assigned his interest to plaintiff, wife of the deceased. The application upon which the certificate was issued contained a condi- tion on the part of the applicant "that if any misrepresentation or fraudulent or untrue answer or statement had been made, or if any fact which should have been stated to the association be suppressed," the agreement of as- surance should be null and void. The applicant also warranted the truth of the statements in his apphcation. Further facts are stated in the opinion. relations between Crenshaw and another's wife, the husband, in a burst of indigna- tion over the discovery, shot and killed the insured. The court, in perhaps a border- line decision, refused to find any defense in favor of the insurer, holding that the death was not caused or superinduced in violation, or attempted violation, of law within the meaning of the policy. Supreme Lodge u. Crenshaw, 129 Ga. 195, 58 S. E. 628. Death Must Be Caused bt Unlawful Act. — To effect forfeiture, it is held that there must be some causative and reasonably contemporaneous connection between the violation of law and the ensuing death or injury, Pythias Knights v. Beck, 181 U. S. 49, 21 S. Ct. 532, 45 L. Ed. 741. For example, the policy is not avoided because the insured happens to be engaged in UlegaUy selling lottery tickets at the time when he is stricken with heart disease unconnected with his occupation, Bradley v. Ins. Co., 45 N. Y. 422; and if the insured is accidentally injured by a gun shot from a distance, the company is not relieved because by chance he is in the act of violating a law against profane swearing, Ace. Ins. Co. v. Bennett, 90 Tenn. 256, 16 S. W. 723, 25 Am. St. R. 685. On the other hand, the insurer was held not liable when the insured met his death because of a collision that occurred during a horse race forbidden by law. Trav- elers' Ins. Co. V. Seaver, 19 Wall. 531, 22 L. Ed. 155. In an interesting case of first impression in Illinois, KUpatrick, the insured, was con- victed and executed for murder. The defendant had issued to him a policy of life in- surance which contained no special stipulation relating to loss of hfe in violation of law or at the hands of justice. In an action on the policy the defendant contended that considerations of public policy precluded a recovery, and the courts below so decided. But the Supreme Court reversed, holding that the argument was erroneous and rested upon the same grounds that were urged centuries ago in support of the now obsolete doctrine of attainder and corruption of blood, Collins v. Met. Life Ins. Co. 232 111. 37, 83 N. E. 542. In a Federal court case where the policy by its terms became payable to the in- sured, he committed the crime of murder for which he was convicted and hanged. After the commission of the crime he assigned the policy to the plaintiffs. The judg- ment of conviction not being res adjudicata as against them, they offered but were not allowed to prove that it was in fact unjust. The court held that the evidence was not admissible and that they could not recover, since it would be contrary to public policy to uphold an insurance indemnifying for loss occasioned by miscarriage of justice in the courts, Burt v. Union Cent. Life Ins. Co., 187 U. S. 362, 23 S. Ct. 139, 47 L. Ed. 216. Compare Box v. Lanier, 112 Tenn. 393, 79 S. W. 1042, 64 L. R. A. 458. 308 WRIGHT V. MUT. BENEFIT LIFE ASSN. [CHAP. XVII PoTTEB, J. Upon the trial, after the plaintiff had introduced the neces- sary proofs to entitle her to a recovery, the defendant offered to prove as a defense to the action, that the deceased Charles F. Wright and Byron D. Houghton, the beneficiary named in the policy, for the purpose of obtaining the poUcy and defrauding the defendant, falsely represented that Wright the insured, waa not then suffering and never had been suffering from cer- tain diseases which had seriously impaired his health, for the purpose of in- ducing and by means whereof defendant was induced to issue the poUcy in- suring the life of said Wright and that such representations were false, etc. This evidence was objected to by the plaintiff, that such proof was inad- missible under the provision of the policy; "that no question as to the valid- ity of an application or certificate of membership shall be raised, unless such question be raised within the first two years from and after the date of such certificate of membership, and during the life of the member therein named," and the objection was sustained and defendant excepted. The defendant also offered to show that the beneficiarj- Houghton, had no insurable interest in the hfe of the insured, in short, that it was a speculative and fraudulent scheme, devised and practiced by Houghton, to secure an advantage to himseff upon the life of W^right which must soon terminate from the disease he was then afflicted with. This was also objected to by the plaintiff and excluded by the court and defendant excepted, the court hold- ing that the defendant could not show any such thing unless during the life of the assured or during the period of two years from the date of the policy such question had been raised. These rulings present the main question upon this appeal and inasmuch as I have reached the conclusion that the judgment should be affirmed, there is but httle, if any, occasion to add anjrthing to the reasons contained in the opinion of the General Term affirming the judgment of the trial court in this case. (IS Hun, 61.) There does not seem to be room for anj' doubt in relation to the meaning of the stipulation referred to. The defendant's counsel does not contend that the language of the stipulation or waiver is not plain and comprehensive of everything which can constitute a defense, nor that the stipulation, though indorsed upon the certificate, does not form a part of the contract of insurance. But he argues from certain supposed analogies to stipulations releasing carriers from lialjility v/hich have been held not to exempt the carrier from liability for negligence, that it must have been intended between the defendant and the insured to except the defense of fraud from the operation of the stipulation in question. (Mjmard V. S. B. & N. Y. R. R. Co., 71 X. Y. 180; Holsapple v. R., \Y. & 0. R. R. Co., 86 id. 27-5.) It does not seem to me that there is any analogy between the two classes of hability and nothing is more misleading than an assumed analogy. The liability of a common carrier of persons or property for injury or loss was adopted at a very early period in \\&n of the peculiar exigencies of the carrying trade, as a rule of public policy. The degree and extent of the lia- bility of the carrier for negligence was fixed by law and not by the terms of a CHAP. XVIl] WRIGHT ;•. MXJT. BENEFIT LIFE ASSN. 309 contract between the parties. There were numerous contingencies incident to the carrying business other than the negligence of the carrier which might result in loss or injury to the person or goods carried and for which the lia- bility of the carrier would depend upon the facts to be established upon a trial. It might well be held in construing an agreement of exemption in general terms, that its office and effect was to relieve from those grounds of habilitj' which depended upon the evidence and not the Lability which was fixed by law. The rule laid down in the cases referred to by the appellant's counsel is merely a rule of the construction of the terms and effect of an agree- ment. It by no means holdc that liability for negligence may not be stipulated away; for the contrary has been repeatedly held, but the terms of the stipu- lation in those cases did not provide exemption from liability for negligence. The case under consideration is an alleged fraud in making a private con- tract between the parties to it. The contract contains a great number of material representations in re- lation to the past and present condition of the insured and of course they are varied with every applicant for insurance and every person insured. Such representations if untrue constitute a breach of warranty which will avoid the contract of insurance. If the representations are known by the party making them to be untrue when made, they would also constitute a fraud and avoid the contract of insurance. The difference between the representations and the proof of them upon a trial to avoid the contract would be only the fact whether the party knew the representation was false when he made it. It is to be presumed that the defendant had some purpose when it offered to the insured a contract containing the stipulation and that the stipulation itself had some meaning. The court is asked to hold that the parties to the stipulation tmderstood (for unless the insured so understood the stipulation the defendant was practicing a fraud upon him) ; that while the stipulation embraced all representations that were untrue, it did not em- brace the same representations, if known by the party making them, to be untrue. The practical difference or effect of this would be, that upon a trial to enforce the contract, the proofs of the representation, their material- ity and untruth, would have to be made all the same, but the stipulation would come in as a defense to all representations save those the insured knew to be false. While I might, perhaps, entertain the idea that the insurer so understood the stipulation, 1 am very confident that the insured did not so imderstand it. It seems to me the analogy is based upon an entire mis- conception of the object and meaning of the stipulation. It is not a stip- ulation absolute to waive all defenses and to condone fraud. On the con- trary, it recognizes fraud and aU other defenses but it provides ample time and opportunity within which they may be, but beyond which they may not be, established. It is in the nature of and serves a similar purpose as stat- utes of limitations and repose, the wisdom of which is apparent to all reason- able minds. It is exemplified in the statute giving a certain period after the discovery of a fraud in which to apply for redress on account of it and in 310 WRIGHT V. MUT. BENEFIT LIFE ASSN. [cHAP. XVII the law requiring prompt application after its discovery, if one would be relieved from a contract infected with fraud. The parties to a contract may provide for a shorter limitation thereon than that fixed by law and such an agreement is in accord with the policy of statutes of that character. Wilkinson v. First Nat. Fire Ins. Co., 72 N. Y. 499, 502. No doubt the defendant held it out as an inducement to insurance by removing the hesitation in the minds of many prudent men against paying ill-afforded premiums for a series of years when in the end and after the pay- ment of premiums, the death of the insured and the loss of his and the testi- mony of others, the claimant instead of receiving the promised insurance may be met by an expensive lawsuit to determine that the insurance which the deceased has been paying for through many years, has not and never had an existence except in name. While fraud is obnoxious and should justly vitiate all contracts, the courts should exercise care that fraud and imposi- tion should not be successful in annulling an agreement, to the effect that if cause be not found and charged within a reasonable and specific time, es- tablishing the invalidity of the contract of insurance, it should thereafter be treated as valid. Hence 1 fail to perceive any error in the disposition made of this question in the court below. I think the judgment should be affirmed with costs. All concur; Haight, J., in result; Follett, Ch. J., not sitting. Jvdgmerd affirmed.^ 1 Royal Circle v. Achterrath, 204 111. 549, 68 N. E. 492, 63 L. R. A. 452, 98 Am. St. R. 224; Welch ». Ins. Co., 108 la. 224, 78 N. W. 853, 50 L. R. A. 774; Holden v. Pru- dential L. Ins. Co., 191 Mass. 153; Patterson v. Ins. Co., 100 Wis. 118, 75 N. W. 980, 42 L. R. A. 253, 69 Am. St. R. 899. Incontestable from date. Union Central L. Ins. Co. V. Fox, 106 Tenn. 347, 61 S. W. 62, 82 Am. St. R. 885. As affecting rule for in- surable interest, Clement v. Ins. Co., 101 Tenn. 22, 46 S. W. 561, 42 L. R. A. 247, 70 Am. St. R. 650; Auctil v. Ins. Co. (1899), App. Cas. 604 (but see 118 N. Y. 237). As related to suicide, Mut. L. Ins. Co. i. Kelly, 114 Fed. 268 (but see 169 U. S. 139). CHAP. XVIIl] A FORI! OF ACCIDENT POLICY 311 CHAPTER XVIII The Accident Insurance Policy a form of policy of accident insurance and health clause A Form of Policy The Insurance Company, in consideration of the warranties in the applica- tion for this policy and of dollars, does hereby insure under classifica- tion (being a by occupation) for the term of months from noon of , 19 . . , in the sum of dollars per week against loss of time not exceeding consecutive weeks, resulting from bodily injuries effected dur- ing the term of this insurance, through external, violent, and accidental means, which shall, independently of all other causes, immediately and wholly disable him from transacting any and every kind of business pertaining to his occupation above stated. Or if loss by severance of one entire hand or foot results from such injuries alone within ninety days, will pay insured one-third the principal sum herein named, in lieu of said weekly indemiuty, and on such payment this policy shall cease and be surrendered to said company, or in event of loss by severance of two entire hands or feet, or one entire hand and one entire foot, or loss of entire sight of both eyes, solely through injuries afore- said within ninety days, will pay insured the full principal sum aforesaid, provided he sur\'ives said ninety days. Or if death results from such injuries alone within ninety days, will pay dollars to if surviving; in event of his prior death, to the legal representatives or assigns of insured, provided — 1. If instu-ed is injured in any occupation or exposure classed by this company as more hazardous than that here given, his insurance shall be only for such sums as the premium paid by him will purchase at the rates fixed for such increased hazard. 2. This policy shall not take effect unless the premium is paid previous to any acci- dent under which claim is made; and the company may cancel it at any time by re- funding said premium, less a pro I'o.ta share for the time it has been in force. 3. The company's total liability hereon in any policy year shall not exceed the principal sum hereby insured; therefore, in case of claim for full principal sum, any sums paid as indemnity within such policy year shall be deducted therefrom. 4. Immediate written notice, with full particulars and full name and address of insured, is to be given said company at of any accident and injury for which claim is made. Unless affirmative proof of death, loss of limb or sight, or duration of disability, and of their being the proximate result of external, violent and accidental means, is so furnished within seven months from time of such accident, all claims based thereon shall be forfeited to the company. Xo legal proceedings for recovery hereunder shall be brought within three months after receipt of proof at this office, nor at all, unless begun within one year from date of alleged accident. 5. This insurance does not cover disappearances; nor suicide, sane or insane; nor injuries of which there is no visible mark on the body (the body itself in case of death not being deemed such mark); nor accident, nor death, nor loss of limb or sight, nor disability, resulting wholly or partly, directly or indirectly from any of the following causes, or while so engaged or affected : Disease or bodily infirmity, hernia, fits, vertigo, sleep-walking; medical or surgical treatment, except amputations necessitated solely by injuries and made within ninety days after accident; intoxication or narcotics; voluntary or involuntary taking of poison or contact with poisonous substances or inhaling of any gas or vapor; sunstroke or freezing; dueling or fighting, war or riot; 312 iPIDELITY & CASUALTY CO. V. JOHNSON [CHAP. XVIII intentional injuries (inflicted by the insured or any other person) ; voluntary over- exertion; violating law; violating rules of a corporation; voluntary exposure to un- necessary danger; expeditions into wild or uncivilized countries; entering or trying to enter or leave a moving conveyance using steam as a motive power (except cable cars) , riding in or on any such conveyance not provided for transportation of passengers, walking or being on a railway bridge or roadbed (railway employees excepted). 6. No claim shall be valid in excess of ?10,000 with $50 weekly indemnity under accident policies, nor for indemnity in excess of money value of insured's time. All premiums paid for such excess shall be returned, on demand, to insured or his legal representatives. 7. Any medical adviser of the company shall be allowed, as often as he requires, to examine the person or body of insured in respect to alleged injury or cause of death. 8. Any claim hereunder shall be subject to proof of interest. A copy of any assign- ment shall be given within thirty days to the company, which shall not be responsible for its validity. The company may cancel this policy at any time by refunding the unearned premium thereon. No agent has power to waive any condition of this policy. In witness whereof, etc. Health Clause For the period during which the Insured shall independently of all other causes be necessarily confined to the house and wholly disabled, and prevented by bodily disease not hereinafter excepted, from performing any and every duty pertaining to his oc- cupation, the Company will pay a weekly indemnity of $ , and if following such a period of total disability and confinement in the house,, he shall be wholly dis- abled and prevented from performing any and every kind of duty pertaining to his occupation, but shall not be necessarily confined to the house, one-half of said amount per week will be paid to the Insured; but no payment shall be made for disability of less than seven consecutive days' or in excess of twenty-six consecutive weeks' duration. Upon satisfactory proof to the Company that he has, as the result of disease, con- tracted during the term of this Policy, and not hereinafter excepted, entirely and irrecoverably lost the sight of both eyes, or permanently and entirely lost the use of both hands or both feet, or of one hand and one foot, and also that he has been for one year, and will thereafter, and during his life, by reason thereof be permanently dis- abled from engaging in any work or occupation for wages or profit, the Company will pay to him $ Certain States have statutes specifying provisions which must and other provisions which must not be inserted in the policy of accident insurance. FIDELITY & CASUALTY CO. v. JOHNSON Supreme Court of Mississippi, 1894. 72 Miss. 333 Injuries effected through external, violent and accidental means. The insured suffered death by hanging at the hands of a mob. Woods, J. The court refused to charge the jury for appellant as asked in his twelfth instruction. This instruction reads as follows: "If the jury believe, from the evidence in this case, that John Johnson came to his death by the hands of a mob, his death was not the result of an accident and this CHAP. XVIIl] FIDELITY & CASUALTY CO. V. JOHNSON 313 case is not within the terms and conditions of the policy sued on, and the jury will find for defendant." By the terms of the policy, indemnity against "bodily injuries sustained through external, violent and accidental means" was secured by the insured. That Johnson came to his death by external and violent means is not denied, but death by hanging at the hands of a mob, it is said by appellant's counsel, is foreign to our preconceived ideas as to what constitutes an accident. According to lexicographers, an accident is a sudden, unforeseen and un- expected event. It has been held by courts adopting this or any similar definition that where a man was killed by robbers, that this was a case of death by accident in the sense in which that word is used in accident insur- ance policies. So, too, it has been held that death from a blow struck by one who has attempted to blackmail the assured was an accident covered by an accident insurance policy. In these and all like cases in which death occurs by violent means external to the man, and against or without in- tention or concurrence of will on the part of the man, death may properly be called an accident. A learned and laborious writer states the true rule for determining whether injuries are accidental. With great simplicity, clearness and strength, Biddle says: "An injury may be said objectively to be accidental, though subjectively it is not; and, if it occur without the agency of the insured, it may logically be termed accidental, though it was brought about designedly by another person." Affirmed.^ ' The United States Supreme Court approved of the following statement of the law: "The term 'accidental' was used in the policy in its ordinary, popular sense, as mean- ing happening by chance ; unexpectedly taking place ; not according to the usual course of things; or not as expected. If a result is such as follows from ordinary means, voluntarily employed, in a not unusual or unexpected way, it cannot be called a result effected by accidental means. But if, in the act which precedes the injury, something unforeseen, unexpected, unusual occurs, which produces the injury, then the injury has resulted through accidental means," Mut. Ace. Assn. v. Barry, 131 U. S. 100, 121, 9 S. Ct. 755, 33 L. Ed. 60. An injury happening to the insured without the concur- rence of his will or intent is nevertheless accidental, although resulting from his own intentional act, provided only such result was not foreseen by him; thus in case of an injury to the insured caused by intentionally jumping from the platform of a train of cars under such circumstances that no harm could reasonably have been expected to follow, U. S. Mut. Ace. Assn. v. Barry, 131 U. S. 100, 9 S. Ct. 755, 33 L. Ed. 60. The same conclusion was reached in the following cases: A sprain unexpectedly caused by lifting heavy weights, Martin v. Travelers' Ins. Co., 1 F. & F. 505; blood poisoning from cutting a com, Nax v. Travelers' Ins. Co., 130 Fed. 985, or from the use of a hypodermic needle, Bailey v. Interstate Cas. Co., 8 App. Div. 127, 40 N. Y. Supp. 513, aff'd 158 N. Y. 723, 53 N. E. 1123; an unintentional taking of poison, Healey v. Mut. Ace. Assn., 133 111. 556, 25 N. E. 52, 9 L. R. A. 371, 23 Am. St. R. 637; an injury to the insured caused by a blow from the handle of a pitchfork slipping through his hands while he was loading hay, which produced peritoneal inflammation and ultimately death. North Am. Ins. Co. v. Burroughs, 69 Pa. St. 43; rupture of a blood vessel dur- ing exercise with Indian clubs, McCarthy v. Travelers' Ins. Co., 15 Fed. Cas. 1254, 8 Biss. 362; exertion causing unusual dilation of the heart, Horsfall v. Pac. Mut. L. Ins. Co., 32 Wash. 132, 72 Pac. 1028, 63 L. R. A. 425, 98 Am. St. R. 846; suicide while insane, Blackstone v. Standard, etc., Ins. Co., 74 Mich. 592, 42 N. W. 156, 3 L. R. A. 486; self-inflicted injuries wiiile insane. Accident Ins. Co. v. Crandal, 120 U. S. 527, 314 LAWRENCE V. ACCIDENTAL INS. CO. [CHAP. XVIII LAWRENCE v. ACCIDENTAL INS. CO. Supreme Court of Judicature, 188L L. R. 7 Q. B. D. 216 Meaning of proviso, "direct and sole cause of death," where an excepted cause cooperates to produce the accident. Denman, J. During the argument of this case I have had considerable doubt as to the meaning of the condition in the policy, and I am not sure 7 S. Ct. 685, 30 L. Ed. 740. But if the acts of the insured are purely volimtary and usual, and the results natural, the injury has been held not to be accidental within the meaning of the policy, although unexpected. Such mlings, however, have usually turned upon the particular phraseology of the contract, Feder v. Iowa, etc., Assn., 107 Iowa, 538, 78 N. W. 252, 43 L. R. A. 693, 70 Am. St. R. 212. The phrase "external and violent means," added to the policy by the insurers for the purpose of restricting their liability, is very strictly construed against them. The word "external" refers to the force or cause and not to the injury. If the cause be external, it may act internally without relieving the company, Am. Aco. Co. v. Reigart, 94 Ky. 547, 21 L. R. A. 651, 23 S. W. 191, 42 Am. St. R. 374; and to hold the insurer, it need not be shown that the cause was violent in the sense of breaking tissues, or visibly marring the body. There- fore, notwithstanding this restrictive clause, it is held that the policy covers death by accidental drowning, Manufacturing Ace. Ins. Co. v. Dorgan, 58 Fed. 945, 7 C. C. A. 581, 22 L. R. A. 620; death by accidental inhaling of gas, Paul v. Travelers' Ins. Co., 112 N. Y. 472, 20 N. E. 347, 3 L. R. A. 443, 8 Am. St. R. 758; intestinal inflammation from eating spoiled oysters, Maryland Cas. Co. v. Hudgins (Tex. Civ. App., 1903), 72 S. W. 1074; choking to death in the attempt to swallow a piece of beefsteak, Amer. Aco. Co. V. Reigart, 94 Ky. 547, 23 S. W. 191, 21 L. R. A. 651 ; a fatal bite of an insect upon the toe causing blood poisoning, Omberg v. U. S. Mut. Assn., 101 Ky. 303, 40 S. W. 909, 72 Am. St. R. 413; freezing to death caused by the collapse of a wagon. Northwest Commercial T. A. v. London Guarantee & A. Co., 10 Manitoba, 537; a stumbling and fatal fall against a locomotive engine, Equitable Aco. Ins. Co. v. Osborn, 90 Ala. 201, 9 So. 869, 13 L. R. A. 267; a blow intentionally struck by another person, Richards v. Travelers' Ins. Co., 89 Cal. 170, 26 Pac. 762, 23 Am. St. R. 455; a rupture caused by jumping from a train. Travelers' Ins. Co. v. Murray, 16 Colo. 296, 26 Pac. 774; lockjaw from a self-inflicted gunshot wound. Travelers' Ins. Co. v. Melick, 65 Fed. 178, 12 C. C. A. 544. So also the insurer was held liable where the immediate cause of death was fright, but caused in conjunction with efforts to hold a runaway horse, McGlinchey v. Fidelity & Cas. Co., 80 Me. 251, 14 Atl. 13, 6 Am. St. R. 190. On the other hand, where an existing but dormant disease is brought into activity by the exertions of the insured, it is decided that the resulting death is not caused by external, violent and accidental means, Travelers' Ins. Co. v. Selden, 78 Fed. 285, 24 C. C. A. 92, 42 U. S. App. 253. Fitzgerald, the insured, went to sleep with his hand vnder his head, and in this position his hand rested upon the edge of the bed rail. This quiet pressure, continuing for a considerable period, resulted in an inflammation of the periosteum of certain bones of the fingers, rendering an operation necessary. The court held that the injury was by "violent means," within the purport of the policy, jEtna Life Ins. Co. v. Fitzgerald, 165 Ind. 317, 75 N. E. 262. The burden is on the plaintiff in an action on the policy to show that the alleged accident is the cause of CHAP. XVIIl] LAWRENCE V. ACCIDENTAL INS. CO. 315 that, but for Winspeax v. Accident Insurance Co., 6 Q. B. D. 42, I should not have thought that the company were protected. The facts are these: The deceased person, while on a railway platform, was suddenly seized with a lit, which caused him to faU forward ofif the platform on to and across the railway. A locomotive engine was at that moment passing through the station; it passed over his neck and body, and he received mortal injuries, of which he then and there died. Then it is stated in the case: "The falling forward of the insured off the platform as aforesaid was in consequence of his being seized with a fit or sudden illness, and but for such fit or illness he would not have suffered death or injury as before mentioned." Now, the immediate cause of death is not in the least disputable; but there is no doubt that if he had not fallen there in consequence of the fit he would not have suffered death, and in that sense the fit led to bis death. The question is whether that was merely one of several events which brought about the accident, in the sense that it caused the accident to happen by causing him the death or injury. Thus, in a Federal court case, Winfield L. Scott, a railway postal clerk, was insured. The only evidence of accidental injury was a red-looking bruise on his left shin, five or six inches long, and two or three inches wide, seen by his wife some three months prior to his death. But for a long time before sustaining this bruise, the defendant who was sixty years old had been treated for double hernia, congestion of the liver and palpitation of the heart. The court concluded that there was an entire absence of proof tending to show that death had resulted from bodily injuries received through external, violent and accidental means, and the judgment in favor of the plaintiff was reversed. National Assn. of Ry. Postal Clerks v. Scott, 155 Fed. 92. In another case in a Federal court, the death of the insured was due to rupture of the heart. The walls of the heart were thin and weakened by fatty de- generation. Just before his death, the insured was engaged in carrying a cellar door, weighing about eighty-six pounds, from one of his buildings to another. Upon arriv- ing at his destination, he exclaimed, "I am tired." A few seconds afterward, his hps turned blue, he grabbed the door with both hands, and fell forward, dead. In carrying the door, there was no stumble, wrench, shp or fall. There was no unforeseen, acci- dental, or involuntary movement of the body. The court held that the rupture was due, not to accident, but to disease, and affirmed the judgment directed by the court below in favor of the defendant, Shanberg v. Fidelity & Cas. Co., 158 Fed. 1. And where the insured died of septicaemia after an operation for appendicitis, the court de- cided that the death was due to disease, and not to external, violent and accidental means, Herdic v. Maryland Cas. Co., 146 Fed. 396. In the controversy over Mc- Cormick's policy, the question arose whether his death was the result of his fall, or his fall the result of his death. On the trial, evidence was received tending to show that the assured by his condition and habit of life was predisposed to an attack of apoplexy. He was driving a buggy in the city of St. Paul. While his horse was on a walk, and while he was putting on his gloves, he reached forward, apparently to gather up the reins, and at that instant the buggy bumped against an obstruction. The as- sured fell forward, struck his head against the pavement, and died within a few minutes. Conflicting exjjert testimony was received as to the cause of death. The court con- cluded that the case was one for the jury, McCormick v. IlUnois C. Men's Assn., 159 Fed. 114. Where, however, it appears that the death or injury was caused by an accident, the burden then rests on the insurer to show that the accident happened by reason of something that was excepted from the provisions of the policy, and not on the insured to affirmatively show that the accident did not occur by reason of any or all of the exceptions incorporated therein, Starr v. jEtna life Ins. Co., 45 Wash. 128, 87 Pac. 1119. 316 LAWRENCE V. ACCIDENTAL INS. CO. [CHAP. XVIII to be there, or whether it was, within the meaning of tliis proviso, a cause of death which would prevent the policy applying to the case. In Winspear V. Accident Insurance Co., where a man, while fording a river, was seized with a fit, and so fell and was drowned in the river — a fit being undoubtedly a kind of a disease which was not within the meaning of the pohcy, which was very hke the present one, although not exactly identical — it was held that the death did not arise from disease within the exceptions in the policy. By this present poUcy, if the insured shall receive any personal injury caused by accidental and external violence within the meaning of this policy and the conditions thereto, and the direct effects of such injuries shaU occasion his death within three calendar months from the happening thereof, then the funds of the company shall be subject to pay the sum assured. "Provided always that this policy insures payment only in case of injuries accidentally occurring from material and external cause operating upon the person of the insured where such accidental injm'y is the sole and direct cause of death to the insured, or disabihty to follow his avocations; but it does not insure in case of death or disability arising from fits or rheumatism, gout, hernia, erysipelas, or any disease whatsoever arisiag before or at the time or follow- ing such accidental injury (whether consequent upon such accidental in- jury or not, and whether causing such death or disabihty directly or jointly with such accidental injury)." Now, the words that appeared to me during a part of the argument to be strongly in favor of the defendants in this case are those latter words, "causing such death or disability directly or jointly with such accidental injury." If the words had simply been these, "this policy shall not attach in cases where the death is caused by an accident, jointly with a fit," I should have thought it was a case in which in aU prob- ability the defendants would be entitled to our judgment. But these three last fines of the clause are merely lines in a parenthesis, and they are put in for the purpose of showing that the exception will apply, whether the dis- ease be consequent upon the accidental injury or not, or whether the disease be one that shall have caused the death itself directly, or whether it shall have caused the death jointly with the accidental injury. But then these are words merely defining the cases in which the previous words, "arising from," may be applicable. The words "arising from" have already received judicial construction in the case of Winspear v. Accidental Insurance Co., in which it was held that the death did not arise from the disease. It ap- pears to me that where words are merely put in as a variation of those pre- viously used, and which are exactly the same as those that have received a judicial construction, we cannot put a different construction upon them. I think we are bound to hold that the death arose from the engine destrojdng the insured by coming across him, and not from the previous fact of a fit having attacked him and so brought him there. It is far better for us to decide in accordance with Winspear v. Accidental Insurance Co., on words that are really identical, so far as they operate in this case, than to gather a distinction out of words which are, after all, merely used as illustrations of the previous descriptions. CHAP. XVIIl] LAWRENCE ('. ACCIDENTAL INS. CO. 317 Watkin Williams, J. I am clearly of the opinion that the plaintiff is entitled to recover, and I desire to base my decision upon reason and prin- ciple, and not upon the decided cases. It seems to me perfectly clear, and altogether free from doubt, that upon every principle of construction and upon the true meaning of this pohcy, the company are liable to pay the ad- ministratrix in this case. Now, the whole case depends on the true construc- tion of the words in the proviso, because in this case the deceased person, having fallen down accidentally in a fit from the platform of the railway on to the rails, was, while lying there, accidentally run over by a train that happened at that moment unfortunately to come up, and he was undoubtedly killed by the direct external violence of the engine upon his body, which caused his death immediately. The question arises whether, according to the true construction of the proviso, it can be said that this is a case of death arising from a fit; because, if this death did not arise from the fit, according to the true construction of the pohcy, the remainder of the clause does not come into existence at all, and is inapphcable. It seems to me that the well- Imown maxim of Lord Bacon, which is appHcable to all departments of the law, is directly applicable to this case. Lord Bacon's language in his " Maxims of the Law," Reg. 1, runs thus: "It were infinite for the law to consider the causes of causes, and their impulsions one of another; therefore it contenteth itself with the inmiediate cause." Therefore, I say, according to the true principle of law, we must look at only the immediate and proximate cause of death; and it seems to me to be impracticable to go back to cause upon cause, which would lead us back ultimately to the birth of the person, for if he had never been bom the accident would not have happened. The true meaning of this proviso is that, if the death arose from a fit, then the com- pany are not Mable, even though the accidental injury contributed to the death in the sense that they were both causes, which operated jointly in causing it. That is the meaning, in my opinion, of this proviso. But it is essential to that construction that it should be made out that the fit was a cause in the sense of being the proximate and immediate cause of the death, before the company are exonerated, and it is not the less so because you can show that another cause intervened and assisted in the intervention'. Now, if the argument of the defendants be a good one, this absurdity would fol- low. Supposing a man went out in the field following sports, and he were to be seized with a fit, either a fainting fit or an epileptic fit, or any other fit, and had retired to one side of the field, and remained there recovering from the fit; and being there, a sportsman — not knowing he was there — accidentally shot him: It might be said, in the same manner, that the cause of death arose from a fit. It seems to me only to require to be stated, to show the entire absurdity of it. The only difference between that case and this is in the time that intervened between the time of the fit and the person being placed within the influence of the succeeding accident, which, in this case, was very short; but I fail to see, in point of reason, that there is any difference between one hour, or one minute, or one day. The break in the chain of causes seems to be equally complete. I, therefore, put my decision on the 318 LAWRENCE V. ACCIDENTAL INS. CO. [CHAP. XVIII broad ground that, according to the true construction of 'this policy and this proviso, this was not an act arising from a fit; and, therefore, whether it contributed directly or indirectly, or by any other mode to the happening of the subsequent accident, seems to me wholly immaterial, and the judgment of the court ought to be in favor of the plaintiff. Judgment for the plaintiff.^ ^ Sole and Proximate Cause. — Independently of all other causes. George C. French, a passenger conductor, had an accident policy for S5,000. He accidentally struck the lower part of his leg against a small iron safe in the baggage car, causing an abrasion of the skin. Septic poison set in, resulting in his death about two weeks after the happening of the accident. The court considered that the disease of blood poison- ing was to be regarded as a mere incident or effect of the accidental injury, and in no sense an independent cause, and held that the claimant was entitled to recover on the policy, French v. Fidelity & Gas. Co., 135 Wis. 259, 115 N. W. 869; General Ace. F. & L. Assur. Co. v. Homely (1908), 109 Md. 93, 71 Atl. 524 (accident the predominant and sole cause, disease a mere link in the chain) . In another case, the insured, a rail- way employe', by being precipitated against the edge of timbers, sustained severe bruises on- his chest. Pneumonia or pleurisy, accompanied by a large accumulation of pus, resulted, and death followed about two months after the accident. The court held that the accident was to be regarded as the sole cause of death. Continental Cas. Co. V. Colvin, 77 Kan. 561, 95 Pac. 565. Same Subject. — "Immediately and wholly disable." — Bishop Green, a freight handler, was insured by a policy which provided that it should be liable in case of in- jury, "at once resulting in continuous total disability" to engage in business. Janu- ary 31st, Green was ssriously injured by a heavy crate of glass which fell upon him. February 2d, however, he returned to his work, and continued at it until March 25th when he died in consequence of the accident. The appellate court below, applying to the poUcy a liberal rule of construction in favor of the insured, held that the terms of the policy requiring the inability to be continuous had no reference to a death loss and affirmed the judgment in favor of the plaintiff. But the Supreme Court reversed, holding that the language of the policy being without ambiguity, and the disability resulting from the accident not being continuous, the claimant was entitled to no re- covery from the defendant, Continental Cas. Co. v. Wade, 101 Tex. 102, 105 S. W. 35. Letherer's policy provided indemnity for loss of time resulting from bodily injuries which should "immediately, wholly and continuously disable and prevent the assured from performing any and all duties pertaining to any business or occupation." The insured fell and struck a scantling. The injury finally resulted in his giving up work altogether, but meanwhile he continued his duties in connection with running an engine in a cider mill for over a week, though the labor was accompanied with great pain. The court held that he was not entitled to recover his insurance money and reversed his judgment, Letherer ». U. S. Health & Ace. Ins. Co., 145 Mich. 310, 108 N. W. 491. In an earlier Michigan case the plaintiff, Hohn, was a barber. He was injured on Friday. On Saturday he went to his shop late and did some work, but not nearly so much as he would have done if well. He rested on Sunday. On Monday he again went to his shop and attempted to work, but suffered such pain that he fainted away; a physician was called, and the plaintiff was taken home in a, carriage. He continued to visit his shop during the week, suffering pain all the while, and occasionally working a Uttle, but was unable to perform all the duties of his business, because of the pain he suffered. The court held that the case was one for the jury, Hohn v. Interstate Cas. Co., 115 Mich. 79, 72 N. W. 1105. Exception op Hazardous Employment. — In a Nebraska case, Simmons was in- sured with the defendant as a traveling salesman for a wholesale drug company. Hav- ing lost his position, for a period of some two years while trying to obtain another position, he lived on his father's ranches. He came and went at his own wiU, put in CHAP. XVIH] BACON V. U. S. MUT. ACCIDENT ASSN. 319 BACON V. UNITED STATES MUT. ACCIDENT ASSOCIATION Court of Appeals of New York, 1890. 123 N. Y. 304 Whether a loss by accident or by disease, where both causes unite. The policy, or certificate, was in general similar to the form of accident policy given in the appendix, but one of the stipulations was worded as follows: "Benefits under this certificate shall not extend to any death or disability which may be caused, wholly or in part, by bodily infirmities or most of his time hunting or visiting from one place to another, and though he some- times communicated orders from his father to the employes on the ranches, he re- ceived no compensation and was never employed as a superintendent. The occupa- tion of "stock farmer, owner or superintendent, supervising only" was classed by the policy as more hazardous than salesman. The father of Simmons asked him to examine the windmills at two of the wells, to see if they were pumping properly. In comphance with this request, Sinunons stopped at the Lost Tank well and there accepted an in- vitation to dine with Mr. Franklin, the foreman of the ranch. He sat down on the ground with Franklin to eat dinner, when a large rattlesnake came out of the grass and bit him so that he died the following day. In the action on the policy, the court held that Simmons had not changed his occupation to the more hazardous employ- ment, Simmons v. Western Travelers' Ace. Assn., 79 Neb. 20, 112 N. W. 365. Some policies provide, not that the insurance shall be avoided, but that the indemnity shall be diminished, if the insured be injured while engaged in an emplojnment classified as more hazardous than that named by him. The same principles, already explained, are applicable. Thus if a man insure as a 'stock-dealer visiting yards, not tending in transit," when in reality at the time of injury, his vocation is that of "stock-dealer and tender in transit," classified in such a policy as more hazardous, his recovery will be reduced accordingly, Loesch v. Union Cas. & Sur. Co., 176 Mo. 654, 75 S. W. 621. But a farmer's occupation does not change to that of a "pile driver," because he temporarily engages in driving piles in the construction of a private bridge. National Ace. Soc. V. Taylor, 42 111. App. 97. The policy issued to the plaintiff by the defendant contained the dausc: "If the assured shall change his occupation to or be injured in any occupation or exposure or in performing acts classified by this company as more hazardous than that in which the member was classed when accepted, then and in all such cases, the insurance, fixed indemnitj' or weekly indemnity payable shall be only the amount fixed for such increased hazard in accordance with the classification of risks by the company and as per the table on the back hereof." Kenny was insured as a manager of a mill, but when on a visit of a few days at his brother's farm he undertook to work with his brother's new six-foot McCormick mowing machine. The season was unusually wet. The horses attached to the machine jumped a ditch of water with which Kenny had not been made acquainted. As a result, Kenny was thrown into the air, and on his descent struck his leg and back on the front part of the seat, receiving injuries which developed into traumatic neuritis. The court held that Kenny was none the less a miller because temporarily occupied in riding a mowing machine as an act of exercise or diversion, and the larger scale of indemnity was allowed him, Kenny s. Bankers' Aee. Ins. Co., 136 Iowa, 140, 113 N. W. 566. Visible M.tnK of Injury Reqoihed. — As to the legal effect of this clause, see Barrj- r. U. S. Mut. Ace. Assn., 23 Fed. 712, aff'd 131 U. S. 100, 9 S. Ct. 755, 33 L. Ed. 60; Horsfall t. Pac. Mut. L. Ins. Co., 32 Wash. 132, 72 Pac. 1028, 63 L. R. A. 425, 98 Am. St. R. 846. 320 BACON V. V. S. MUT. ACCIDENT ASSN. [CHAP. XVIII disease existing prior or subsequent to the date of this certificate, or by poison in any manner or form." Verdict for plaintiff, affirmed by General Term Supreme Court. Peckham, J. I think the deceased died from disease withia the meaning of the language used in the policy sued upon ia this action, and not from an accident causing the disease. The disease itself was not caused by an acci- dent within the meaning of the policy. The case of Paul v. Travelers' Ins. Co., 112 N. Y. 472, has been cited by coimsel for the respondent as decisive of his case. Upon the question de- cided the case is conclusive, and we have no disposition to alter our views as expressed therein. But upon the question of whether the deceased in this case died from disease, as above stated, the case of Paul is without the slightest analogy. In that case the deceased came to his death by acci- dentally inhaling illuminating gas. This gas is a manufactiu'ed article, gathered into large reservoirs, and hence distributed through pipes into almost every house in a city or village. The deceased accidentally, while asleep, inhaled this gas and was suffocated. This would seem to be a plain case of death from accident, and it was found that the gas was not purposely inhaled. The death being the result of accident, it was then held that such death was caused by external and violent means, within the meaning of the policy. This also seems plain enough. The gas was external, and it was not inhaled voluntarily — i. e., intentionally and for the purpose of being killed thereby. It might naturally be said — as in effect it was — that death, as the result of accident, imports an external and violent agency as the cause. There was no question in the Paul case that the deceased came to his death through disease; no pretense could properly be made as to death from disease in such a case. If the deceased had been asleep in a room into which a large quantity of water was poured through the accidental breaking of a water- main, and in consequence thereof he had been drowned, no one would deny that the death was caused by accident, and was not the result of disease, as that word is generally used among men. There is no difference in the case in principle if the death, instead of being caused by water which was visible, was caused by gas which is invisible. In neither case could the idea even suggest itself that death was caused by disease. But in the case before us the facts are entirely different. The deceased died, as is said and as will be here conceded, from malignant pustule. It is caused, as the plaintiff's witness testified, by the infliction upon the body of a certain kind of animal substance, contact with disease or putrid animal matter; this acts by producing, at the point of contact with this matter, a papula, something like a flea bite, which rapidly becomes a vesicle, a blister-like affair, and then a pustule; this is accompanied by a great deal of swelling in the parts immediately around it, and a great deal of pain in the individual; the glands in the vicinity become infiltrated with blood and pus, and become dark red or even black in color; the neighboring glands become involved; then comes, almost immediately after or together with these signs, CHAP. XVIIl] BACON V. U. S. MUT. ACCIDENT ASSN. 321 a great prostration, and the patient dies in a short time, five to eight days generally, the extreme limits being from twenty-four hom-s to sixteen days; he dies of exhaustion. As to the cause of the pustule, the witness stated that the virus comes from the hide, or hair, or wool of animals suffering from this disease; from their flesh sometimes, or it may come from the feathers of birds that have been feeding upon this pecuUar kind of carrion; it may be communicated directly, that is, by the immediate contact of the individual with it, by his touching it or handling it and then bringing the matter in contact with the skin or thin mucous membrane; or it may be transported, as there are very many cases known, by insects, flies, mosquitoes, that have been feeding upon this, carrying it away and depositing it upon individuals. It is commonly known as malignant pustule, or charbon, or anthrax; they are all synonymous terms. It has been called wool-sorter's disease, because it happens among people that handle wools and hides, such as tanners, butchers, and herds- men, and those people that are engaged in business where they are brought in contact with that sort of thing. In answer to the question, "How rare is malignant pustule?" this same witness for the plaintiff answered: "In the eastern parts of this country it is pretty rare; there have been some epidemics reported in America; in the eastern part of Massachusetts, I think about twenty years ago, there were quite a number of cases among the hairworkers, people that take the hair that comes from abroad and make mattresses of it." The witness thus designates the diflSculty as an epidemic, which word is so frequently used in connection with disease as almost to be synonymous therewith. It was undoubtedly so used in this instance by the witness, who thus described malignant pustule as a disease, when referring to its frequency in ^Massachusetts some years ago. The word epidemic would scarcely be used to express a frequent occurrence of accidents. The witness also said that he had seen it termed in one standard authority as an acute infectious disease. He said that the special poison of the disease has been found to be a particular kind of bacteria, "baciUus-anthrax." The following question was put to the witness: "Is it not so that anthrax is an acute, infectious malady, which breaks out commonly in an epizootic or enzootic manner, and is not infrequently sporadic in herbivorous animals and swine, and is transmissible to a great number of other animals, as well as to mankind?" The answer of the witness, after some fencing, was, "Yes, I think that is correct." Malignant pustule differs, according to this same witness, from diphtheria, smallpox, or scarlet fever, in the single fact that this is a particularly poi- sonous animal matter, and it has one particular germ from which it originates, as smallpox has another, and hydrophobia another, and the cause of the difficulty in each case is some form of bacteria, transmissible to mankind. It can be contracted through eating the flesh of animals subject to the disease. The bacillus is very small, so small that it may enter in the pores of the skin, and an abrasion of the skin is not necessary, but might quicken 21 322 BACON V. U. S. MUT. ACCIDENT ASSN. [CHAP. XVIII the result. The forming of the pustule upon the skin is the product of the poison. Another witness for the plaintiff, who was a physician, said that he under- stood malignant pustule to be a development of the particular bacilli in the system radiating from the point of contact. He added that the contagion might be internal as well as external, taken through the mouth or through the nose, and it is generally considered an acute infectious disease. Both these learned gentlemen, however, refused, themselves, to designate malignant pustule as a disease. Dr. Harris defined it as "a pathological condition and succumbiag of the body to the infliction of this particular poison." Dr. Bailey says he con- siders it as a "pathological condition following this particular inroad of this particular kind of bacilli." We all know that "pathology," as used generally, means that part of medicine which explains the nature of diseases, their causes and symptoms. A "pathological condition" means neither more nor less than a diseased condition of the body. The insurance in this case was against bodily injuries effected through external, violent, and accidental means. It was not to extend "to any death or disability which may have been caused wholly or in part by bodily in- firmities, or disease existing prior or subsequent to the date" of the policy, "nor to any case except where the injury is the proximate or sole cause of the disability or death." There cannot be the slightest doubt that malignant pustule is regarded generally, by those who have but the usual acquaintance with such matters, as a disease. Every particle of testimony given by the doctors called by the plaintiff, shows clearly, to my mind, that it is so re- garded generally in the medical world, and that it is only when these doctors are asked to define the case in a manner to suit their refined notions of scientific and artistic accuracy that they define the trouble as a "pathological condition of the body;" in the one case, "succumbing to infliction of this particular poison," and in the other, "following this particular inroad of this particular kind of bacilli." The difference between the cause of this condition and the causes of typhoid fever, tuberculosis, smallpox, scarlet fever, and such like diseases, is that this particular condition is caused by different bacilli from the others, and they come in contact with the skin or enter into its pores, while in the other cases they are generally breathed in. But no abrasion of the skin is needed to produce the contact of the bacilli, and what follows from such contact seems to be as plainly a disease as in the case of smallpox or typhoid fever. The question then is, even assuming that some particular physicians refuse to call this a disease and describe it as a pathological condition, whether it is not a disease within the meaning of that term as used in this policy? Taking all the facts testified to by these physi- cians of the plaintiff, including their own special description of this condition of the body, and it seems to me there can be no intelligent, rational doubt that the insured died from a disease attacking him subsequent to the issuing CHAP. XVIIl] BACON V. U. S. MUT. ACCIDEN'T ASSN. 323 of the policy. He did not die from any accident, within the provision con- tained ill the policy defining an accident. The definition given by the phy- sicians for the plaintiff, as to the difficulty being a pathological condition of the body and not a disease, is upon these facts entirely too fragile to base a recovery upon, and the distinction between a disease and a pathological con- dition of the body is, with reference to this case, much too refined for com- mon acceptance. It seems to me clear that the meaning of the words used in the policy covers just such a case, and that the parties never intended that a cause of death which to all outward appearances, and to the world in gen- eral, was a disease, should be converted into a "pathological condition" of the body caused by an accident. The judgment should be reversed and a new trial ordered; costs to abide the event. O'Brien, J. (dissenting). The principal, if not the only, question in this case is whether the death of the insured was the result of accident, within the meaning of the words used in the contract, or of disease or other cause not covered by the stipulations of the parties. There is no dispute as to the fact that death resulted from the effects of a mahgnant sore upon the lip of the insured, which, soon after its appearance, involved the neighboring parts, producing septicsemia and utter exhaustion. There were two theories as to what this local sore was. On the part of the plaintiff, it was claimed that it was what was known as malignant pustule, while the defendant sought to establish the fact that it was a facial carbuncle, and, therefore a disease, or the result of disease, within the terms or meaning of the contract. The court instructed the jury that if the sore was, in fact, a carbuncle, that the plain- tiff could not recover, but that if it was a malignant pustule produced upon the person of the deceased in the manner claimed by the plaintiff, that then the plaintiff was entitled to a verdict. The testimony of the medical experts produced by the plaintiff was to the effect that this pustule is not a disease in the strict sense of that term, but a pathological condition of the system caused by the accidental infliction of diseased or putrid animal matter, infested with bacteria or bacilli anthrax, upon the thin skin of the Hp, whence the bacilU multiply and are diffused through the system. The animal virus that produces the sore comes from the hides, hair, wool, or flesh of animals suffering from the disease known as anthrax, and may be transmitted to human beings directly by the immediate contact of the individual with it, by his touching or handling it, and then bringing the matter in contact with the skin or thin mucous membrane, or it may be carried by carrion birds, or by insects, and in various other ways communicated to man and inflicted or implanted upon some exposed por- tion of the body. People whose business requires them to handle hides, hair, or wool, and who live in cattle-grazing regions, or localities such as the south- em or western portions of the United States, are, according to the proofs in this case, more exposed to malignant pustule than persons in other vocations, or who live in locaKties where cattle do not abound. The insured went to Council Bluffs on the 1st of February, 1884, and, as 324 BACON V. U. S. MUT. ACCIDENT ASSN. [OHAP. XVIIl has been stated, died there in less than two months after. He was first em- ployed as a bookkeeper in a meat market, and later as a check clerk in the transfer department of the Union Pacific Railroad. It was shown that car- loads of hides frequently pass that station, and that a large number of cattle are brought there and slaughtered in the vicinity, but there was no direct or positive proof that the deceased ever came in immediate contact with the hides, or even the flesh, of these animals. We must accept the verdict of the jury that the deceased died from the effects of malignant pustule. Whatever an appellate court may think of the weight and force of the evidence submitted at the trial, it cannot, when there is some evidence, ignore or disregard the deUberate judgment of the body which, under our system of administering justice, is empowered and required to determine disputed questions of fact. There was evidence to warrant the finding, and in such a case, after review by the General Term, this court must deal with the case upon the principle that death was caused as claimed by the plaintiff. Whether the malignant pustule of which the insured died was the result of animal virus coming in contact with the lip, or whether the sore was pro- duced in some other way, was, perhaps, a more difficult question; but in view of the testimony of the plaintiff tending to show that the infliction of this virus upon the person is the only cause of pustule, and that the insured was in some degree exposed to it, and that death generally follows contact with it in a few days, we think it cannot be said that this finding is based wholly on speculation and conjecture. It was the province of the jury to draw all proper inferences from the testimony, and while there was no direct or positive proof as to when or how the animal virus came in contact with the person of the deceased, yet the jury was warranted in finding from the other testimony in the case that in some way the bacilli anthrax were im- planted upon the Up where the sore appeared, and at some time within ninety days prior to the death of the insured. Assuming that death was the result of maUgnant pustule, caused in the manner claimed by the medical experts who testified in behalf of the plaintiff, the question remains whether this was "external, violent and accidental means," within the intent and mean- ing of the contract. This court has held that where death results from breathing an atmosphere impregnated with illuminating gas which in some way escaped from pipes while the insured was asleep, the beneficiary was en- titled to recover under a policy containing those words. Paul v. T. Ins. Co., 112 N. Y. 472. Death by drowning is included in such a contract. Trew V. R. P. Assn., 6 H. & N. 839; Mallory v. T. Ins. Co., 47 N. Y. 53. So is death which may have been produced by fright. McGlinchey v. F. & C. Co., 80 Me. 251. Without attempting to collate all the cases on this point, it is sufficient to observe that the courts, both in this' country and in England, have given to these words a broad and Uberal interpretation in favor of the insured or the beneficiary designated in the policy. XL S. M. A. Assn. v. Barry 131 U. S. 100, 121; N. A. L. & A. Ins. Co. v. Burroughs, 69 Pa. St. 43; A. Ins. Co. Ca.iP. XVTIl] BACON V. U. S. MUT. ACCIDENT ASSN. 325 V. Crandal, 120 U. S. 527; Winspear v. A. Ins. Co., L. R. 6 Q. B. Div. 42; Paul V. T. Ins. Co., supra. Guided by the principles laid down in these and other cases, and by what seems to have been the intention of the parties, I am of the opinion that we should hold in this case that the infliction of animal virus by some exterior force or power upon the person of the deceased, as found by the jury, was a bodily injury, "effected through external, violent, and accidental means," producing death, within the intent and meaning of the policy, and that the defendant is liable. When death results from the accidental infliction of the animal virus upon the person, whether by hand- ling the same, or deposited upon his person by insects or otherwise, as shown by the witnesses for the plaintiff, it cannot, I think, be said that the jury was bound to find that the malignant pustule was a disease within the conditions of the policy exempting the defendant from liability. The jury could have found, in view of the evidence, that the deceased lived in a locahty, and was engaged in employments in which he was exposed to contact with this pecul- iar form of poison, and it seems to me that a malignant pustule produced by the deposit upon the lip of the deceased of a particle of this animal virus, resulting in death, is as much an accident as in the case of death from breath- ing illuminating gas while asleep. There was evidence upon which the jury could have found that the deceased contracted the pustule in this way. For these reasons I am constrained to dissent from the prevailing opinion in this case, and am in favor of affirming the judgment. All concur with Peckham, J., except Rugeb, C. J., and O'Brien, J., dissenting. Judgment reversed.'- ' Fanner's policy, issued by the defendant, contained two kinds of insurance, one against accidents and the other against disease. The part relating to accidents pro- vided insurance, "For loss through personal, bodily injuries caused solely through accidents . due wholly to violent means external to the body . . . and such as are not caused or contributed to by any deformity or disease." Another provision of the policy declared: "All cases of contact with poison or with poisonous or in- fectious substances, are covered only under the health provisions of this policy." ^Yhile Farmer was sitting in front of his hotel holding a little dog on his lap, some one came behind him and pinched the dog's tail, whereupon the dog bit the insured on his thumb, from the poisonous effects of which, two weeks thereafter, he died. The court held that within the meaning of the policy it was a case of accident, and not of disease or poisoning and that the bite was to be regarded as the sole cause of death, Farmer v. Mass. Mut. Ace. Assn., 219 Pa. St. 71, 67 Atl. 927. Bailey's policy excepted injuries directly or indirectly from any disease. The insured was a physician, and, being in a somewhat emaciated and exhausted condition, due to a prior injury, in order to gain stimulus during his drive on the highway in the country, he dissolved a tablet of morphia as he had been accustomed to do, and injected it into hia leg with a hypo- dermic needle, while sitting in his carriage. Owing to the disease of cellulitis, or blood poisoning, which shortly resulted, Dr. Bailey was disabled for about twenty weeks. On appeal, the judgment of nonsuit was reversed, and it was held that the question whether the injuries complained of were sustained through external, violent and acci- dental means should have been submitted to the jury, Bailey v. Interstate Gas. Co., 8 App. Div. 127, afE'd 158 N. Y. 723. Intoxication ok Narcotics. — The insured, one of the guests at a convivial dinner, had been drinking freely of stimulants. One of his boon companions present boasted of his skill in the use of hia pistol and declared his ability to shoot the insured in the 326 TUTTLEt;. travelers' ins. CO. [chap. XVIII TtTTTLE V. TRAVELERS' INS. CO. Supreme Judicial Court of Massachusetts, 1883. 134 Mass. 175 Exposure to ohvious or unnecessary danger. Due diligence. When not for jury. Action of contract upon an accident policy of insurance, issued by de- fendant upon the life of Stephen Tuttle, and made payable to plaintiff, his wife. ear without hurting him elsewhere. Presumably owing to his condition, the insured made no objection to the experiment. He was shot in the forehead and killed by his friend. The policy was avoided, Shader ^.'Assurance Co., 66 N. Y. 441, 23 Am. Rep. 65. Poison, etc. — Voluntary or involuntary taking of poison or contact mth poisonous substances. This exception covers the accidental taking of poison. Early v. Standard Life & A. Co., 113 Mich. 58, 71 N. W. 200, 67 Am. St. R. 445; Miller v. Fidelity & Cas. Co., 97 Fed. 836; Travelers' Ins. Co. v. Dunlap, 160 III. 642, 43 N. E. 765, 52 Am. St. R. 355; but many courts agree that if the exception contains only the phrase "taking poison," the insurer will not be relieved from liability in the case of a purely accidental taking, since the word "taking" points to a conscious act. The Inhaling of Gas or Vapok. — The strong leaning of the courts towards a construction of the terms of the accident policy which shall favor the insured is strik- ingly illustrated by an Illinois ease. The policy provided: "This insurance shall not cover . . . death . . . resulting, wholly or partly, directly or indirectly . . from any gas or vaiMr." The insured met his death by reason of the unconscious and in- . voluntary inhaling of escaping gas at night while he was asleep. The court allowed the plaintiff to recover on the policy, interpreting the clause to refer to a conscious inhaling of gas in connection with medical or surgical treatment, or dentist's work, or a suicidal purpose. Travelers' Ins. Co. ». Ayers, 217 111. 390, 75 N. E. 506 (citing many cases) ; Menneilley v. Employers' Liability Assur. Corp., 148 N. Y. 596, 43 N. E. 54, 31 L. R. A. 86; and see Pickett v. Pac. Mut. Life Ins. Co., 144 Pa. St. 79, 22 Atl. 871, 13 L. R. A. 661, 27 Am. St. R. 618. Dueling or Fighting. — This exception should not be construed as meaning that the insured shall submit without resistance to whatever violence may be offered him, Coles V. New York Cas. Co., 87 App. Div. 41, 83 N. Y. Supp. 1063; Jones v. V. S. Mut. Ace. Ass., 92 Iowa, 653, 61 N. W. 485. But if the insured is injured in consequence of his voluntary engagement in a fight the insurer will be exonerated from liability under this clause, Jones v. U. S. Mut. Ace. Ass., supra. Intentional Injuries. — Intentional injuries inflicted by *hp insured or any other person. Intention which is a question of fact to be inferred from the act itself and surrounding circumstances, is an essential element under this clause to relieve the insurer from liability, Stevens s. Continental Cas. Co., 12 N. D. 463, 97 N. W. 862. But though the injury may be whoUy accidental to the insured in that it was unfore- seen by him, yet, if intended by his assailant, there can be no recovery under this exception, Butero ». Travelers' Ace. Ins. Co., 96 Wis. 536, 71 S. W. 811, 65 Am. St. R. 61. And such an intent exists where a person has intentionally struck the insured in order to protect himself though without intent to inflict the particular injury sus- tained. By virtue of this exception, if the insured is murdered the company is re- lieved from liability. Travelers' Ins. Co. ». McConkey, 127 U. S. 661, 8 S. Ct. 1360, 32 L. Ed. 308. And if a constable is intentionally injured in making an arrest or serving a process this exception in his accident policy becomes applicable. Grimes ». CHAP. XVIIl] TUTTLE V. TRAVELERS' INS. CO. 327 The evidence showed that about ten o'clock in the evening of March 13, 1879, Tuttle was killed by being struck by a railroad train, while running along the tracks in front of it, for the purpose of getting on a train approach- ing in an opposite direction on a parallel track. The trial judge directed a verdict for the defendant, and reported the case for the consideration of the fuU court. C. Allen, J. The policy provides, among other things, that no claim shall be made under it "when the death or injury may have happened in consequence of exposure to any obvious or unnecessary danger." It is also made subject to the condition that "the party insured is required to use all due diligence for personal safety and protection." Both of these provisions were violated by the act of the deceased in going upon and along the track of the railroad, under the circumstances stated in the report. Wright v. Boston & Maine Railroad, 129 ]Mass. 440, 443. No two cases are precisely alike in their facts, and what constitutes due care must depend upon the facts of each case. But the conduct of the deceased was such as, in the words of Mr. Justice Colt, is "condemned by the general knowledge and experience of all prudent men, and is conclusive on the question of due care." The danger was obvious, the exposure to it unnecessary, the want of due diligence clear, and the death of the insured occurred in consequence thereof. See also Wills V. LjTm & Boston Railroad, 129 Mass. 351; Johnson v. Boston & Maine Railroad, 125 Mass. 75; AUjm v. Boston & Albany Railroad, 105 IMass. 77; CordeU v. New York Central & Hudson River Railroad, 75 N. Y. 330; 70 N. Y. 119; 64 N. Y. 535; Baxter v. Troy & Boston Raihoad, 41 X. Y. 502; McCarty v. Delaware & Hudson Canal, 17 Hun, 74. The plaintiff contends that it was not the exposure or negligence of the assured which caused his death, but the coming upon him of the locomotive engine, the beU or whistle of which may not have sounded; that this was a new force or power which intervened, of itself sufficient to stand as the cause of the misfortune; that it was for the jury to determine whether or not the railroad corporation was negligent; and that, if so, the negligence of the as- sured, if it existed, was too remote to defeat the pohcy. Insurance Co. v. Tweed, 7 Wall. 44, 52; Milwaukee & St. Paul Railway v. Kellogg, 94 U. S. 469, 475; Scheffer v. Raih-oad Co., 105 U. S. 249, 252. But, without speculat- ing as to possible cases, we do not think that the doctrine relied on is ap- plicable to this case. If a person volimtarily places himself in a position where he is exposed to an obvious danger, and the precise injury happens to him which there is reason to fear, it cannot fairly be held that the language Fidelity & Gas. Co., 33 Tex. Civ. App. 275, 76 S. W. 811. But the act of an insane person incapable of forming a rational intent will not fall within the restriction, Cor- ley V. Travelers' Protection Assn., 105 Fed. 854, 46 C. C. A. 278. Voluntary Ovebexektion. — Under the exception the insured does not lose his right to recover unless there has been a conscious or intentional overexertion or a reckless disregard of consequences, Rustin v. Standard Life & A. A. I. Co., 58 Neb. 792, 76 N. W. 712, 46 L. R. A. 253, 76 Am. St. R. 136. 328 BURKHARD V. TRAVELERS* INS. CO. [cHAP. XVIII of this policy was not intended and understood to be applicable to such a case. For example, if one whUe waEdng on a railroad track is assaulted by a robber or a dog, or is struck by lightning, his act of traveling there has no tendency to produce the injury, and is not to be deemed a contributory cause thereof. But, on the other hand, if one who goes into a battle is hit by a bullet, or if one who goes up in a balloon is blown out to sea by the currents of air, or if one who makes a raUroad track his path for travel is run over by a passing locomotive engine, he must ordinarily in any legal question be held to take the risk of those results. There is in each of these cases such an association of cause and effect, that the one must be held to have con- tributed to the other. To hold that the death of the assured in the present case did not happen in consequence of his exposure to the risk, but from a new force or power which intervened, would be to fritter away the language of the polifry by metaphysical distinctions too fine to enter into the imder- standing or contemplation of parties engaged in the practical business of making a contract of insurance. We must assume that the assured read his policy, and was acquainted with its language and attached some practical meaning to it. See White v. Lang, 128 Mass. 598; McGrath v. Merwin, 112 Mass. 467; Norton v. Eastern Raikoad, 113 Mass. 366; McDonald v. Snel- ling, 14 Allen, 290; Cluff v. Mutual Benefit Ins. Co., 13 Allen, 308, 319; s. c, 99 Mass. 317, 329; Harper v. Phoenix Ins. Co., 19 Mo. 506. Judgment on the verdict. BURKHARD v. TRAVELERS' INS. CO. Pennsylvania Supreme Court, 1883. 102 Pa. St. 262 Accident. Volunkcnj exposure to unnecessary danger. Walking or being on roadbed of railway. Chief Justice Mehcuh delivered the opinion of the court. This case arises on a contract of insurance against injuries and death through external, violent and accidental means. The death of the intestate was so caused. The general terms of the policy are broad enough to make the company liable. It claims exemption therefrom under certain exceptions in the policy. What rule, then, must be applied in the interpretation of this contract and its exceptions? The true principle of sound ethics, says Chancellor Kent, is to give the contract the sense in which the person making the promise believes the other party to have accepted it. A just sense should be exercised in so interpreting it as to give due and fair effect to its provisions. 2 Kent's Com. 557. When a party uses an expression of his liability having two meanings, one broader and the other more narrow, and each equally probable, he cannot, after an CHAP. XVIIl] BURKHAED (>. TRAVELERS' INS. CO. 329 acceptance by the other contractmg party, set up the narrow construction. 2 Whar. on Con., § 670. Hence, when an insurance company tenders a policy to a party seeking to be insured, and uses ia the poUcy ambiguous words, these words will be held to have the meaning most favorable to the insured, as the presumption is that on this construction he took the policy, and as the company could have avoided the difficulty by being more specific. Id.; Fowkes t'. Ins. Co., 3 B. & S. 917. The words in such case, said Mr. Jus- tice Blackburn, ought to be construed in that sense in which, looking fairly at them, a prudent man would have understood the words to mean. Id. It is now well recognized as a general rule, that when a stipulation or an excep- tion to a poHcy of insurance, emanating from the insurers, is capable of two meanings, the one is to be adopted which is most favorable to the insured. May on Ins., §§ 172-179; Wood on Ins.^ §§ 141-146; Allen v. Ins. Co., 85 N. Y. 473; Western Ins. Co. v. Cropper, 8 Casey, 351; White v. Smith, 9 Id. 186. In case of doubt as to the meaning of terms emanating from an in- surance company, they are to be construed most strongly against the insurer. May on Ins., supra; Fowkes v. Ins. Co., supra; Wilson v. Ins. Co., 4 R. I. 156; Bartlett v. Ins. Co., 46 Maine, 500; Bowman v. Same, 27 Mo. 152; Ins. Co. V. Slaughter, 12 Wall. 404; N. A. Life & Ace. Ins. Co. v. Burroughs, 19 P. F. Smith, 43. The business of this company is to insure against accidents. The purpose of this policy is to pay specific damages for bodily injuries and death caused by external, violent, and accidental means. The death of the intestate was so caused. The company seeks to avoid liability under two clauses in the policy. One provides, the insurance shall not extend to a case of death or in- jury caused by "voluntary exposure to unnecessary danger;" the other, that "walking or being on the roadbed or bridge of any railway are hazards not contemplated or covered by this contract, and no sum will be paid for disability or loss of life in consequence of such exposure, or while thus ex- posed." The insured was travehng by rail through Indiana on his way to Kentucky. The train stopped on the bridge across the Ohio River by reason of the draw part of the bridge being open. He went to the front platform of the coach in which he was riding, and stepped off, and through a hole in the floor of the bridge, causing his death. This hole was about three feet wide and four feet long. It was caused by the removal of some planks during the making of repairs. 1. Was this act of the insured a voluntary exposure to uimecessary danger? To make him guilty of a "volimtary exposure to danger," he must inten- tionally have done some act which reasonable and ordinary prudence would pronounce dangerous. The uncontradicted evidence shows that several other passengers got out of the coach, and some of them in advance of the insured. They certainly apprehended no danger. It is customary for male passengers to aHght when a train stops for any length of time. No notice was given to passengers that it was dangerous to get out of the coach where it stood. So far as appears, the bridge, with the exception of this hole, was well 330 BURKHARD V. TRAVELERS' INS. CO. [cHAP. XVIII covered with plank and entirely safe. When the intestate alighted, other passengers were standing on the bridge near the brakeman. The latter was sitting on timber that was lying on the footwalk of the bridge, and was to be used in the repairs being made. The passengers had no knowledge of these repairs. The brakeman held his lantern so placed on the floor that another timber cast its shadow over this hole, making it impossible for the insured to see it. He could see that portion of the floor lighted by the lantern, and the passengers standing thereon. He could see the brakeman near them. He stepped out of the coach in plain sight of the brakeman. He had a right to suppose he would land on a floor as firm as that on which the others stood. Neither word nor sight gave him any notice of danger. He did not approach the opening caused by the draw, and was not injured thereby. It is true he voluntarily left the car; but a clear distinction exists between a voluntary act and a voluntary exposure to danger. Hidden danger may exist; yet the exposure thereto without any knowledge of the danger does not constitute a voluntary exposure to it. The approach to an unknown and un- expected danger does not make the act a voluntary exposure thereto. The result of the act does not necessarily determine the motive which prompted the action. The act may be voluntary, yet the exposure involuntary. The danger being unknown, the injury is accidental. Accident is defined by Worcester to be an event proceeding from an un- known cause or happening without the design of the agent; an vmforeseen event; incident; casualty; chance: and by Webster, an event that takes place without one's forethought or expectation; an event which proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected; chance; casualty; contingency. In view of the unquestioned facts, the death of the intestate was accidental. The danger was unknown. The injury was not designed. We think there was not such a voluntary exposure to danger as to fairly bring the act of the in- sured within the meaning of the exception. 2. Was he walking or being on the roadbed or bridge of the railway? He certainly was not walking on the roadbed or bridge; and, strictly speaking, it is doubtful where he was being on either. The evidence indicates that, without touching either, he probably passed directly from the steps of the car through the hole in the bridge. We will not, however, put the case on the narrow ground that he did not come in contact with either roadbed or bridge.' The language of the exception clearly implies two thoughts: One, that the insured must not be on the roadbed or bridge for any length of time; the other, that the prohibition is not to guard against injury resulting from a defective roadbed or defective railway bridge, but against the danger of injury from trains passing thereon. If the design was to apply the language to bridges defectively constructed or out of repair, it would not have been restricted to railway bridges. It would have included all bridges, both foot and wagon. The purpose is not to avoid liability for injuries resulting from being on bridges unsafe in themselves. The manifest intent is to exempt from ' Compare McClure v. Aec. Assn., 141 la. 350. CHAP. XVin] BURKHARD V. TRAVELERS' INS. CO. 331 responsibility for damages caused by collision with trains moving thereon. The present is not like a case between a passenger and a railway company, in which the company may be exempt from hability for damages arising from negligence of the passenger not voluntary. Nor did the act of the in- sured prove such a reckless exposure of his person, nor obvious risk of dan- ger, as to bruig him within the application of the rule declared in Morel v. Miss. Valley Ins. Co., 4 Bush, 535; LoveU v. Accident Ins. Co., 3 Ins. Law Jour. 877; SawteUe v. Railway Pass. Ass. Co., 15 Blatchford, 216, and kin- dred cases. We therefore think, imder the facts found, and the rules of law which we have stated, the learned judge erred iu holdiag that the conduct of the in- sured brought him within either of the exceptions, so as to relieve the com- pany from liability. Judgment reversed.^ • Rebman's policy contained the provision: "Nor does this contract extend to, nor insure against, death or any kind of disablement resulting wholly or partly, directly or indirectly, from voluntary exposure to unnecessary danger. The certificate holder is required to use all due diligence for personal safety and protection." Rebman had frequently taken the 1 : 02 p. m. train for Pittsburgh at a station near his home. Shortly before the accident, orders had been given not to take on passengers at this station, but mail was received and discharged there. Rebman did not know of this order. He went to the station expecting the train to stop. He saw it approach with steam off and at reduced speed. ^Vhile it was running six or eight miles an hour and passing to his right, he seized the hand rail at the front platform of the last car with his left hand, placing his left foot on the lower step, and was in the act of raising his body when his hold was broken, and he fell backward and was killed. He was nearly sixty-six years of age, weighed 1»4 pounds and had an umbrella under his left arm. The Pennsylvania Supreme Court held that a judgment of nonsuit was proper, since the insured was injured by exposing himself to a risk not covered by the policy, Rebman v. General Ace. Ins. Co., 217 Pa. St. 518, 66 Atl. 859. Hunt's policy excepted injuries resulting from "voluntary or unnecessary exposure to danger." Hunt, thirty-six years of age, was engaged in plaj-ing a game of indoor baseball in a gymnasium of the Young Men's Christian Association. The floor was slippery. Having batted the ball, he overran first base, and, as he was in the habit of doing to stop himself, he put out his foot and hand against the side wall of the gymnasium which was between six and ten feet beyond the base. In doing this he broke his ankle. He admitted that he could have stopped short of the wall if he had tried. The court below directed a verdict for the defendant. The judgment was reversed and a new trial ordered. Hunt ». U. S. Ace. Assn., 146 Mich. 521, 109 N. W. 1042. VoLTTNTAKT ExposuKE TO Unnecessabt Dangbr. — A conspicuous object of in- surance is to provide indemnity for misfortimes resulting from insidvertent heedless- ness. By the insertion of an exception covering injury or death caused by voluntary exposure to unnecessary danger, insurers against accidental injuries have attempted to impose a very considerable restriction upon their general liability. While this pro- vision of the contract may not be altogether ignored, the courts do not construe the words as meaning the same as contributory negligence in the law of torts. Travelers' Ins. Co. V. Randolph, 78 Fed. 754, 24 C. C. A. 305, 47 U. S. App. 260. They hold rather that there must be a conscious and intentional exposure to unnecessary danger, that is to say, that the insured must be aware of such danger and purposely assume the risk of it, before the insurer can invoke the aid of this clause in defense, Ashen- felder v. Employers' Liability Assur. Corp., 87 Fed. 682, 31 C. C. A. 193 (contractor suffocated by burning bucket of tar, company nevertheless liable) ; Collins v. Bankers' Ace. Ins. Co., 96 Iowa, 216, 64 N. W. 778, 59 Am. St. R. 367 (fishing in the dark from 332 NORTHRUP V. RY. PASS. ASSUR. CO. [CHAP. XVIII NORTHRUP V. RAILWAY PASSENGER ASSURANCE CO. Court of Appeals op New Yobk, 1871. 43 N. Y. 516 Accident while traveling by public or private conveyances. Ghovek, J. It must be conceded that the injury received by the plaintiff's intestate does not come within the strict hteral words of the contract of as- surance. By that contract the respondent agreed to pay the legal representa- tives of the intestate, in the event of her death from personal injury ensuing boat without knowledge of snags, company liable); Irwin v. Phoenix Ace, etc., Assn., 127 Mich. 630, 86 N. W. 1036 (not mere thoughtlessness meant, as where mason stepped on unsupported end of scaffold), Thomas v. Masons' Fraternal Ace. Assn., 64 App. Div. 22, 71 N. Y. Supp. 692 (gun standing against a tree shpped and injured hunter, not within the exception, Johnson v. London G. & Ace. Co., 115 Mich. 86, 72 N. W. 1115, 40 L. R. A. 440, 69 Am. St. R. 549 (insured attempted to drive a bull out of a pasture, company liable). Self-defense by the insured, apparently necessary, is justifiable, Campbell v. Fidelity & Cas. Co., 109 Ky. 661, 60 S. W. 492. An act is not unnecessary if performed in the line of duty, Pac. Mut. Life Ins. Co. v. Snowden, 58 Fed. 342, 7 C. C. A. 264 (cattle dealer in transit), Rustin v. Ins. Co., 58 Neb. 792, 79 N. W. 712, 46 L. R. A. 253, 76 Am. St. R. 136 (proprietor of pleasure resort, in order to test veracity of one of his performers, raised a very heavy dumb-bell, company liable) ; Freeman v. Travelers' Ins. Co., 144 Mass. 572, 12 N. E. 372 (employe of rail- road shoveling snow); Bateman v. Travelers' Ins. Co., 110 Mo. App. 443, 85 S. W. 128 (flagman involuntarily went to sleep) ; Jamison v. Continental Cas. Co., 104 Mo. App. 306, 78 S. W. 812 (flagman fell asleep, question for jury, many cases reviewed) ; Coles V. N. Y. Cas. Co., 87 App. Div. 41, 83 N. Y. Supp. 1063 (bartender ejected a noisy customer) ; Richards v. Travelers' Ins. Co., 18 S. D. 287, 100 N. W. 428, 67 L. R. A. 175 ("cattle dealer visiting yards"). Where the insured was engaged regularly in electric light repairing, and fell from a tree while so engaged there was no volun- tary exposure to unnecessary danger. Continental Cas. Co. v. Jennings (Tex. Civ. App., 1907), 99 S. W. 423. Attempts to save life are not prohibited, for example, to prevent a person from being run over, Williams d. U. S. Mut. Ace. Assn., 82 Hun, 268, 31 N. Y. Supp. 343, aff'd 147 N. Y. 693, 42 N. E. 726; or to rescue wrecked sailors! Tucker v. Ins. Co., 50 Hun, 50, 4 N. Y. Supp. 505, aff'd 121 N. Y. 718. An insured does not voluntarily expose himself to unnecessary danger by scaling a bank with i. loaded gun, Cornwell v. Fraternal Ace. Assn., 6 N. D. 201, 69 N. W. 191, 40 L. R. A. 437, 66 Am. St. R. 601 ; or by cleaning a gun in ignorance that it is loaded. Miller v. American Mut. Ace. Assn., 92 Tenn. 167, 21 S. W. 39, 20 L. R. A. 765; or by crossing a railroad track at a point recognized as a thoroughfare, Payne v. Fraternal Ace. Assn., 1 19 Iowa, 342, 93 N. W. 361 ; or, as matter of law, by standing on the platform or steps of a railroad car. Smith v. Mtna Life Ins. Co., 115 Iowa, 217, 88 N. W. 368, 56 L. R. A. 271, 91 Am. St. R. 153; or by passing from one car to another in a vestibuled train, Robinson v. Society, 132 Mich. 695, 94 N. W. 221. It must be observed that while in ordinary actions for personal injuries the burden of proof rests upon the plaintiff to prove his due care, or absence of contributory negligence, under the clause of the accident policy the burden is upon the insurance company to show that there was a voluntary exposure to unnecessary danger or a lack of due diligence, Garcelon v. Commercial Travelers' E. Ace. Assn., 195 Mass. 531, 81 N. E. 201; Noyes v. Commer- cial Travelers' E. Ace. Assn., 190 Mass. 171, 183. CHAP. XVIIl] NORTHRUP V. RY. PASS. ASSUR. CO. 333 ill three months from the happening thereof, when caused by any accident while travehng by public or private conveyances provided for the transporta- tion of travelers, etc. The intestate was not actually traveling upon any public or private conveyance provided for the transportation of passengers at the time of receiving the injury which caused her death. It appears from the facts agreed upon by the parties, that the intestate, prior to such time, had undertaken to go a journey from Steuben to Madison County; that the mode adopted for making the journey was by rail from Steuben to Watkins in Schuyler County, thence by steamer to Geneva, thence by rail to Madi- son. That the intestate, in the prosecution of such journey, had arrived at Geneva on board the steamer, and, as usual, was passing on foot from the steamboat landing to the railway station to go on board of the cars for the remainder of her journey; and while so passing from the landing to the sta- tion, a distance of about seventy rods, she slipped and fell, thereby receiving an injury which caused her death about four days thereafter. It further appears, that upon the arrival of the boat at Geneva there were usually hacks at the landing seeking passengers for any part of the village or the rail- road station, but that a large majority going to the railroad station went there on foot. The question for determination is, whether at the time of re- ceiving the injurj'' the plaintiff was, within the meaning of the policy, traveling by a public or private conveyance. The policy must be construed so as to carrj' into effect the intention of the parties, so far as such intention can be determined from the language used, construed in the light of well-known extrinsic facts, which must be presumed to have been known to the con- tracting parties at the time of making the contract, and in reference to which it was entered into. One fact of this character, very important in the present ease, is that of the frequent change required from one train of cars to anothe." at intermediate stations upon the same journey. Those passing from Buf- falo or the Falls to New York by the New York Central, or from the former or Dunkirk to the same by the Erie, cannot be unaware of this fact. Can it be said that a passenger is not traveling, within the meaning of this con- tract, by pubUc conveyance, while passing from one train to go on board another in the actual prosecution of his journey; or, for further illustration, can this be said of a passenger from New York to Dunkirk by the Erie, while going from the ferryboat at Jersey City to get on board of the train Due Diligence fob Pehsonal Safety and Protection. — The provision found in some policies calling for due diligence for personal safety and protection is satisfied if reasonable diligence is exercised, Kentucky L. & Ace. Ins. Co. v. Franklin, 102 Ky. 512, 43 S. W. 709 (hunter on fence with gun cocked). The burden of proof is on the insurer, Keene v. New England Mut. Ace. Assn., 161 Mass. 149, 36 N. E. 891 (cross- ing railway tracks) ; Freeman v. Travelers' Ins. Co., 144 Mass. 572, 12 N. E. 372. But the court will hold certain acts of negligence to be plainly within the exception, for example, where the assured fell asleep on a railroad tie, Standard L. & Ace. Co. v. Langston, 60 Ark. 381, 30 S. W. 427. A passenger on a vestibuled train is not guilty of negligence in going into the dining car when the train is moving at full speed, if he does not know that a side door of the vestibule is open, Robinson v. U. S. Ben. Soc, 132 Mich. 695, 94 N. W. 211. 334 NORTHRUP V. RY. PASS. ASSUR. CO. [cHAP. XVIII at that place? I think that such passenger, within the meaning of this con- tract, and also within the fair construction of the language, is a traveler by public conveyance all the way from New York to Dunkirk, although he may walk a short distance from the ferryboat to the train at Jersey City, or from one train to another when such changes are made at intermediate stations. An injury received while so necessarily walking in the actual prosecution of the journey is received whUe traveling by public conveyance within the meaning of the policy, as such walking is the actual and necessary accom- paniment of such travel. There is no difference in principle between a pas- senger so walking and the intestate in the present case. The presumption is, that the railroad trains and the steamer run in connection, the same as the ferryboat from New York to Jersey City with the Erie trains, and that, by means of this connection, the journey of the intestate was designed to be continuously prosecuted; and it surely can make no difference in principle that the space to be walked over in going from one conveyance to another is a few steps more or less. Nor does it affect the question, that the intes- tate might have procured a hack to carry her, had she so chosen. She pur- sued the same course that the great majority of passengers did. This she had the right to do imder the contract. Theobald s. "Railway Passenger Assurance Co. (26 Eng. Law & Equity), 432, sustains this view.' In that case, the assurance was against railway accident whilst traveling in any class carriage, on any line of railway in Great Britain, etc. This was held to in- clude an injury received from shpping on the step of the car, while standing at the station, in getting out. Jvdgmerd reversed. CHAP. XIX] FORM OF JIARINE INSUKANCE POLICY 335 CHAPTER XIX The Marine Insurance Policy form of policy of marine insurance with collision clause A Form of Policy of Marine Insurance: Cargo By the Insurance Company on account of In case of loss, to be paid in funds current in the United States, or in the City of New York, to , do make insurance, and cause to be insured, lost or not lost, at and from upon laden or to be laden on board the good , whereof is master for this present voyage , or whoever else shall go for master in said vessel, or by whatever other name or names the said vessel, or the master thereof, is or shall be named or called. Beginning the adventure upon the said goods and merchandises from and immedi- ately following the loading thereof on board of the said vessel, at as aforesaid, and so shall continue and endure until the said goods and merchandise shall be safely landed at as aforesaid. And it shall and may be lawful for the said vessel, in her voyage, to proceed and sail to, touch and stay at, any ports or places, if thereunto obliged by stress of weather, or other unavoidable accident, without prejudice to this insurance. The said goods and merchandises, hereby insured, are valued (premium included) at dollars. Touching the adventures and perils which the said Insurance Company is contented to bear, and take upon itself in this voyage, they are of the seas, men-of-war, fires, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, reprisals, takings at sea, arrests, restraints and detainments of all kings, princes or people, of what nation, condition or quality soever, barratry of the master and mariners, and all other perils, losses and misfortunes that have or shall come to the hurt, detriment or damage of the said goods and merchandises, or any part thereof. And in case of any loss or misfortune, it shall be lawful and necessary to and for the assured, his factors, servants and assigns, to sue, labor, and travel for, in and about the defense, safeguard and re- covery of the said goods and merchandises, or any part thereof, without prejudice to this insurance; nor shall the acts of the insured or insurers, in recovering, saving and preserving the property insured, in case of disaster, be considered a waiver or an ac- ceptance of an abandonment ; to the charges whereof the said Insurance Company will contribute according to the rate and quantity of the sum herein insured; having been paid the consideration for this insurance, by the assured, or his assigns, at and after the rate of per cent. And in case of loss, such loss to be paid in thirty days after proof of loss, and proof of interest in the said (the amount of the note given for the premium, if unpaid, being first deducted), but no partial loss or particular average shall in any ease be paid, unless amounting to fi7:e per cent. Provided always, and it is hereby further agreed, That if the said assured shall have made any other assurance upon the premises afore- said, prior in day of date to this policy, then the said Insurance Company shall be answerable only for so much as the amount of such prior assurance may be deficient towards fully covering the premises hereby assured ; and the said Insurance Company shall return premium upon so much of the sum by them assured, as they shall be by such prior assurance exonerated from. And in case of any assurance upon the 336 FORM OF MARINE INSURANCE POLICY [CHAP. XIX said premises, subsequent in day of date to this policy, the said Insurance Company shall nevertheless be answerable for the full extent of the sum by them subscribed hereto, without right to claim contribution from such subsequent assurers, and shall accordingly be entitled to retain the premium by them received, in the same manner as if no such subsequent assurance had been made. Other assurance upon the premises aforesaid, of date the same day as this policy, shall be deemed simultaneous herewith; and the said Insurance Company shall not be liable for more than a ratable contribution in the proportion of the sum by them insured to the aggregate of such simultaneous assurance. It is also agreed, that the property be warranted by the assured free from any charge, damage or loss, which may arise in consequence of a seizure or detention, for or on account of any illicit or prohibited trade or any trade in articles contraband of war. Warranted not to abandon in case of capture, seizure, or detention, until after condemnation of the property insured; nor until ninety days after notice of said condemnation is given to this company. Also warranted not to abandon in case of blockade, and free from any expense in consequence of capture, seizure, detention or blockade, but in the event of blockade, to be at liberty to proceed to an open port and there end the voyage. In Witness Whbkbof, the President or Vice-President of the said Insur- ance Company hath hereunto subscribed his name, and the sum insured, and caused the same to be attested by their Secretary, in , the day of 19... Me-mohandum. It is also agreed, that bar, bundle, rod, hoop and sheet iron, wire of all kinds, tin plates, steel, madder, sumac, wicker-ware and willow (manufactured or otherwise) , salt, grain of all kinds, tobacco, Indian meal, fruits (whether preserved or otherwise), cheese, dry fish, hay, vegetables and roots, rags, hempen yarn, bags, cotton bagging, and other articles used for bags or bagging, pleasure carriages, house- hold furniture, skins and hides, musical instruments, looking-glasses, and all other articles that are perishable in their own nature, are warranted by the assured free from average, unless general; hemp, tobacco stems, matting and cassia, except in boxes, free from average under twenty per cent, unless general; and sugar, flax, flax-seed and bread, are warranted by the assured free from average under seeen per cent, unless general ; and coffee, in bags or bulk, pepper in bags or bulk, and rice, free from average under ten per cent, unless general. Warranted by the insured free from damage or injury, from dampness, change of flavor, or being spotted, discolored, musty or mouldy, except caused by actual contact of sea water with the articles damaged, occasioned by sea perils. In case of partial loss by sea damage to dry goods, cutlery or other hardware, the loss shall be ascer- tained by a separation and sale of the portion only of the contents of the packages so damaged and not otherwise, and the same practice shall obtain as to all other merchan- dise as far as practicable. Not liable for leakage on molasses or other liquids, unless occasioned by stranding or collision with another vessel. If the voyage aforesaid shall have been begun and shall have terminated before the date of this policy, then there shall be no return of premium on account of such termina- tion of the voyage. In all cases of return of premium, in whole or in part, one-half per cent, upon the sum insured is to be retained by the assurers. $ , dollars. Secretary President. A Form of Collision CUrnse And it is further agreed, that if the vessel hereby insured shall come in collision with another vessel, and the assured become liable to pay, and shall pay, any sum or sums for damages resulting therefrom to said other vessel, her freight or her cargo in such case this company will contribute towards the payment of three-fourths part CHAP. XIX] PAKMENTER V. COUSINS 337 of the total amount of said damages, in the proportion that the sum insured under this policy bears to the total valuation of the vessel as stated herein, provided, that this company shall not in any e^-ent be held liable under this agreement for a greater sum than three-fourths part of the amount insured under this policy. And it is also agreed that this insurance company will bear a like proportionate share of any costs and expenses that may be incurred in contesting the liability re- sulting from said collision, provided, the written consent of the company to such contest be first obtained. But under no circumstances shall this company be held liable for any contribution in respect of any sum that the insured may be held hable to pay by reason of loss of life or personal injury to individuals from any cause whatsoever, nor for any claim for demurrage or loss of the use of any vessel, nor for wages or provisions or expenses of master, officers or crews. It is further agreed to, that in no event shall this insurance company be liable under this policy for more than the sum insured in any case, either for claims for loss and damage and or charges to hull of the vessel hereby insured and or for claims of any and all kinds arising under this collision clause, or the policy to which it is at- tached, and all payments made under this policy shall reduce this poUcy by the amounts so paid, unless restored by a new premium. In this country there is no statutory form of policy for marine insurance. PARMETER v. COUSINS CouBT or King's Bench, 1809. 2 Campb. 235 The voyage: commencement of the risk, when it attaches. This was an action on a policy of insurance on ship and freight, valued at £1,200, at and from St. Michael's, or all or any of the Western Islands, to England. The ship met with very tempestuous weather on her outward voyage, and when she arrived at St. Michael's she was so leaky that the crew were obliged to work at the pumps spell and spell. She was then quite ia an unfit state to take in a cargo, and, there being no harbor in the island, she was in great danger from the storm, which still continued. In fact, after lying at anchor above twenty-four hoius, she was blown out to sea and was wrecked. Park for the plaintiff contended that the underwriters were clearly an- swerable for a loss so happening. The policy, being at as well as from, at- tached the moment the ship cast anchor at St. Michael's; and at any rate she had lain there twenty-four hours, so that the outward risk had completely expired. The objection of want of seaworthiness, when properly considered, was without any foundation. The ship on her arrival at St. Michael's was unfit to commence the homeward voyage ; but this was unnecessary. It was enough if she was fit for the voyage when the voyage commenced. One state of seaworthiness was required while she remained al, and another when she sailed /roTO, the place. This distinction had been settled by Lord Kenyon 22 338 LIDGETT V. SECRETAN [CHAP. XIX (Forbes v. Wilson, Park, 299, n.; Marsh. 155; Smith v. Surridge, 4 Esp. 25 S. P.), and recognized by Lord EUenborough (Hibbert v. Martin, Sat. after M. T. 1808). If it were not allowed, the policies on the homeward voyage would in almost every instance be vitiated; as it seldom happens that a ship on her arrival at the outward port wants no repairs, but is in a condition im- mediately to take in the homeward cargo. If in this case the policy on the outward voyage had expired, and the policy on the homeward voyage had not attached, how was the shipowner to secure himself an indemnity dur- ing the whole course of the adventure? LoBD Ellenbohough. What we have to consider here is, whether the underwriters on this ship, at and from St. Michael's to England, be liable for a loss happening in the manner that has been described. And I am clearly of opinion that they are not. To be sure, while the ship remains at the place, a state of repair and equipment may be sufficient which would constitute un- seaworthiness after the commencement of the voyage. But while in port she must be in such a condition as to enable her to lie in reasonable security till she is properly repaired and equipped for the voyage. She must have once been at the place in good safety. If she arrives at the outward port so shattered as to be a mere wreck, a policy on the homeward voyage never attaches. Such is the present case. I do not remember anyone like it; but the principles on which it must be decided are perfectly well established. Plaintiff nonsuited. ' LIDGETT V. SECRETAN CouBT OF Common Pleas, 1870. L. R. 5 C. P. 190 The voyage: termination of the risk, until moored twenty-four hours in good safely. The policy in this case, which was upon the ordinary printed form of a Lloyd's policy, was effected by the plaintiffs on their iron sailing ship Char- lemagne. The risk was described in writing to be "at and from London to Calcutta, and for thirty days after arrival;" and by the other terms of the policy was to continue until the said ship, etc., should be moored at Cal- cutta. Then followed the usual printed words, "upon the said ship, etc., •mtil she hath moored at anchor twenty-four hours in good safety." The ship left London for Calcutta, and after sustaining damage at sea arrived in the River Hooghly in the month of October, 1866. She was then ' Lost oe Not Lost. — The effect of this stipulation is that the insurer takes upon himself not only the risk of future loss, but also loss, if any, that may have already happened, Hooper v. Robinson, 98 U. S. 528, 25 L. Ed. 219. The necessity for such a retrospective application in policies is evident; since owing to the time occupied in the transmission of advices from abroad, property is often exposed to marine risks before the parties interested are cognizant of the fact or have had an opportunity to protect themselves by insurance. CHAP. XIX] LI0GETT V. SECRETAN 339 taken in tow by a steam tug, and brought to moorings at a usual place of discharge within the harbor of Calcutta, where she came to anchor and was moored on the 28th of October. The captain gave the pilot the usual certif- icate that she was then properly moored and left in safety. She had brought troops from England, who then disembarked, and her cargo was unloaded and completely and safely discharged by the 8th of November, with the exception of two hundred tons of iron which were left in her for ballast. On the 12th of November she was taken from her moorings to a dry dock for survey and repairs; and, in the course of her repairs in the dock, the vessel accidentally caught fire and was whoUy destroyed on the 5th of December. It was found in the case that the vessel had sustained considerable damage from striking on a reef or bank before she reached Calcutta, whereby she became much strained and injured and leaky. Considerable repairs were necessary; and she required extraordinary pumping, which was done at first by the troops on board and afterwards by an engine and lascars from the shore, to get her clear of the water which was in one of her compartments. She was also injured in her rudder or steering apparatus, so as materially to affect her steering; and she was in danger of breaking from her moorings, from the currents and bore of the River Hooghly; and, if she had broken away, the defect in her steering apparatus would have further endangered her. But, notwithstanding these matters, she remained at her moorings for more than twenty-four hours as a ship, though damaged, and safely dis- charged her cargo. Under these circumstances, it was contended on behalf of the plaintiffs that they were entitled to recover as for a total loss by fire; and on behalf of the defendant, that the plaintiffs were only entitled to claim in respect of the partial loss by sea damage before the arrival of the ship at her moorings, and that they were not entitled to claim anything in respect of the loss by fire, because such fire occurred after the termination of the risk under the policy. The judgment of the court (Bovill, C. J., Willes, J., and Beett, J.) was deUvered by Bovill, C. J. If the thirty days covered by the policy are to be reckoned from the time of the ship's arrival at Calcutta, either in the sense of arrival in the port, or arrival at and being finally moored at an ordinary place of mooring and discharge within the port, then, as the fire and loss of the vessel did not occur until the thirty-eighth day after she was so moored at Calcutta, viz., the 5th of December, the loss would not come within this policy; but if the risk was extended, and continued beyond such thirty days, by reason of the printed words "until she hath moored at anchor in good safety," and of the vessel having been moored in a damaged state as described, then the ship was covered by this policy at the time of the fire on the 5th of December, and the defendant would be liable for the total loss by fire. Whether the thirty days were in this case to be reckoned from the arrival 340 LIDGETT V. SECEETAN [CHAP. XIX only of the vessel at Calcutta, or from her having been moored at anchor twenty-four hours in good safety, it is not necessary to determine, because we are all of opinion that, even in the latter view, the defendants are entitled to judgment. Assuming, then, that the thirty days are to be reckoned from the time of the ship being moored for twenty-four hours in good safety, the question arises, what is the meaning of those words in such a policy? We are of opinion that the meaning is not, as has been contended, that the moorings are safe, but that the words refer to the ship being in safety. The words cannot mean that the vessel is to arrive without any damage or injury- whatever from the effects of the voyage; otherwise, the loss of a mast, or even a spar, a sail, or a rope, though the vessel was perfectly fit to keep not only the river, but the sea, would, contrary to all the ordinary meaning of language, prevent her from being considered as in safety. So, on the other hand, the words would not, in our opinion, be satisfied by the vessel arriving and being moored in a sinking state, or as a mere wreck, or by a mere tem- porary mooring. We think also that the mere liability to damage, whether partial or total, during the twenty-four hours, by the occurrence of some or all of the perils insured against, cannot prevent the running of the twenty-four hours, be- cause the extension of the period of risk for twenty-four hours after having moored in good safety clearly implies that, notwithstanding the safety in- tended, the ship is liable to partial or total loss by the occurrence of a peril insured against. The American decision upon that point, of Bill v. Mason, 6 Mass. 313, proceeded on the ground that, although the ship was, during twenty-four hours after being moored, liable to damage or total loss, she was not in fact either lost or in that case even damaged. Where, on the other hand, a ship arrived in port in a sinking state, and on being moored was obliged to be lashed to a hulk in order to keep her afloat until the people on board were landed, and where she sunk on being moved toward the shore, it was held that she was not moored in safety, because the court considered that she in fact arrived as a wreck, and not as a ship. Shawe v. Felton, 2 East, 109. So, where a vessel arriving in a hostile port with simulated papers had her papers immediately taken and her hatches sealed down by the officers of government, although she was not formally condemned until afterwards, it was held that she had not been moored in safety for twenty-four hours, be- cause she was in effect within the twenty-four hours taken from her owners by the foreign government. Homeyer v. Lushington, 15 East, 46. Nor was a vessel which had been for a short period moored to a wharf, but within twenty-four hours was ordered into quarantine, and whilst there, but more than twenty-four hours after the original temporary mooring, was lost by a peril insured against, considered to have moored in good safety, because, as it would seem, she had not, before the loss in respect of which the claim was made, been finally moored at the ordinary place of mooring. Waples v. Eames, 2 Str. 1243. CHAP. XIX] LIDGETT V. SECRETAN 341 Where a vessel after being moored remained in actual safety as a ship for twenty-four hours, and so that during those twenty-four hours her owners had complete and undisturbed possession of her, but afterwards she was seized in consequence of the master having smuggled before her arrival, it was held that the tei-ms of the policy were satisfied, and that the loss by the seizure was a loss after the termination of the risk. Loekyer v. OfHey, 1 T. R. 252. In that case, Willes, J., in delivering the judgment of the court, said (1 T. R. at p. 261): "There must be some certain and reasonable limitation in point of time laid down by the court when the insurer shall be released from his engagement. If he be liable for a month, he may be for a year, and so on. And we all think that the law on insurances would be left unsettled and in much confusion if any other time were suggested than that prescribed by the poUcy; viz., the continuance of the voyage and the ship's being moored twenty-four hours in safety." In the present case, the vessel, though considerably damaged and leaky, and with one compartment full of water, existed as a ship at the time of her arrival, and she was able to keep afloat and did keep afloat as a ship for more than twenty-four hours after being moored, by exerting the means within the power of the captain. She arrived and moored at the ordinary place for imloading, and was so moored as a ship in the possession or control of her owners for more than twenty-four hours; and she remained as a ship and in possession of her owners for more than thirty days after the lapse of the twenty-four hours before described, and until the time of the fire by which she was totally lost. If the underwriters are liable beyond thirty days from her being so moored for twenty-four hours, it is difficult imder such circumstances to see when the hability is to end. We think the only safe rule in this case is to hold, that, after the expiration of thirty days from the arrival and mooring of the vessel, and her having remained as a vessel, and in the possession or control of her owners, though not sound, for twenty-four hours, the underwriters were not responsible. We are, therefore, of opinion that there was not a total loss within the period of risk covered by this policy, and that our judg- ment should be for the defendant. Jvdgment for the defendant.'^ ' By special indorsement on the policy in consideration of an additional premium the ship Raoensworth Castle was at liberty to go to Antwerp. She never reached the inner dock at Antwerp, which was the usual place for discharging cargo, although she arrived at the outer dock of that port. The court held that the voyage was not at an end. Stone s. The Marine Ins. Co., etc., 1 Exch. D. 81. The ship Afton was insured for a voyage to any port of discharge in the United Kingdom "and whilst in port during thirty days after arrival." She arrived at Greenock on the Clyde, discharged her cargo, and was placed in a dock for repairs. Within thirty days after arrival at this port of discharge she proceeded in tow on a new voyage for Glasgow. She had reached the channel of the Clyde, her stern being about 500 feet distant from the Greenock harbor works, when she was capsized by a sudden gust of wind. It was held that she was not "in port" and that the underwriters were not liable, Hunter v. Northern Mar. Ins. Co., L. R. 13 App. Cas. 717. By indorsement on an open canal cargo policy, Petrie's shipment of cement was insured against " perils of the seas, canals, rivers, etc.," "to New York harbor." The cargo in fact was shipped to Tarrytown from the Brook- 342 LIDGETT V. SECRETAN [CHAP. XrX lyn stores. Evidence of custom, however, was received on the trial in the action against the insurer to the effect that the term "harbor of New York," as used in the business of marine insurance, included Tarrytown and other points within the New York customhouse district. It also appeared that the boat, which was seaworthy, arrived at Tarrytown, was moored alongside the dock, but when the tide went out it grounded and was so broken or strained that it sank and the cargo was destroyed. The jury found for the plaintiff, and the judgment was aflBrmed, the court hqlding that a loss had occurred within the harbor of New York by a peril insured against, and that the insurer was liable, Petrie ». Phoenix Ins. Co., 132 N. Y. 137, 30 N. E. 380. Cargo should be landed within a reasonable time after the ship's arrival when no time is specified; otherwise it will cease to be covered by the policy. What is a reasonable time in any particular case depends upon the usages of the trade, Parkinson v. Collier, 2 Park, Ins. 653. CHAP. XX] MILLER V. CALIFORNIA INS. CO. 343 CHAPTER XX The Marine Policy — Concluded MILLER, APPELLANT, v. CALIFORNL^ INS. CO., RESPONDENT Supreme Court of California, 1888. 76 Cal. 145 Perils of the sea. Action on a policy of marine insurance on the steamer Pilot. Among others, the risks insured against were as follows: "Touching the adventures and perils which this insurance company is content to bear and take upon itself, they are of the seas, fires, pirates," etc. "It is also agreed that in case of insurance on a steamer, this company is not liable for any injury, de- rangement or breakage of the machinery or bursting of the boilers, unless occasioned by stranding." In the course of the voyage, the boiler exploded, and the vessel shortly sank and became a wreck. The plaintiff contended that the explosion of the boiler was a peril of the sea. Paterson, J. Perils of the sea are defined by our Civil Code to be : " storms and waves; rocks, shoals and rapids; other obstacles, though of human origin; changes of climate; the confinement necessary at sea; animals peculiar to the sea; and all other dangers peculiar to the sea." (Civ. Code, § 2199.) The bursting of a boiler is not within any of the first six causes named. Is it a danger peculiar to the sea? Perils of the sea have been defined to be, "all perils, losses and misfortunes of a marine character, or of a character incident to a ship as such." (Thames & Mersey Mar. Ins. Co. v. Hamilton, 12 App. Cas. 484.) In that case it was said: "The damage to the donkey- engine was not through its being in a ship at sea. The same thing would have happened had the boiler and engines been on land, if the same mismanage- ment had taken place. The sea, waves and wind had nothing to do with it. . . . It is, I think, impossible to say that this is damage occasioned by a cause similar to perils of the sea on any interpretation which has ever been apphed to that term. It wiU be observed that Lord EUenborough limits the operation of the clause to marine damage. By this I do not understand him to mean only damage which has been caused by the sea, but damage of a character to which a marine adventure is subject. Such an adventure has its own perils, to which either it is exclusively subject or which possess, in relation to it a special or peculiar character. To secure an indemnity against these is the purpose and object of a policy of marine insurance. . . . 344 MILLER V. CALIFORNIA INS. CO. [CHAP. XX But the explosion of the boiler on board the Panama had no marine char- acter at aU. It might have happened in precisely the same way, and done the same kind of damage, if a similar engine had been in use for the purpose of moving manufacturing machinery on shore." These views seem to express very clearly the proper meaning of the seventh clause of § 2199, supra. Judgment affirmed.^ McKiNSTEY, J., and Seaels, C. J., concurred. ^ In the famous case cited above, the steamer Ifichmaree, with her machinery, in- cluding a donkey-engine, was insured by the defendant. For purposes of navigation, the donkey-engine was being used in pumping water into the main boilers, when, owing to a valve having been inadvertently closed, water was forced into and split open the air-chamber of the donkey-pump, damaging it to the extent of about £72, 10s. The closing of the valve was not due to ordinary wear and tear, nor had the action of the sea, waves, or wind anything to do with it. The House of Lords, reversing the court below, held that whether the injury occurred through negligence, or accidentally without negligence, the loss was not covered by the policy, either under the words " perils of the seas," or under the general words "all other perils, losses and misfortunes that have or shall come to the hurt, detriment or damage of the subject-matter of insurance," Thames & Mersey Mar. Ins. Co. o. Hamilton, 12 App. Cas. 484, 56 L. J. Q. B. 626. So also the English court has declared that difficulties arising merely from the ordinary obstruction or closing in by ice of a port, which is subject to be closed, and is always closed in the winter months, do not amount to a peril of the seas within the ordinary meaning of a policy of marine insurance, but that when the obstruction by ice is accidental and unexpected, due, for example, to the prevalence of unexpected winds or currents, then an extraordinary difficulty and danger is created and such obstruction and danger constitute a peril of the seas, Popham v. St. Petersburg Ins. Co., 10 Com. Cas. 31. In another English case, twenty-six packages of dead pigs had been shipped at Hamburg on board the Leopard. Thirty-two quarters of beef had been shipped at a later date for the same voyage on board the Ostrich. Both shipments were consigned to the plaintiff, the insured. AU the meat so shipped became putrid and was necessarily thrown overboard, not because of any direct action of storms or seas affecting it, but solely on account of the unusual delay in the voyage, which, however, was occasioned by tempestuous weather. The English court held that this was not a loss by perils of the seas, or within the words "all other perils, losses and misfortunes," etc., in the policy, Taylor v. Dunbar, L. R. 4 C. P. 206. During a voyage of one of the ocean liners from New York to Liverpool the ship's carpenter and the deck-hands erected a temporary structure on deck to protect passengers while dancing. The job was done so carelessly that the shelter with its heavy supports falls to the deck in calm weather. The collapse breaks certain cabin windows, damages the tempo- rary structure, and also injures one of the ladies who was engaged in dancing at the time. The injured passenger recovers compensation for her hurt and her fright from the steamship company. The steamship company, however, fails to recover from its underwriters for the damage sustained by the temporary erection and the ship; since the loss is not within the scope of the perils clause of the marine policy as construed by the courts, Thames & Mersey Mar. Ins. Co. v. Hamilton, 12 App. Cas. 493, 56 L. J. Q. B. 626. Nor can the steamship company look to that policy to recover re- imbursement for the amount of the judgment paid by it to the injured passenger, since the usual marine policy does not cover employers' liability, which forms the subject of another class of insurance. Damage to cargo by ordinary dampness of the hold is not covered by the policy, although aggravated by the length of the voyage due to stress of weather. Likewise damage by worms or climate is not covered. Baker i;. Mfrs. Ins. Co., 12 Gray (Mass.), 603; Martin v. Salem Mar. Ins. Co., 2 Mass. 420. Collision. — Collision is also a peril, Peters v. Warren Ins. Co., 14 Pet. (U. S.) 99, 10 L. Ed. 371, and this whether the collision be the result of inevitable accident or CHAP. XX] GHEEN V. ELMSLIE 345 GREEN V. ELMSLIE CouKT OF King's Bench, 1795. 1 Peake, N. P. Gas. 278 Captvre: proximate cause of loss. This action was on a policy of insurance on the ship Fly, from Exeter to London. The insurance was against capture only. The ship, while on her voyage, was driven by a hard gale of wind on the coast of France, and was there captured by the enemy; she did not receive any damage from the wind. Erskine contended that this was a loss by the perils of the seas, and not by capture, and that therefore the defendant was not liable on this policy. But Lord Kenyon said, the case was too clear to admit of argument; this was clearly a loss by capture, for had the ship been driven on any other coast but that of an enemy, she would have been in perfect safety. Verdict for the plaintiffs.^ fault on the part of the ship insured, or of fault on the part of the other ship; for, on the principle of causa proxima, the underwriters must pay, be the fault whose it may, Richelieu Nav. Co. i. Boston Ins. Co., 136 U. S. 408, 421, 10 S. Ct. 934, 34 L. Ed. 398. The courts differ, however, as to whether the underwriters' liability extends to cover payments made by the insured for damages to the other ship. The English and Fed- eral courts hold that such loss is too remote to be covered unless expressly insured. The Barnstable, 181 U. S. 464, 21 S. Ct. 684. The Massachusetts court adopts the opposite view and considers the loss within reach of the ordinary marine policy without specific mention, Whorf v. Equitable Mar. Ins. Co., 144 Mass. 68, 10 N. E. 513. It is usual, however, to provide for this liability by a distinct contract called the collision or running down clause, Tatham r. Burr (1898), App. Cas. 382. In New York the term " collision" seems not to be limited to an impact between vessels or navigable objects, but to include also an accidental striking of a vessel against ice or other foreign object, Newtown Creek Towing Co. t. Mtna. Ins. Co., 163 N. Y. 114, 57 N. E. 302 (in the briefs are cited many authorities). Thieves. — The word "thieves," associated as it is with "enemies, pirates, rovers," has in England been held applicable only to persons outside the ship who enter and commit robbery, this conclusion being put upon the ground that the ship or master is liable in tort for goods stolen or embezzled by anyone on board, Steinman v. Angler Line (1891), 1 Q. B. 619. But in America the clause is held appUcable as well to a larceny or theft committed by passengers or those in the service of the ship, Spinetti V. Atlas S. Co., 80 N. Y. 71, 36 Am. Rep. 579. Babbatet. — The term "barratry" includes every wrongful act willfully committed by the master or crew to the prejudice of the owner, or, as the case may be, the char- terer of the ship, Atkinson v. Great Western Ins. Co., 65 N. Y. 531. But mere negli- gence or error of judgment does not constitute barratry, Hutchins v. Ford, 82 Me. 363, 19 Atl. 832. Though acts to be barratrous must be prejudicial to the owner, they need not be BO intended, if intentionally committed, Earle v. Rowcroft, 8 East, 126. Ac- cordingly, any unauthorized breach of law exposing the owner to penalties is barratry, even though intended for his advantage, Goldsehmidt v. Whitmore, 3 Taunt. 508; nor need the barratrous act, if unlawful, be intended to enure to the self-benefit of the master or mariners committing it, Dederer v. Delaware Ins. Co., 2 Wash. (C. C.) 61, Fed. Cas. No. 3,733. ' The Bavmmore was insured by a valued time policy against loss or damage by fire or explosion only. She stranded on the coast of Oregon and sustained such in- 346 MONTOTA V. LONDON ASSUR. CO. [cHAP. XX MONTOYA ET ALS. v. THE LONDON ASSURANCE CO. Exchequer, 1851. 6 Exchequer, 451 Proximate cause; how far followed in its results? Plaintiff's insurance covered hides and tobacco. In the course of her voyage, the vessel shipped large quantities of sea water. This rendered the hides rotten and putrid and on the termination of the voyage it was dis- covered that the putrefaction of the hides had in turn imparted an ill flavor to the tobacco, a large portion of which was rendered totally worthless. Pollock, C. B. The question for the court is, whether, under the partic- ular circumstances of this case, the plaintiffs are entitled to recover from the underwriters for the damage occasioned to the tobacco, as a loss within the meaning of the policy; and we are all clearly of opinion that our judgment ought to be for the plaintiffs. Mr. Peacock has argued the case with much ingenuity, and the effect of his argument has been to cause some doubt where the precise limits of the responsibiUty of underwriters are to be fixed. Many ingenious cases might be suggested, in which the court would have much difficulty in deciding whether they would fall within such Umits. But it appears to me that no such doubt or difficulty exists in the present case, and I think, as fell from one of the members of the court in the course of the argument, that if the imderwriters here would have been responsible for damage done to a cargo consisting entirely of corn, the lower part of which had been spoilt by direct contact with the sea water, and the upper by the fermentation of the lower part, the underwriters must equally be liable in the present case; for, in truth, there is no distinction between the two cases. It is a matter of no difference whether the whole of the cargo belongs to one person, and consists of one entire package of com, or whether the cargo con- sists partly of corn and partly of hides, and is the property of several owners. In both cases the loss arises from perils of the seas; and it is difficult to see how the loss can be said not to be the immediate result of such perils. Several of the cases put to us on the part of the defendants are, in my opinion, cases of the direct and immediate consequence of perils of the seas, in which the sea water is the immediate cause of the loss. And I think it may be laid down as a general rule, that where mischief arises from perils of the seas, and the natural and almost inevitable consequence of that mischief is to create fur- ther mischievous results, the imderwriters, in such case, are responsible for the further mischief so occasioned. juries by sea perils that the cost of repairing her would have been greater than her value when repaired. Thirty-six hours afterwards she was completely destroyed by fire. The English court held that the insurer was liable for the full amount under- written, Woodside v. Globe Mar. Ins. Co, (1986), 1 Q. B. D. 105. CHAP. XX] THE G. R. BOOTH 347 Paeke, B. I am also of opinion that our judgment ought to be for the plaintiEfs. There is no doubt that the maxim of Lord Bacon, which was cited at the commencement of the case, and has been reUed upon by Mr. Peacoclc, is perfectly correct, and applies not only to the present case but to all cases of this description; and the question in each case is what is causa proxima, and what causa remota. There is very great difficulty, as my Lord Chief Baron has observed, in saying where the precise line is to be drawn: and it is often no easy matter to decide whether a particular case falls within it or not. But I do not see that there is any difficulty in saying that the present case does fall within the Une. If the owner of this tobacco which has been injured, could recover compensation for his loss occasioned by that injury from the master or owner of the vessel, there is no good reason why he should not be entitled also to recover against the underwriter for a loss occasioned by perils of the seas. If the cargo had consisted wholly of hides, and the upper part had been injured by vapors arising from the decomposi- tion of the lower hides, occasioned by the action of sea water, the owner of the hides would have been entitled to recover from the underwriter for the injury so occasioned to the upper layers. It is a matter of no difference whatever that the cargo consists partly of corn and partly of hides. The loss in either case is immediately and directly caused by perils of the seas, and would therefore fall within the terms of this policy. It is therefore not necessary to give any opinion upon the cases which have been put on the part of the defendants. Some of them may fall within the line, and others without it. It seems to me to be impossible to distinguish this case from that which I put, where the cargo is supposed to consist entirely of hides or com, and the upper part is injured by noxious gases arising from the decom- position of the lower portions, or by the water being raised by capillary at- traction. The assured are therefore entitled to recover in this action. Judgment for the plaintiffs. THE G. E. BOOTH SuPEEME Court of the United States, 1898. 171 U. S. 450 Joint action of peril insured against and peril excepted. Tms was a libel against the steamship G. R. Booth, for damage done to sugar, part of her cargo, under the following circumstances: Another part of the cargo consisted of twenty cases of detonators, being copper caps packed with fulminate of mercury for exploding dynamite or gun cotton. While the steamship was being unladen at the dock in New York City, her port of destination, one of the cases of detonators exploded, purely by accident, and without any fault or negligence on the part of anyone engaged in carrying or 348 THE G. R. BOOTH [cHAP. XX discharging the cargo. The explosion made a large hole in the side of the ship, through which the sea water rapidly entered the hold and greatly dam- aged the sugar. The bill of lading of the sugar provided that "the ship or carrier shall not be liable for loss or damage occasioned by the perils of the sea or other wa- ters," or "by collision, stranding or other accidents of navigation, of what- soever kind." The question certified by the Circuit Court of Appeals to this court is whether the damage to the sugar is within these exceptions in the bill of lading. Mr. Justice Gray. The case turns upon the question whether the dam- age to the sugar by the sea water which entered the ship through the hole made in her side by the explosion, without her fault, was "occasioned by the perils of the sea"; or, in other words, whether it is the explosion, or a peril of the sea, that is to be considered as the proximate cause of the dam- age, according to the familiar maxim catisa proxima rum remota spectatur. Generally speaking the words ''perils of the sea" have the same meaning in a bill of lading as in a policy of insurance. There is a difference, indeed, in their effect in the two kinds of contract, when negUgence of the master or crew of the vessel contributes to a loss by a peril of the sea; in such a case, an insurer against "perils of the sea" is liable, because the assured does not warrant that his servants shall use due care to avoid them; whereas an ex- ception of "perils of the sea" in a bill of lading does not relieve the carrier from his primary obligation to carry with reasonable care, unless prevented by the excepted perils. But when, as in the present case, it is distinctly found that there was no negligence, there is no reason and much inconven- ience, in holding that the words have different meanings in the two kinds of commercial contract. Phoenix Ins. Co. v. Erie Transportation Co., 117 U. S. 312, 322-325; Liverpool Steam Co. v. Phoenix Ins. Co., 129 U. S. 397, 438, 442; Compania La Flecha v. Brauer, 168 U. S. 104; The Xantho, 12 App. Cas. 503, 510, 514, 517. In the case at bar the explosion of the case of detonators, besides doing other damage, burst open the side of the ship below the water line, and the sea water rapidly flowed in through the opening made by the explosion, and injured the plaintiff's sugar. The explosion, in consequence of which, and through the hole made by which, the water immediately entered the ship, must be considered as the. predominant, the efficient, the proximate, the responsible cause of the damage to the sugar, according to each of the tests laid down in the judgments of this court, above referred to. The damage to the sugar was an effect which proceeded inevitably, and of absolute neces- sity, from the explosion, and must, therefore, be ascribed to that cause. The explosion concurred, as the efficient agent, with the water, at the instant when the water entered the ship. The inflow of the water, seeking a level by the mere force of gravitation, was not a new and independent cause but was a necessary and instantaneous result and effect of the bursting open of the CHAP. XX] THE G. R. BOOTH 349 ship's side by explosion. There being two concurrent causes of the dam- age — the explosion of the detonators and the inflow of the water — without any appreciable interval of time, or any possibility of distinguishing the amount of damage done by each, the explosion, as the cause which set the water in motion, and gave it its efficiency for harm at the time of the dis- aster, must be regarded as the predominant cause. It was the primary and efficient cause, the one that necessarily set the force of the water in opera- tion; it was the superior or controUing agency, of which the water was the incident or instrument. The inflow of the sea water was not an intermediate cause, disconnected from the primary cause, and self-operating; it was not a new and independent cause of damage; but on the contrary, it was an in- cident, a necessarj' incident and consequence, of the explosion, and it was Cje of a continuous cham of events brought into being by the explosion — events so linked together as to form one continuous whole. The damage was not owing to any violent action of winds or waves, or to the ship coming against a rock or shoal or other external object; but it was owing to an explosion within the ship, and arising out of the nature of the cargo, which cannot be considered, either in common understanding, or ac- cording to the judicial precedents, as a peril of the sea. As was observed by this court in Insurance Co. v. Boon, 95 U. S. 131. "Often in case of a fire much of the destruction is caused by water applied in efforts to extinguish the flames; yet, it is not doubted, all that destruction is caused by the fire, and insurers against fire are liable for it." If damage done by water thrown on by human agency to put out a fire is considered a direct consequence of the fire, surely damage done by water entering instantly, by the mere force of gravitation, through a hole made by an explosion of part of the cargo, must be considered as a direct conse- quence of the explosion. Upon principle and authority, therefore, our conclusion is that the ex- plosion and not the sea water, was the proximate cause of the damage to the sugar, and that this damage was not occasioned by the perils of the sea, within the exceptions in the bill of lading. Much reliance was placed by the appellee upon a recent English case, in which the House of Lords, reversing the decision of Lord Esher and Lords Justices Bowen and Fry in the Court of Appeal, and restoring the judgment of Lord Justice Lopes in the Queen's Bench Division, held that damage to goods by sea water which, without any neglect or default on the part of the shipowners or their servants, found its way into the hold of a steamship through a hole which had been gnawed by rats in a leaden pipe connected with the bath-room of the vessel, was within the exception of "dangers or accidents of the seas" in a bill of lading. Hamilton v. Pandorf, 12 App. Cas. 618; 17 Q. B. D. 670; 16 Q. B. D. 629. There is nothing in the report of any stage of that case to show that the sea water entered the ship immediately upon the gnawing by the rats of the hole in the pipe; and any such inference would be inconsistent with one of the opinions delivered in the House of Lords, in which Lord Fitzgerald said: "The remote cause was in a certain 350 THE G. R. BOOTH [cHAP. XX sense the action of the rats on the lead pipe; but the immediate cause of the damage was the irruption of sea water from time to time through the in- jured pipe, caused by the rolling of the ship as she proceeded on her voyage." 12 App. Cas. 528. However that may have been, that case differs so much in its facts from the case now before us that it is unnecessary to consider it more particularly. Question certified answered in the negative.^ ' If the master barratrously bore holes in the ship, causing her to fill and sink, barratry and not sea peril is the proximate cause, Waters v. Merchants' Ins. Co., 11 Pet. (U. S.) 213, 9 L. Ed. 69 (but see Heyman v. Parish, 2 Camp. 149; Arcangelo v. Thompson, 2 Camp. 620). An English marine policy on living animals contained a warranty "free from mortal- ity and jettison." The violence of a storm which was a peril insured against so injured some of the animals as to cause their death. The insurer was held liable notwith- standing the exception embodied in the warranty, Lawrence v. Aberdein (1821), 5 B. & Aid. 107. In another English case, under a bill of lading which excepted "acci- dents of the seas," the question arose whether an accident of the seas, or the resulting heat from the engine room, which damaged the plaintiff's cargo of grain, was to be regarded as the proximate or significant cause of the loan. During the voyage from Baltimore to Avonmouth, owing to exceptionally heavy weather, and for the safety of the ship, the ventilators of the steamship were closed for about a week, with the result that the air in the hold nearest the engine-room space became heated, and, not being able to escape through the ventilators, damaged a, portion of the plaintiffs' grain. The court held that an accident of the sea was the proximate cause of the loss, and that, therefore, the exception in the bill of lading applied in favor of the defend- ants, the shipowners. The Thrunscoe (1897), Prob. 301. In a New York case a marine policy upon the cargo of a canal boat contained an "ice clause" providing that if the boat "was prevented or detained by ice or the closing of navigation from terminating the trip," the policy should cease. The canal boat with others in a tow was proceeding down the Delaware River, when, in consequence of a gale, the towing tugs were sepa- rated from the boats which were driven ashore and stranded. During the night ice formed about them so that the tugs could not get at them. The boat thus remained fro3en in until a thaw, when the wind and ice forcing her upon another boat, she broke in two, sank, and the cargo was injured. The court held that the primary, predominating, all-embracing cause to which all the ensuing loss must be attributed was the storm and not the ice, and that, therefore, the defendant was liable, Brown v. St. Nicholas Ins. Co., 61 N. Y. 332. By virtue of the doctrine here presented, the law holds that the hostile agency first in operation gives character to the whole connected catastrophe, unless otherwise expressly defined by the terms of the policy. For example, if an explosion named as an excepted peril, causes a destructive fire, as well as breakage or displacement, explosion is taken as the predominant and exclusive cause of the entire loss, Ins. Co. v. Tweed, 7 Wall. 44. And by the same logic, if in the natural course of a conflagration insured against, incidental explosions occur, no matter how violent, the effects of combustion and explosion alike, if not too remote and improbable are attributed to fire as the sole primary and all-embracing c;ause, Mitchell v. Potomac Ins. Co., 183 U. S. 42, 52, 22 S. Ct. 22, 46 L. Ed. 74 ("a loss occurring solely from an explosion not resulting from a preceding fire is covered by the exception"); Hall v. National F. Ins. Co., 115 Tenn. 513, 92 S. W. 402; amira, Hustace v. Phoenix Ins. Co., 175 N. Y. 292, 67 N. E. 592 (a heavy explosion, a mere incident to preexisting conflagration, was held to be the proximate cause and the insurer exonerated). The same doctrine finds copious and striking illustration in many court decisions, already adverted to, relating to the construction of the accident policy; for example, where the accidental injury, insured against, in turn results in blood poisoning, pneumonia or some other form of disease disease being expressly designated in the policy as an excepted risk. CHAP. XX] MAGNUS V. BUTTEMER 351 MAGNUS V. BUTTEMER English Court of Common Pleas, 1852. 11 C. B. 875 Whether loss by perils of the sea, or wear and tear. Action of assumpsit on a policy of assurance on the sliip Elizabeth, for twelve calendar months, in port or at sea, in all services, in the coast and coasting trade of the United Kingdom. The Elizabeth sailed from Rochester to Sunderland. On her arrival at Simderland, the vessel went up the river abreast of Laing's shipyard. She had to wait four or five days before she could go in to discharge. She was moored head and stem, and floated when the tide was in, and was aground, but not dry, at low water. She took three days to discharge. The beach was hard, shingly, and steep. When the vessel took ground, she listed towards the beach about two planks. When the first tide was ebbing, a creaking- noise was heard as she took the grovmd, and it occurred when she floated again. This happened every tide, and soimded as if something was breaking. The cabin door, which would open and shut freely when the vessel was afloat, would not do so when she was aground. After first lying on the beach the vessel made more water than usual. The mate saw that she was "hogged," after having taken the ground. He observed that some of the trenails had started, and that some of the planks had left the trenails. The question for the opinion of the court was, whether, under these cir- cumstances, there was a loss by perils of the seas. Jehvis, C. J. I am of opinion that the loss in this case was not a loss by perils of the sea, but a damage falling within the description of ordinary Independent Causes, Peoducing Distinguishable Damages. — During the American Civil War, the light on Cape Hatteras having been extinguished by the Confederate troops for military reasons, the captain of a ship missed his reckoning, struck on a reef of rocks, and the ship became a wreck. The cargo consisted of 6,500 bags of coffee, of which 150 bags were saved and 1,000 more would have been saved if Federal salvers had not been interrupted by Confederate troops. This coffee was insured "free from all consequences of hostilities." On these facts, the English court held that the underwriters were liable for the loss of the 5,350 bags left on the ship. The case was to be dealt with, the court said, as if there were two policies, one on the war risk and the other on the sea risk, and the question here was, Which of the two was the proximate cause of each loss? One hundred and fifty bags were actually re- covered. As to the 1,000 bags remaining aboard, it was the Confederate forces which directly prevented the rescue, and hence caused the loss. But the extinguishing of the light was only the remote cause of the loss of the remainder, the proximate cause being the striking on the reef which could not be said to follow as a natural or ordinary, still less as a necessary consequence of the extinguishing of the light, lonides r. Uni- versal Marine Ins. Co., 14 C. B. (N. S.) 259, 10 Jur. (N. S.) 18, 32 L. J. C. P. 170, 8 L. T. 705. 352 MAGNUS V. BUTTEMER [CHAP. XX wear and tear. No doubt, the question is one of importance; but I think it has been very unnecessarily brought before the court; for the matter seems to have been perfectly understood and settled by aU the text-writers upon this branch of the law. To make the imderwriters liable, the injury must be the result of something fortuitous or accidental occurring in the course of the voyage. Here the vessel, upon her arrival at Sunderland, goes up the river, and, in consequence of the rising and falling of the tide, rests upon the river's bed, and receives damages. There was nothing unusual, no peril, no accident. To hold that the assured were covered, in such a case, would be virtually making the policy a warranty against the wear and tear and or- dinary repairs of the vessel. I think the defendant is entitled to judgment. Maule, J. I am of the same opinion, and I concur with the lord chief justice in thinking that this is a very clear case. Stevens, and the other text writers referred to, express no sort of doubt, but are evidently well ac- quainted with the distinction between wear and tear, for which the under- writers are not liable, and accidents, the occurrence of something out of the ordinary course of the voyage, for which they are liable. This distinction has been well understood for many years. To hold the underwriters liable in such a case as this would be tantamount to holding that the ordinary repairs of a vessel are to be comprehended within the perils insured against. The case of Fletcher v. Inglis was sufficiently distinguished in the course of the argument; the statement of damage there is this: "Between 9 and 10 at night, the tide having then left the vessel, a cracking noise was heard in the ship, proceeding, as the witness believed, from something breaking. Some time after this, on the return of the tide, there was a considerable swell in the harbor, and the ship strvck the ground hard several times; in the morning eighteen of her knees were found to be broken." There were in that case some cir- cumstances which also occur here; but there was another circumstance there which is wanting here to make the cases parallel. There was casus fortuitus, the swell that set in, after which the ship's knees were found to be broken. That, I apprehend, was the ground of the decision in that case; and that is quite consistent with the argument of Mr. Scarlett, who was not likely to lay down a general doctrine which did not meet the assent of the court, so familiar as they were at that time with insurance law. The case evidently proceeded upon the extraordinary and accidental circumstance of the great swell setting in the harbor. Suppose, instead of the swell, the case had stated, or the evidence shown, that a violent storm had arisen, and that the vessel was dashed against a rock and injured, nobody could have doubted that that was a loss by perils of the sea. That only differs in degree from the actual case of Fletcher v. Inglis; but it differs very materially from the present case, which shows a mere subsiding of the ship upon the shore or beach on the re- ceding of the tide in the usual and expected course. According to sound law and common sense, the assured was entitled to recover in that case, whereas here nothing has happened which the assured could have wished or antici- pated to happen otherwise than it did happen. They intended the ship to CHAP. XX] PROV. WASH. INS. CO. V. ADLER 353 take the ground as she did. There was no accident. We are asked, there- fore, to assume a loss by perils of the sea when the facts disclosed to us ab- solutely negative the existence of sea peril. No instance is to be found of underwriters being liable where the voyage has been conducted to its ter- mination without anything happening but what was expected and intended, and where the sole cause of the damage was the insufficiency of the ship to bear the ordinary stress of the voyage to which she is exposed. Authority and common sense concur in showing that this is not a liability which ought to be cast upon the underwriters. Judgment for the dejmdant.^ PROVIDENCE WASHINGTON INS. CO., ETC., v. ADLER, ETC. Court of Appeals of Mahyland, 1885. 65 Md. 162 Loss hy inherent vice. The plaintiffs shipped by a line of steamers, running from New York to the South, a quantity of oilcloth clothing to Louisiana and Texas. They insured this clothing before shipment in the office of the defendant company. The clothing was packed in boxes, and on its arrival at its destination, it was found injured and comparatively worthless, either by spontaneous com- bustion or by some chemical action arising from the material in the goods themselves. They all presented the appearance of having been burned or charred within the boxes. The clothing was not injured by any external force or accident, but whatever the injury was, it was the result of the in- herent infirmity of the goods themselves. Neither the plaintiffs nor the de- fendants knew at the time the insurance was effected, that the goods were liable to spontaneous combustion, or to be injured by any inherent defect in the goods. No extra premium to cover such risk was paid. Under these circumstances the defendants claim that by the general principles of insurance law, they are not Uable for a loss by spontaneous combustion, caused by the inherent infirmity of the goods themselves. Stone, J. This was a marine policy, and one of the dangers insured against, by the terms of the policy, was fire. But while this is undoubtedly so, the question remains, and is still undecided in this State, whether the term "fire" used in the ordinary marine policy will, upon general principles, cover the case of spontaneous combustion, caused by an inherent infirmity in the article insured, and not the result of accident or peril of the sea. There is no doubt of the liability of the defendant company, under its policy, had the ship taken fire, and the goods been consumed; or had the fire originated ' A policy does not cover the chemical action of the sea on the Atlantic cable coiled in a ship, there being no influx of sea water, Paterson v. Harris, 1 Best. & S. 336, 101 E. C. L. 336. Nor damage to the subject insured caused by climate, Martin v. Salem Marine Ins. Co., 2 Mass. 420. 23 354 ST. PAUL r. & M. INS. CO. V. PAc. c. s. CO. [chap. XX from any of the perils insured against; but the question is a very different one, when, as in this case, the goods are in good faith insured, and believed both by plaintiffs and defendant, not to be liable to spontaneous combustion by reason of their inherent infirmity, but which in fact were so liable, and were so injured. No well-managed insurance company would take a marine risk, on an article inherently liable to spontaneous combustion; nor would any prudent shipmaster or owner receive such on his vessel, as not merely the property so insured, but the property of others, and the safety of the ship, and the lives of the crew would be endangered by so doing. It would, as Emerigon says, be intolerable that the owner should receive pay for goods that destroyed themselves. The object of a marine policy is to insure against the perils of the sea, and not against the perils incident to the goods themselves. In this case it is very clear that the goods were injured by their own inherent in- firmity, and that such inherent infirmity was not called into activity by any peril insured against. We think such loss was not within the contemplation of either party to the contract of insurance; that the term "fire'' used in the policy included fire from accident or brought about by a peril of the sea, and not spontaneous combustion. Judgment reversed.^ ST. PAUL FIRE & MARINE INS. CO. v. PACIFIC COLD STORAGE CO. Circuit Coukt or Appeals, 1907. 157 Fed. 625 The suing and laboring clause. Libel against the insurance company to recover expenses under the suing and laboring clause of the marine policy. The insured, a storage company, was engaged in the business of selling, in Alaska, certain refrigerated supplies. Its policy covered a cargo of re- frigerated meats, canned goods, etc., on a voyage from Tacoma, Wash., to Dawson, Yukon Territory. Owing to the very low water, there was a strand- ing of the refrigerating vessel on the Yukon River, causing a delay of several days. Part of the cargo was thereupon transferred to a lighter steamer with- out refrigerating plant. Both vessels reached Circle City in October. The river above had become partially closed by ice, and navigation was dangerous. The refrigerating vessel was then laid up and the lighter steamer proceeded ' Loss by inherent vice includes, for example, natural and ordinary diminution by leakage or evaporation, natural and ordinary disease, decaj', fermentation or other deterioration in the subject insured, Cory v. Boylston F. & M. Ins. Co., 107 Mass. 140, 9 Am. Rep. 14; Eldridge (1907), pp. 94, 95. Willes, J., says: "By the expression 'vice' is meant only that sort of vice which by its internal development tends to the destruction or the injury of the animal or thing to be carried, and which is likely to lead to such a result," Blower v. Gt. W. R. Co., L. R. 7 C. P. 662. CHAP. XX] ST. PAUL F. & M. INS. CO. V. PAC. C. S. CO. 355 until frozen in, seventy miles from Dawson. Both vessels were in dangerof being crushed or disabled by the ice, and their cargoes lost by freshets likely to occur in the spring. To avert this peril, both cargoes were transported to Dawson by land during the winter. Hunt, District Judge. It is contended by the appellant that the cargo of the Kerr was not exposed to any peril under the terms of the policy, that it was merely delayed, and that the appellee was not entitled to expend any amount under the sue and labor clause because, it argues, the said clause was not applicable "to a case of remote and future peril, but to an immediate danger or present loss, and not under any circumstances to a case of delay alone." We are satisfied that peril to the boat of being destroyed or disabled by masses of floating ice coming down in the spring was one covered by the policy of insurance issued by appellant to appellee, and that, when it was determined to send the goods overland, rather than to leave them on the boat, with the risk of total loss in the spring, the decision was made with regard to the safety of the goods themselves. Moreover, the insurance com- pany knew the facts and was satisfied that the assured should use its best judgment to save the cargo by moving it overland to Dawson. The agent of the insurance company knew just where the boats were. He was advised that it was thought best to remove the cargo overland, he knew the probable cost of moving each pound of cargo and he acquiesced in the opinion that it was best to move it, rather than to take the risk of a total loss by the break- ing up of the ice in the spring. The insurance company fairly agreed to make an advance toward the expense of removing the goods, and, it is just to say, led the assured to believe that when the removal was completed and the vouchers showing the total expense were received, and the claim adjusted, the underwriter would pay such a proportion of the expense of removal as it might be liable for under its policy of insurance. What proportion of the expenses should be borne by the underwriters was left open for subsequent determination; but the reasonable inference from the whole evidence is that there was no contention in respect to the wisdom of forwarding the goods overland to Dawson. We therefore conclude that the cargo was in a posi- tion of peril and that the expense of remo\dng it was incurred by the assured with the consent of the imderwriter to avert a probable total loss from the peril then jjending. The peril was a peril of the sea; and, as the goods would probably have been a total loss unless removed and forwarded to Dawson during the winter, the expenses of so forwarding them became a consequence of the peril, Hubbell v. G. W. Ins. Co., 74 X. Y. 254; PhiUips on Insurance, §§ 1127, 1128; Bryant v. Insurance Co., 13 Pick. (Mass.) 543. We find no error of which appellant can complain. The decree is affirmed.^ ' The sue and labor clause though part of the policy is to be treated as wholly distinct from the engagement to indemnify for losses caused by the perils insured against and, therefore, in exceptional cases this collateral agreement may impose upon the under- 356 ST. PAUL F. & M. INS. CO. V. EAC. S. C. CO. [CHAF. XX writers an obligation to make payment to the insured even in excess of the entire amount for which the policy is underwritten, Aitchison v. Lohre, 2 Q. B. D. 502, 3 Q. B. D. 553, 566, 4 App. Cas. 755; Gilchrist ». Chicago Ins. Co., 104 Fed. 566, 44 C. C. A. 43; for example, in case of expenses paid by the master in an unsuccessful attempt to recover captured property in addition to a total loss of the property by the capture. For the same reason liability under the sue and labor clause is not a lia- bility for particular average and is not subject to the percentage restrictions contained in the memorandum clause, but is to be met in due proportion whatever the amount, Kidston v. Empire Marine Ins. Co., L. R. 1 C. P. 535. This provision of the policy has reference to expenditures not covered by the general perils clause, Alexander v. Sun Mut. Ins. Co., 51 N. Y. 253. The object of the clause is to furnish compensatory encouragement to the insured, to put forth diligent and prudent effort toward a prevention or diminution of the underwriters' loss, without prejudice to the rights of either party under the policy of insurance, Washburn & M. Mfg. Co. v. Reliance Mar. Ins. Co., 179 U. S. 1, 18, 21 S. Ct. 1, 45 L. Ed. 49; Munroe v. Ins. Co., 52 Fed. 777, 3 C. C. A. 280; Soelberg ». Western Assur. Co., 119 Fed. 23. Two conditions are requisite to constitute a valid claim under this clause; the apprehended loss must be something for which the underwriters would have been liable, and the measure for safety which gives rise to the expense claimed must be the act of the assured himself or of his agent or servant, Aitchison ». Lohre, 4 App. Cas. 755; Uzielli v. Boston Mar. Ins. Co., 15 Q. B. D. 11. If, for example, goods are insured "free of capture," it is clear that an expense incurred to prevent a capture could not be claimed under this clause; nor, if "against total loss only," an expense incurred merely to diminish damage or avert a loss other than total, Kidston ». Empire Ins. Co., L. R. 1 C. P. 543, Exch. L. R. 2 C. P. 357. In England, general average losses including contributions are not recoverable under the sue and labor clause. Mar. Ins. Act (1906), §78 (2); Aitchison c. Lohre, 4 App. Cas. 755, 49 L. J. Q. B. 123. The rule differs in the United States, International Nav. Co. u. Atlantic Mut. Ins. Co., 100 Fed. 313, 322 (Brown, J.). Salvage Recovered, how to Be Divided. — The plaintiffs Duffield and others were owners oi the steamboat Sam Cloon. The value of the vessel as agreed upon in the policies was 820,000, the total insurance $15,000, leaving the owners insures to one- fourth the value. The steamboat was sunk in the Mississippi River, and abandoned to the insurers, who accepted the abandonment and proceeded to raise the wreck. The net amount of salvage recovered by the underwriters as a result of their opera- tions was $3,000. Under the phraseology of the sue and labor clause of the policy, the insurers contended that they were entitled to keep the whole of the proceeds, but the court held that the plaintiffs were entitled to recover from them one-fourth of the net amount of the salvage realized, Cincinnati Ins. Co. v. Duffield, 6 Ohio St. 200. Except in case of a liability policy, Ursula Bright v. Amsinck, 115 Fed. 243, if the total amount of marine insurance is short of the value of the property insured, the assured is himself a coinsurer for the deficiency. Hood Rubber Co. v. Atlantic Mut. Ins. Co., 161 Fed. 788; Egan v. Ins. Co., 193 111. 295, 61 N. E. 1081; Natchez, etc., Co. v. Louisville Underwriters, 44 La. Ann. 714, 11 So. 54. Memorandttm Clause. — Warranted free from average unless general; warranted free from average under a certain percentage unless general. Certain articles are in their nature perishable, or peculiarly susceptible to change. A list of such articles is made subject to the restrictions of the modern memorandum clause. "The term 'average unless general' means a partial loss of the subject-matter insured other than a general average loss, and does not include 'particular charges,' " Eng. Mar. Ins. Act (1906), 1 Sch. 13. Total Loss op Pakt. — ^Where the subject-matter insured is warranted free from particular average the assured cannot recover for a loss of part, other than a loss in- curred by a general average sacrifice, unless the contract contained in the policy be apportionable; but if the contract be apportionable, the agsured may recover for a total loss of any apportionable part, Silloway v. Neptune Ins. Co., 12 Gray (Mass.), 73^ CHAP. XX] ST. PAUL F. & M. INS. CO. V. PAC. S. C. CO. 357 Unless Ship Be Stkanded. — As to the meaning of this phrase sometimes added to the memorandum clause and as to what constitutes a stranding, see London Assur. Co. V. Companhia de, etc., 167 U. S. 149. 17 S. Ct. 785, 42 L. Ed. 113. Unless the Ship Be Burnt. — As to when a ship is "burnt," see London Assur. Co. ». Companhia de, etc., 167 V. S. 149; The Glealivet (1894), Prob. 48. 358 EDGEFIELD MFG. CO. V. MD. CAS. CO. [CIIAP. XXI CHAPTER XXI Guarantee, and Liability Insurance EDGEFIELD MFG. CO. v. MARYLAND CASUALTY CO. Supreme Court op South Cabolina, 1907. 78 S. C. 73 Immediate notice oj accident required. Plaintiff procured an employe's liability policy of insurance for $3,500 from the defendant to indemnify against claims for accidents to its employes. Jennings, an employ^, recovered a judgment of 13,500 against the manu- facturing company for personal injuries received in their employ. After payment of the judgment, the manufacturing company as plaintiff brought this action on its insurance poUcy to recover $1,500, the insurance being lim- ited to that amount, for the death or injury of any one employ^. The acci- dent occurred October 21, 1903. The negligence suit based upon it was be- gun in January, 1904. Price, who was actively in charge of the mill, and indeed the larger part of the office force were, during this period, sick with the smallpox. Woods, J. The stipulation that the insured should give immediate notice of an accident and full information concerning it, and send the simimons immediately to the insured company, means that these things should be done with reasonable promptness under the circumstances, not that they should be done literally without the lapse of any time.' The numerous au- thorities on this point are collated in 21 Cyc. 1731, 1732. What is reasonable promptness under such stipulation is usually a question of fact for the jury. There was evidence that Price, vice president and treasurer in charge of the mill, was in extreme ill health, though trying to attend to the duties of Ms office, when the accident happened to Jennings, and grew worse, until his death in February, 1904. Mr. A. S. Tomokins then took charge of the offices of the mill as temporary successor to Price. In March, 1904, Mr. Tompkins was made aware for the first time that his company had casualty insurance by finding the policy among the papers of the company, and on the same day gave the casualty company notice of the accident, and offered to send it the summons served on behalf of Jennings. Mr. Tompkins thus sums up in his evidence the reasons for the delay; "That is when I found the policy. ' Compare with strict doctrine of warranties relating to matters applicable prior to loss. CTtAP. XXl] EDGEFIELD :aFG. CO. V. MD. CAS. CO. 359 Xot only had Mr. Price been sick, but the balance of the people in the office nearly all had smallpox. The entire office had three or four months' vaca- tion by Mr. Price being in a dying condition; quarantined on account of smallpox. That was the condition of things at the time this accident oc- curred and shortly after. We had these conditions to contend with. The mill was almost entirely at a standstill." In view of these facts, it is evident a jury could not reasonably reach any other conclusion than that the delay was excusable, and the notice given and the summons sent with all promptness to be fairly expected and exacted. The judgment of this court is that the judgmevt of the Circuit Court be af- firmed.^ ' Immediate Notice of Accident Reqcieed. — To govern the rights of the parties under this important provision of the policy the New York Court of Appeals has laid down a set of rules and holds among other things that the liability of the assured for the negligence of his servants or agents in failing to apprise him of an accident must be confined to those agents whose duty it is, either by his express regulation, or by their supervision and control in the natural and proper conduct of business over the sub- ordinate servants by whom the accident had been caused to transmit such knowledge to their superiors or the assured, and the assured is not chargeable with the knowledge of the servant causing the accident or with the knowledge of information of a co- servant of the same rank as the one causing the accident, Woolverton v. Fidelity & Casualty Co., 190 N. Y. 41, 82 N. E. 745. Compare Mandell v. Fidehty & Cas. Co., 170 Mass. 173, 49 N. E. 110, 64 Am. St. R. 291. The clause of the fidelity bond calling on the employer to give immediate notice of default or misconduct on the part of the employe is similarly construed. Fidelity & Cas. Co. v. Courtney, 186 U. S. 342, 22 S. Ct. 833, 46 L. Ed. 1193. The individual surety generally acts gratuitously. Not so the surety company. The courts construe the contract of the surety company as one of insurance rather than as one of suretyship, American Surety Co. v. Pauly, 170 U. S. 144, 18 S. Ct. 552, 42 L. Ed. 977; Bank of Tarboro v. Fidelity & Deposit Co., 126 N. C. 320, 35 S. E. 588, 83 Am. St. R. 682, 128 N. C. 366, 38 S. E. 908, 83 Am. St. R. 682. Meaning of "forthwith," "immediate," "as soon as possible" in connection with a requirement for notice or proofs under any kind of policy, Everson v. General F. & L. Assur. Corp., 202 Mass. 169, 88 N. E. 658; Trippe v. Provident Fund Soc, 140 N. Y. 23, 35 N. E. 316, 22 L. R. A. 432, 37 Am. St. R. 529; Hughes v. Ins. Co., 222 Pa. St. 462; Cady v. Fidelity & Cas. Co., 134 Wis. 322, 113 N. W. 967, 17 L. R. A. (N. S.) 260. But if the condition of the policy prescribes a limit of time for service the notice must be received within the time specified, McCord v. Masonic Cas. Co., 201 Mass. 473. "Satisfactory proof" means "such as ought to be satisfactory to reasonable men acting reasonably," Traiser ». Commercial F. E. Ace. Assn., 202 Mass. 292. JtJDGMENT IN ACCIDENT SciT CONCLUSIVE. — The insurer, having received proper notice of the accident suit and opportunity to conduct the defense, is concluded by the judgment therein rendered, which naturally is offered in evidence in the suit on the policy, to estabhsh the fact of the employer's liability to the insured person, and the amount of that liability, B. Roth Tool Co. v. New Amsterdam Cas. Co., 161 Fed. 709; City of St. Joseph v. Ry. Co., 116 Mo. 636, 22 S. W. 794, 38 Am. St. R. 626. The United States Supreme Court says: "When a person is responsible over to another either by operation of law or by express contract, and he is duly notified of the pendency of the suit, and requested to take upon himself the defense of it, he is no longer re- garded as a stranger, because he had the right to appear and defend the action, and has the same means and advantages of controverting the claim as if he were the real and nominal party upon the record. In every such case, if due notice is given to such 560 EDGEFIELD MFG. CO. V. MD. CAS. CO. [cHAP. XXI person, the judgment if obtained without fraud or collusion, will be conclusive against him whether he has appeared or not," Washington Gas Co. ». Dist. of Columbia, 161 U. S. 316, 16 S. Ct. 564, 40 L. Ed. 712. As to the liability of the insurer for the costs in the accident suit see New Amsterdam Cas. Co. v. Cumberland T. & T^ Co., 152 Fed. 961; Nesson v. V. S. Cas. Co., 201 Mass. 71. APPENDIX APPENDIX (Note. — Forms of insurance policies in current use are interpolated in the text in connection with the discussion of the legal meaning of their clauses. Standard fire policies, pp. 207 et seq. Life policy, pp. 275 et seq. Accident policy, pp. 3H et seq. Marine policy, pp. 335 et seq.) Simple Form of Application for Fire Policy The Home Insurance Co., New York. Insurance is wanted by to the amount of S rate term from , 190 . . to 190. . On Location Binding Slip Used in New York City Name Location on Amount S Rate Time Months. Each of the undersigned companies, for itself only, insures the property above described for the amount set opposite its name until the issue of its Standard Policy on the same in place hereof, or until twelve o'clock noon of the next business day after the risk is declined, by notice to the assured or broker placing the risk. But in no event shall this insurance be in force over fifteen days from the date of com- mencement of liability hereunder. Binder Signed Company Amount Date of Commencement of Liability Signature (The use of the foregoing form of binder is compulsory among the members of the New York Fire Exchange, to wit, the stock companies and certain insurance agencies. The late judge William Rumsey, who prepared it, advised that it was not inconsistent with the cancellation clause of the standard fire policy, but the point has not been adjudicated. The New York Fire Exchange governs the action both of stock com- panies and of brokers within specified territory. Some such institution is almost a necessity to compel uniformity and system in rates and forms of clauses and in other 363 364 APPENDIX particulars relating to the conduct of insurance. The Exchange prohibits rebates and encourages improvements by the insured which shall diminish the risk of fire loss and lower the rates of premium.) Printed Rider Called "The Forms" (Including Description of the Property and Special Clauses), Prepared by the Broker to Be Attached to the Policies on Stock of a Depart- ment Store. $ On merchandise and articles on sale of every description, including ma- terials, samples and supplies, manufactured, unmanufactured and in process of manufacture, their own or held by them in trust or on consignment or commission, or sold but not delivered or removed, including the property of others held on storage, or for repairs, or for which the insured may be liable, also for labor and materials put on same, contained in the brick, stone and iron buildings and additions situate It is understood and agreed that this insurance shall cover the assured, as now or hereafter constituted. , It is understood and agreed that this insurance is for the benefit of Brown & Co., as now or may be hereafter constituted. Privileged to work overtime and to keep for use not exceeding two (2) quarts of benzine, in patent safety cans. Privileged to do such work and to use such materials as are usual in the business of department store. Privileged to use steam for heat and power and gas for light and heat, and for existing communications. Other insurance permitted. Sole Occupancy Warranted. — "Warranted by the assured that the building herein described is occupied exclusively by one tenant." Watchman and Clock. — "Warranted by the assured to maintain. Night, Sunday and Holiday Watchman, with approved stations and approved watch clock, and making such reports to the New York Fire Insurance Exchange as may be required." Special Building Signal. — "Warranted by the assured to maintain a Special Build- ing Signal approved by the New York Board of Fire Underwriters for the transmission of alarms to Fire Department Headquarters." Autmnatic Fire Alarm Clause. — The entire building containing the property hereby insured, having been equipped with the Automatic Fire Alarm Signal Telegraph, in accordance with the Rules and Regulations of the New York Board of Fire Under- writers, and a certificate to that effect issued by authority of said Board, this policy is issued at a reduced rate of premium, and in consideration of such reduced rate, it is hereby made a condition of this policy that the assured shall use due diligence that such equipment shall continue to be maintained during the full term of this insurance. Automatic Sprinkler Clause. — It is hereby made a condition of this policy that the insured shall use due diligence to maintain in full working order during the term of this insurance the automatic sprinkler equipment now in use, and that no change shall be made in such system without the approval of the New York Fire Insurance Exchange or the New York Board of Fire Underwriters, and that if such sprinkler equipment is not automatically connected with a central fire alarm station in a manner approved by said Exchange or Board the insured shall maintain a watchman, with an approved watch clock, during the hours when the premises are not regularly in opera- tion and when closed or whenever such automatic fire alarm signal station is tem- porarily disconnected. (The 100% average clause is here inserted.) Mechanics' Privilege. — Permission for mechanics to be employed for ordinary altera- tions and repairs in the within described premises, but this shall not be held to include the constructing or reconstructing of the building or buildings, or additions or the enlargement of the premises. APPENDIX 365 New York Standard Clause Forbidding the Use of Electricity. — This entire policy shall be void if electricity is used for light, heat or power in the above described premises unless written permission is given by this company hereon. "Privileged to Use EUctricily in the above inentioned premises for light, and /or heat, and /or power, it being hereby made a condition of this policy that where the equipment is owned or controlled in whole or in part by the assured a Certificate shall be obtained from the New York Boarf of Fire Underwriters, and that no alterations shall be made in that portion of the equipment owned or controlled by the assured after Certificate is issued without notice thereof being given to the said Board." Lightning Clause. — This policy shall cover any direct loss or damage caused by Lightning (meaning thereby the commonly accepted use of the term Lightning, and in no case to include loss or damage by cyclone, tornado or windstorm) , not exceeding the sum insured, nor the interest of the insured in the property, and subject in all other respects to the terms and conditions of this policy. Provided, however, if there shall be any other insurance on said property, this Company shall be liable only pro rata with such other insurance for any direct loss by Lightning, whether such other insurance be against direct loss by Lightning or not. Attached to and forming part of Policy No Insurance Company. Send Policy to Benedict & Benedict. Liberty and Nassau Sts. New York. (Signed) Please Sign This Form, and Make no Alterations A Combined Form for Dwelling-House and Furniture Prepared by the Broker $ On the Dwelling, Additions and extensions. Decorations, Frescoes, Plate and other Glass, Heating and Electric Apparatus, Wiring and Moulding covering the same. Gas and Electric Fixtures, Elevators, Plumbing, Steam, Gas and Water Pipes, Awnings, Stoops, Sidewalks, Fences and Yard Fixtures, and all permanent fixtures contained in or attached to said dwelling and additions situate Loss, if any, payable to Mortgagee, subject to clause hereto attached S On Household Furniture and Utensils, useful and ornamental, Beds, Bed- ding, Carpets, Rugs, Linen, Wearing Apparel, Plate, Plated Ware, Chande- liers, Gas Fixtures, Printed Books and Music, Pictures, Paintings, En- gravings and their Frames (at. not exceeding cost). Bronzes, Statuary and other Works of Art, objects of Virtu, Curiosities, Curios, Antiques, Piano- fortes, Musical Instruments, Scientific Instruments, Billiard Tables, Bicy- cles, Guns, Fishing Rods, and other Sporting Implements, Trunks, Tools, Sewing Machines, Curtains, Mirrors, Clocks, Watches, Diamonds, and all other Jewelry, Crockery, Glass and China Ware, Stoves, Fuel and Family Stores and all other household furniture the property of the assured, or any member of the family or servants or guests, all contained in the above- described dwelling, additions and extensions. The item of this policy covering on household furniture does not cover on property insured under policies covering on building. It is understood that the existence of a mortgage on the above-described buildings shall not invalidate this insurance. It is understood that the insurance shall not be invalidated should the buildings stand on leased ground or be vacant or unoccupied. Other insurance permitted. Privileged to make additions, alterations and repairs, and this policy to cover thereon 366 APPENDIX and therein; to use Steam Furnaces or Grates for heating, to use Gas, Kerosene Oil or Electricity for lighting, and to use Kerosene Oil or Gas Stoves; also to use small quan- tity of Benzine or Naphtha for cleaning purposes. (Lightning Clause as in last preceding form.) Attached to and forming part of Policy No Insurance Company. Send Policy to Benedict & Benedict, Liberty and Nassau Sts. New York. (Signed) Please Sign This Form, and Make no Alterations (The purport of some of the provisions in the last two forms shows that they are included by the broker, because they are required by the insurer or because they secure a lower rate of premium.) Dwelling Warranties Dwelling Warranty. — ^Warranted by the assured that the within-deacribed building is occupied exclusively for dwelling purposes by not more than two families; or Flat House Warranty. — Warranted by the assured that the within-described build- ing is occupied exclusively for dwelling purposes. (The New York Fire Exchange requires one or the other to indicate whether private residence or apartment house. The latter calls for the higher rate. See 103 App. Div. 12.) A Form of Average Clause It is understood and agreed, that the amount insured by this policy shall attach in each of the above-named premises in that proportion of the amount hereby insured that the value of property covered by this policy, contained in each of said places, shall bear to the value of such property contained in all of above-named premises. (The New York standard fire policy and others expressly allow the attachment to the policy of special clauses. See 181 N. Y. 472.) Application and Survey Clause New York Stand Ann. This policy is based upon an application and survey of the property on file which is hereby referred to as forming part of this policy. Date of Application, Where Filed, Attached to and forming part of Policy No [Signature for Company.] Coinsurance Clause New York Standard. If at the time of fire the whole amount of insurance on the property covered by this policy shall be less than the actual cash value thereof, this Company shall, in case of loss or damage, be liable for such portion only of the loss or damage as the amount insured by this policy shall bear to the actual cash value of such property. Attached to and farming part of Policy No [Signature for Company.] Mortgagee Clause New York Standard. Loss or damage, if any, under this policy, shall be payable to as mortgagee [or trustee], as interest may appear, and this insurance, as to the interest APPENDIX 367 of the mortgagee [or trustee] only therein, shall not be invalidated by any act or neg- lect of the mortgagor or owner of the within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for pur- poses more hazardous than are permitted by this policy; provided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mort- gagee [or trustee] shall, on demand, pay the same. Provided, also, that the mortgagee [or trustee] shall notify this Company of any change of ownership or occupancy or increase of hazard which shall come to the knowledge of said mortgagee [or trustee], and, unless permitted by this policy, it shall be noted thereon and the mortgagee [or trustee] shall, on demand, pay the premium for such increased hazard for the term of the use thereof; otherwise this policy shall be null and void. This Company reserves the right to cancel this policy at any time as provided by its terms, but in such case this policy shall continue in force for the benefit only of the mortgagee [or trustee] for ten days after notice to the mortgagee [or trustee] of such cancellation and shall then cease, and this Company shall have the right, on like notice, to cancel this agreement. Whenever this Company shall pay the mortgagee [or trustee] any sum for loss or damage under this policy and shall claim that, as to the mortgagor or owner, no lia- bility therefor existed, this Company shall, to the extent of such payment, be there- upon legally subrogated to all the rights of the party to whom such payment shall be made, under ajl securities held as collateral to the mortgage debt, or may, at its option, pay to the mortgagee [or trustee] the whole principal due or to grow due on the mort- gage with interest, and shall thereupon receive a full assignment and transfer of the mortgage and of all such other securities; but no subrogation shall impair the right of the mortgagee [or trustee] to recover the full amount of claim. Dated, Attached to and forming part of Policy No [Signature for Company.] An Iron Safe Clause The following covenant and warranty is hereby made a part of this policy: 1st. The assured will take a complete itemized inventory of stock on hand at least once in each calendar year, and unless such inventory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within 30 days thereof, or this poUcy shall then be null and void and upon demand of the assured the unearned premium from that date shall be returned. 2d. The assured will keep a set of books, which shall clearly and plainly present a complete record of business transacted, including all purchases, sales and shipments, both for cash and credit, from date of inventory as provided for in first section of this clause, and during the continuance of this policy. 3d. The assured will keep such books and inventory, and also the last preceding inventory, if such has been taken, securely locked in a fire-proof safe at night, and at all times when the building mentioned in this policy is not actually open for business ; or, failing in this, the assured will keep such books and inventories in some place not exposed to a fire which would destroy the aforesaid building. In the event of failure to produce such set of books and inventories for the inspec- tion of this Company, this policy shall become null and void, and such failure shall constitute a perpetual bar to any recovery thereon. (The above clause is used sometimes in the South, not in New York.) An Earthquake Clause This Company shall not be liable for loss or damage occasioned by or through any volcano, earthquake, hurricane or other eruption, convulsion or disturbance of nature. 368 APPENbrx A Form of Clause for Insurance of Vse and Occupancy On the UBc and occupancy of his mill buildings, situate at It is a condition of this contract of insurance that, if the said buildings or macbiner}' therein, or either of them, or any part thereof, shall be destroyed, or so damaged by fire occurring during the continuance of this policy that the mill is entirely prevented from producing goods, this Company shall be liable at the rate of dollars per day for each working day of such prevention, and in case the buildings, or machinery, or any part thereof, are so damaged as to prevent the making of a full daily average pro- duction of goods, this Company is to be liable per day for that proportion of dollars which the product so prevented from being made bears to the average daily yield previous to the fire, which, for the purpose of this insurance is agreed to be the average daily production of goods based upon the time said mill was running for one year previous to the fire, not exceeding in either case the amount insured. Loss to be com- puted from the day of the occurrence of any fire to the time when the mill could with ordinary diligence and dispatch be repaired or rebuilt, and machinery be replaced therein, and not to be limited by the day of expiration named in the policy. The Nationai. Boabd of Fibe XJndebweiters Have Recommended Certain Fohms OP Clauses Among Which Abe the Following Renl Clause National Boabd Standabd. $ On the rents of the story building, situated and known as No The intention of this insurance is to make good the loss of rents, caused by fire or lightning, actually sustained by the assured on occupied or rented portions of the premises which have become untenantable, for and during such time as may be neces- sary to restore the premises to the same tenan table condition as before the fire; said time, in case of disagreement, to be determined by fippraisement in the manner pro- vided in the conditions of this policy; but this Company shall not be liable for a greater proportion of any loss than the sum hereby insured bears to the actual annual rental of such occupied or rented i)ortions of the premises. Attached to and made a part of Policy No of Insurance Company. Reinsurance Clause National Boabd Standard. This policy is issued as reinsurance to apply to Policy No of the Insurance Company, and is subject to the same risks, privileges, conditions and en- dorsements (except changes of location), assignments, changes of interest or of rate, valuations and modes of settlements, as are or may be assumed or adopted by the said company. The amount payable under this policy shall bear the same ratio to the amount payable by the reinsured company under any and all policies upon the property specified and contained within the limits described herein, that the amount of this reinsurance in force at the time of loss shall bear to the total amount insured by the reinsurance company upon such property in force at the time of such loss, and shall be paid at the same time and in the same manner as payment shall be made by said reinsured company. Other reinsurance is permitted without notice until required. Attached to and forming part of Policy No of the Insurance Company. Where a Retainer Clause is desired to be attached to the foregoing Reinsurance Clause, the following is approved by the National Board of Fire Underwriters: Retainer Clause The reinsurance company shall retain at its own risk, on the identical property covered at the time of any loss, by this policy, over and above all its reinsurance thereon, APPENDIX 369 an amount equal to the amount of this policy upon such property, and, failing so to do, the amount which would otherwise be payable under this policy by reason of said loss shall be proportionately reduced. Attached to and forming part of Policy No of the Insurance Company. A Form of Proof of Loss State of , ) County of ) Be it known. That on this day of 189. ., before me , a Notary Public duly commissioned and sworn, and residing in the County and State aforesaid, personally appeared , who, being duly sworn, says that the follow- ing statement and the papers therein referred to and signed with his own hand con- tain a particular, just and true account of his loss in the words and figures following, to wit: I. That on the day of 189 .. , the Insurance Company by their Policy of Insurance, numbered , did insure the party herein and therein named against loss or damage by fire to the amount of dollars on (description of property insured from the policy) for the term of from the day of , 189 .. , to the day of 189 .. , at noon. II. That in addition to the amount covered by said policy of said company, there was other insurance made thereon to the amount of dollars, as specified in the following schedule, besides which there was no other insurance thereon. (List of policies covering any of the property, showing as to each policy its date, term, and • amount, the name of the company, and a copy of the description and schedule of property insured contained in such policy.) III. That the property insured belonged to (statement of interest of in- sured and of all others in the property and of all incumbrances thereon and changes of title, etc., since the issuing of the pohcy). IV. That the building insured or containing the property destroyed or damaged, was occupied at the time of fire in its several parts by the parties hereinafter named, and for the following purposes, to wit: (List of tenants.) V. That the actual cash value of the property so insured amounted to the sum of dollars at the time immediately preceding the fire, as set forth in the follow- ing schedule: That on the day of , 189 .. , a fire occurred by which the property insured was injured or destroyed to the amount of dollars, as set forth in the following schedule which the deponent declares to be a just, true and faithful account of his loss as far as he has been able to ascertain the same: (Schedule of property damaged or destroyed, showing the cash value of each item thereof and the amount of loss thereon.) And the insured claims of the In- surance Company the sum of dollars. (If there are subdivisions in pohcy, also a statement of the amount claimed under each subdivision.) VI. That the fire originated (statement of knowledge and belief of the insured as to the time and origin of the fire) , and the said deponent further declares that the said fire did not originate by any act, design or procurement on his part, or in consequence of any fraud or evil practice done or suffered by him, and that nothing has been done by or with his privity or consent to violate the conditions of insurance or render void the policy aforesaid. (Insured.) Sworn to before me this, day of 189... } Notary Public. 24 370 APPENDIX Examples of the Operation of Coinsurance Clauses Prepared for This Book by Willis O. Robb, Esq., Manager of the New York Fire Exchange. Companies Pay Under 80% Clause Under 100% Clause 1. Value $10,000"] Ins. 6,000 V $ 4,500 $ 3,600 Loss 6,000 J 2. ValuB 10,000"] Ins. 6,000 > 6,000 4,800 Lobs 8,OOoJ 3. Value 10,000"] Ins. 6,000 V 6,000 6,000 Loss lO.OOoJ 4. Value 10,000"] Ins. 8,000 >- 6,000 4,800 Loss 6,000 J 5. Value 10,000"! Ins. 8,000 > 8,000 6,400 Loss 8,000 J 6. Value 10,000"] Ins. 8,000 V 8,000 8,000 Loss 10,000 J 7. Value 10,000 "| Ins. 10,000 > 6,000 6,000 Loss 6,000j 8. Value 10,000 "1 Ins. 10,000 y 8,000 8,000 Loss 8,000 9. Value 10,000^ Ins. 10,000 Y 10,000 10,000 Loss 10,000 10. Value 10,000"! Ins. 12,000 V 6,000 6,000 Loss 6,000 J 11. Value 10,000"] Ins. 12,000 > 8,000 8,000 Loss 8,000 J 12. Value 10,000 "| Ins. 12,000 > 10,000 10,000 Loss 10,000 J Thus in the first example, under the 80% clause ^000== (the insurance)^ 8000= (80% of value) *' . -^ , ., , , „ ^. . , 2000= (the deficit) 4500, of the loss falls on the insurers, and = | or 1.500 fallo 8000= (80% of value) ' ' ^ on the insured. Under the 100% clause f^, or 3600, falls on the insurers, and yj, or 2400, on the insured. APPENDIX 371 Marine Policy Established by Statute of Florence, January 28, IBSS Be it known and made manifest to all persons, that of makes assurance on merchandise belonging to him or his friends, or to whomsoever the same may belong, laden or to be laden for [such or such a port or roadstead in such a place] by the hands of or his agent, or although others have laden it in the name of the aforesaid , or in some other name designated or not designated on board the ship named , or howsoever named, commanded by We begin the said insurance from the time when the said goods shall be, or shall have been, laden on board the said ship in [such a place], to continue until the said mer- chandise shall be discharged on land or in safety at [such a place], with liberty for the ship to touch at any other place, and to navigate forwards or backwards, to the right hand or the left, at the pleasure of the captain, and as he may require: The said as- surers taking upon themselves in respect of the said goods the risk of all perils of the seas, fire, jettison, reprisals, robbery by friend or foe, and every other chance, peril, misfortune, disaster, hindrance, misadventure, though such as could not be imagined or supposed to have occurred, or be likely to occur, to the said goods, and barratry by the master, except as to stowage or customhouse. All the said risks the said in- surers are to run and take on themselves until the said goods shall be safely discharged on shore at [such a place] ; and if they are not laden, the insurers are entitled to retain one and a half per cent. And if the said goods shall sustain, or have sustained, any disaster (which God forbid), the insurers shall pay to the said . .the svna insured, within two months from the news reaching the city. And if within six months there shall have been no true news, the insurers shall pay to the said the sum insured; and in case of subsequent arrival and safe dis- charge at the said place, the aforesaid shall pay back to each the sum he has received. In the event of shipwreck, it is allowed to make recovery without authority from the insurers, it being stipulated that the said insurers are not responsible for theft by the captain of the said ship. And the insurers are bound first to pay to the aforesaid the sums insured, and to litigate afterwards. And these are to bind themselves by sufficient sureties (one or more as directed by the fire official deputies on insurance) to pay back to each insurer the sums they have received, with damages of twenty per cent. The time allowed to the insurers for proving is eighteen months, To the observance of this the insurers bind themselves to the said , them- selves, their heirs, and goods present and future, submitting themselves to the office aforesaid, and to every other judgment and court whither the said shall please to summon them. Inchmaree Clause This insurance also specially to cover (subject to the free of average warranty) loss of or damage to hull or machinery through the negligence of master, mariners, engineers, or pilots, or through explosions, bursting of boilers, breakage of shafts, or through any latent defect in the machinery or hull, provided such loss or damage has not resulted from want of due diligence by the owners of the ship or any of them or by the manager. A Negligence Clause Including negligence and errors of navigation; including all risk of negligence, default, or error in judgment of the pilot, master, mariners, engineers, or others of the crew. A Deviation Clause It is hereby agreed to hold the assured covered should the vessel deviate from the terms and conditions of this policy, at a premium to be arranged as soon as the devia- tion is known. 372 APPENDIX A Craft Clause Including all risk of craft, boats, lighters, to or from the vessel upon whatever terms as to liability or otherwise the lighterman may be employed: such craft, boat or lighter being deemed a separate insurance, and loss in boats, craft, or lighter is to be settled under this policy without reference to the liability or non-liability of the lighterman under special agreement between assured and lighterman or otherwise, the assured transferring all rights against the lighterman to the underwriters. A Clause as to Loading Warranted by the assured not to be loaded in tons of 2,240 lbs. more than the registered capacity under tonnage deck, with lead, marble, stone, coal, sand or iron; also warranted not to be loaded with lime under deck. Also if loaded with grain, warranted to be loaded under the inspection of the Surveyor of the Board of Under- writers, and his certificate as to the proper loading and sea-worthiness obtained. Customary Deductions: England In the adjustment of claims for particular average in a policy on ship, in the absence of any special provisions in the policy, the following items for repairing damage or making good losses are recoverable from the insurer without deduction new for old: — Graving dock expenses. Cost of removals. Use of shears, stages, and graving dock appliances, and cost of cartage and carriage. Cost of anchors and of provisions and stores which have not been in use. Cost of temporary repairs. Cost of straightening bent iron-work. All repairs of damage sustained by a vessel on her first voyage. Chain cables are subject to a deduction of one-sixth. All other repairs of damage sustained after the first voyage are subject to a deduc- tion of one-third. Metal sheathing must be dealt with by allowing in full the cost of a weight equal to the gross weight of metal sheathing stripped off, minus proceeds of the old metal. Xails, felt, and labor metaling, are subject to one-third, also the cost of replacing metal lost. Chalmers & Owen, Ins. (1907), p. 154. INDEX INDEX Abandonment, 195, 196 Accident meaning of, 313-315 accident or disease, 314-325 Accident policy and clauses, 311-334 Accident poUcy, form of, 311 Accounting, no right to, 69 Accounts, production of, 269 Actions, 45, 273, 274 Actual total loss, 186-196, 219 Additions, 217 Adjusters, 177, 196, 197 Adjustment marine, 196, 197 general average, 203, 204 fire, 271, 272 Age, 286 Agents of the insured brokers, 77, 78 concealment, 89 notice of cancellation, 264 Agents of insurers, 132-138, 147-177 See Waiver and Estoppel Alienation clause, 239-244 Anticipatory breach of contract, 286 Application, forms of, 275, 363 Application written, 109 Application and survey clause, form of, 366 Apportionment, 196, 197, 203, 271, 272 Appraisal, 269-271 Arbitration, see Appraisal Assessments, 290-292 Assignment of policies, 66 of fire policy, 244, 245 See Bankruptcy "At and from," 337 Average clause, form of, 366 Award, see Appraisal Bailees, 26, 27 Bankruptcy of insurer, 297 Barratry, 345 Beneficiary rights of, 66-69 Beneficiary change of, 68, 69 creditors, 69 wife and children, 69 designation of, 285, 286 Benefit societies, 7-13 Benzine, 245-250 Bills, production of, 269 Binding slip, 73-83 form of, 363 Blanket policy, 4 Books, production of, 269 Broker, 77, 78, 264 "Burnt," 357 By-laws, 7-13 Cancellation, 257-264 Capture, 345 Cargo, 182, 186, 197, 203, 244, 356 Carrier, see Common Carrier Cars, 331-334 Cause, see Proximate Cause Caveat emptor, 87 Certificate, fraternal societies, 7 Change of interest, title or possession, 239-244 Change of voyage, 186 Charter, 7 Chattel mortgage, 113 Clauses of fire policies treated in sequence, 207-274 of life policies treated in sequence, 274-310 of accident policies treated in sequence, 311-334 of marine policies treated in sequence, 335-357 employers' liability insurance, 358, 359 Closing of contract, 70-86 Coinsurance clause, form of, 366 Coinsurance clauses, 272, 370 Coinsurer, marine, 42, 356 Collateral security, 244, 245 Collision, 344, 345 Collision clause, form of, 336, 337 375 376 INDEX Commencement of risk, marine, 337, 338 Common carriers, 26, 27, 45 Concealment marine, 87-89 fire and life, 88-92 Conditions precedent, 103, see Warranties Consideration, 71, 137, 290-292 Constitution of societies, 7-13 Constitutionality, 13-17 Construction of the contract, 83-86, 247- 250 Constructive total loss, 195, 196 Consummation of contract, 70-86 Contract of insurance nature of, 3-69 closing and construction of, 70-86 requisites of, complete, 70 Contributing policies common law, 42 fire policy, 271, 272 Contribution, 271, 272 Contributory negligence no defense, 41, 42 unseaworthiness, 178-182 accident policy, 331-333 Conveyance, 332 Convoy, 187 Countersigning agent, 161-176 Court or jury, 95- 96, 112, 113 See Jury Craft clause, form of, 372 Creditors, 32-40, 69 Crimes, 303-307 Custom or usage, 83, 84, 105 especially marine, 84 Customary deductions, 372 Damage, see Loss ; Measure of Indemnity Danger, voluntary exposure to unneces- sary, 328-332 Dangerous articles, 245-250 Death by the hands of justice or in viola- tion of law, 303-307 Deck load' 203 Deductions, customary, marine, 197, 372 Delay, marine, 186, 344 Delivery of policy, 70-73, 288-290 Department store, form of clause, 364 Dependents, 285 Description of property insured, 217, 218 Deterioration, ordinary, 353, 354 Deviation, 182-187 Deviation clause, form of, 371 Disease, 120, 278-283, 325 Divisibility of contract, 129-131, 218-222 Double insurance, see Other Insurance Due diligence for personal safety, 333 Dueling, 326 Dwellings, form of description of, 365 Dwelling warranties, form of, 366 Earthquake and volcano clause cases under, 258 form of, 367 Employers' liability insurance, 358, 359 Employment, 287, 318, 319 Entirety of contract, 129-131, 218- 222 Estoppel, see Waiver Evidence, 140-142 Examination under policy, 269 Exchange, New York Fire, 363 Fxcases, 107 Executory contract of sale, 45-54, 241- 244 Explosion, excepted loss, 253-258 External, violent, and accidental means, 312, 313 illustrations, 312-314 Factories, 228-230 temporary cessation, 228 Falling building, 258 False swearing, 220-227 Family, 69, 285 Family physician or usual medical at- tendant, 278-283 Family relationship, 286 Fidelity and guarantee insurance, 358, 359 Fighting or dueling, 326 Fire, what constitutes, 213-217 Fire Exchange, New York, 363 Fire loss, 213-217 Fire policies, forms of, 207-212 Fire policy and clauses, 207-274 Fireworks prohibited, 106 Floating policy, 4 Florentine ancient marine policy, 371 Forfeitures not favored, 84-86, 110 See Warranties Forms, 360-372 "For whom it may concern," 27 Fraternal associations, 7-13 Fraud or false swearing, 220-227 "Free of average," 189, 356, 357 Furniture, form of description for, 365 INDEX 377 Gas, accident policy, 314, 326 General average, 198-204 "Good faith," 87 Habits, 120, 286, 287 Hazardous articles prohibited, 245-252 Hazardous employment, 318, 319 Health, 120, 278-283, 325 Health clause, fprm of, 312. Heirs, 285 "Held in trust," 26 Husband, 69, 101 lUegaiity, 187 Illness, see Health Immediate notice of accident, 358, 359 Immediate notice of loss, 359, 360 "Immediately and wholly disable," 318 Implied warranty, see Warranties Inchmaree or machinery clause, form of, 371 Incontestable clause, 118, 308, 309 Increase of risk, 230-232 Incumbrances, 113 Indemnity, a cardinal principle, 18, 28, 29, 42, 47, 57, 58 Industrial insurance, 7 Infirmities, 283, 284, 287 Inhaling gas or vapor, 314, 326 Inherent vice, 353, 354 Injuries, 283, 284, 287 Inquiry, failure to make, 91, 234-238 Insanity, see Suicide Insolvency of insurer, 297 Iniiurable interest property, 18-26 life, 27H10 creditor, 32-40 payees, assignees, 40 when must interest exist, 40 temporary suspension, 40 Insurance nature of, 3 definitions, 4-6 a personal contract, 58-62 Insurance department, 13 Insured, 4 Intentional injuries, 326 Interest of insured, 232-234 Interpretation, see Construction of Con- tract Interstate commerce, 15 Intoxicants, 325, 326 Iron-safe clause, 367 Jettison, 203 Jury, 95, 96, 113, 114, 120, 131, 219, 225, 232, 252, 302, 303 325, 332 "Kept," "used," "allowed," 106, 250 Law, in violation of, 303-307 Law of place, 86 Lessee, 58 Liability of insurer, see Measure of Recovery Liens, 113 Life insurance, 284 Life insurance policy, 277 Life policy and clauses, 275-310 Life tenant, 58 Lightning, 217, 256 Lightning clause, form of, 365 Limitation of time for suit, 273, 274 Lloyd's, 7, 14 Loading clause, form of, 372 Location, 218 Loss under fire policy, 57, 58, 271, 272 under marine policy, 196, 197 in general average, 203, 204 "Loss if any payable to," 264 Lost or not lost, 338 Machinery or Inchmaree clause, form of, 371 Magistrate's certificate, 269 Manufactory, 228-230 Marine policy ancient Florentine, 371 Marine policy, form of, 335, 336 Marine policy and clauses, 335-357 Married woman, 69 Massachusetts standard fire policy, 210- 212 Materiality, test of, 94, 95 Measure of recovery as related to indemnity, 57, 58 limited interest, 58 marine, 196,. 197 fire, 218, 219 Mechanics, 250 Medical attendance, 278-283 Memorandum clause fire, 245-250 marine, 356 Merchandise, fluctuating, 218 MUl, 228-230 Misrepresentation, see Representation 378 INDEX Mortality tables, 284 Mortgage, 113 Ivlortgagee, 264-266 meaning of standard clause, 265 Mortgagee clause, form of, 366 Mortgagor, 264-266 Mortuary tables, 284 Murder, 326 Mutual benefit societies, see Benefit Societies Narcotics, 325 Negligence, no defense, 41, 42 unseaworthiness, 178-182 accident policy, 331-333 Negligence clause, form of, 371 New for old, see Deductions New York Fire Exchange, 363 New York standard fire policy, 207- 210 Notice of abandonment, 195, 196 Notice of accident or injury, 358, 359 Notice of loss, 359, 360 Occupancy, change of, 232, 243 Occupancy clause, form of, 368 Occupation, 287, 318, 319 Open policy, 4 Operation, of factories, 228 Opinion, 93, 94, 118, 120, 224, 225 One-third new for old, 197, 372 Oral contract, 71, 83 Other or double insurance warranty against, 230, 286 contribution, 271, 272 Overexertion, 327 Ownership, 232-238 waiver, 234-238 Parole, 71, 83, 140 Partial loss, marine, 196, 197 Particular average, 186, 187 Parties, 71 Partners, alienation, 239, 240 Partnership, 239, 240 Patterns, 250 Payee, 40, 264, 265, 285 Perils insured against; marine, 343-357 Personal examination, 269 Physician, 278-283 Place of contract, 86 Poison, 326 Policies kinds of, 45 forms of, 360-372 See Clauses Pooling agreement, 240 Port, 185, 337, 338 Possession, change of, 243 Premises, see Description; Location Premium apportionable or returnable, 63-66 prompt payment, 290 credit for, fire, 71, 78 waiver of payment, life, 132, 146, 288- 297 statutory notice of, 290 Presumption, suicide, insanity, 299-303 See Evidence "Prime cost," 197 Profits, 4, 40, 41, 219 Prohibited articles, 245-250 Prohibited waters, 104, 105 Proof of loss, form of, 369 Proofs of loss, 267-274, 359 Proper vice, 353, 354 Property insured, 217, 218 Pro rata clause, 271, 272 Proximate cause fire, 216, 253-258 accident, 314-318 marine, 345-351 Proximate and sole cause, 314t-318 Railway bridge, 328-331 Railway relief department, 7 Ratification, 27 Rebuilding, 219 Recovery, see Measure of Recovery Regulation and control, 3 Reinstatement, 219 Reinsurance description of, 5 meaning of clause, 272, 273 Reinsurance clause, form of, 368 Relationship, 286, 287 Release, subrogation, 57 Relief department, 7 Remedies, 45, 69, 273, 274 Removal, see Location Renewal, 5 Rent clause, form of, 368 Rent policy, 4 Repairs, 250 Replace, 219 Representations, 92-98 Reserve, 297 INDEX 379 Residence and travel, 287 Retainer clause, 368 Rider, 83 Roadbed, 326-331 Sale, see Alienation Salvage, 195, 196, 356 "Sane or insane," 118, 299 Seamen, seaworthiness, 181 Seaworthiness, 178-182 Self-defense, 326 Self-destruction, see Suicide Severable contract, 129-131, 218-222 Ship, policy on, usually valued, 6 Sickness, 120, 278-283 Slip, see Binding Slip Smoke, 213-217 Smuggling, 187 Sole cause, 318 Sole ownership, 232-238 SoUcitors, 147-161 Sprinkler clause, 114 Standard policies fire, 207-212 life clauses, 278 accident clauses, 312 contract binding though not standard, 212 Statutes, 3, 13, 131, 139, 155 as to warranties, 131 as to agency, 155 Stock, fluctuating, 218 Stowage, as affecting seaworthiness, 181 Stranding whether general average, 199-202 under memorandum clause, 357 Subject of insurance a chance, 88 property, 217, 218 Subrogation, 43-57 Sue and labor clause, 354—357 salvage under, 356 Suicide, 68, 118, 131, 297-303 "Surrender value," 297 Survey clause, form of, 366 Temperate habits, 120, 286, 287 Temporary breach, 104, 126-129 Tenant, 58, 106 Term, 71, 338-342 Termination of risk, marine, 338-342 Their own or held in trust, 26 Thieves, marine, 345 Time policy, 5 Title, 232-244 Tontine policy, 5 Total loss actual, 186-195 constructive, 195, 196 total loss of part, 356 total loss of building, fire, 219 Totally disabled, 318 Trade usage or custom, 83, 84 Travel and residence, 287 Traveling, injuries while, 332-334 "Uberrimae fidei," 87 Unconditional and sole ownership, 232- 238 See Loss "Unless ship be burnt," 357 See Insurer; Statutes "Unless ship be stranded," 357 Unoccupied, 250-252 Unseaworthiness, 178-182 Usage or custom, 83, 84 Use and occupancy, 240 Use and occupancy clause, form of, 368 Vacancy, 250-252 Valuation, see Measure of Recovery Value, opinion, 94 Valued policy, 6, 219 Vendee, 46, 47, 62, 233, 241-244 Vendor, 46, 47, 62, 233, 241-244 Vested rights, 66-69 Violation of law, 303-307 Visible mark of injury, 319 Volcano clause, 258, 367 Voluntary exposure to unnecessary dan- ger, 328-332 Voluntary overexertion, 327 Voluntary stranding, 199-202 Voyage policy, 5 Wagers, void, 32 Waiver and estoppel nature of, course of business, 132-137 election once made is final, 137 whether new consideration required, 137 what cannot be waived, 139 oral promise at time of contract, 140 whether silence a waiver, 142 demanding proofs of loss, 142-145 authority of agents to waive, 147-177 illiterate applicants, 161 380 INDEX Waiver and estoppel knowledge of forfeiture at time of con- tract, 161-174 knowledge of intended future viola- tion, 174-176 oral waivers during term of policy, 176 oral waivers after loss, 142-146, 177 by omitting to inquire, 234-238 by delivering life policy, 288-297 Walking on roadbed, 328-331 War, 107 Warranties, express nature of, 99-105 affirmative and promissory, 101 acts of tenant, 106 inability to fulfill, 107 reference to extraneous papers, 107-109 contrasted with representations, 109- 114 what constitutes, 109, 110 Warranties, express interpretation of, 109-118 opinion, expectation, belief, 118-120 of present condition or use, 120, 121 questions unanswered or partially an- swered, 122-126 temporary breach, 104, 126-129 divisibility of contract, 129-131 See Clauses Warranties, implied seaworthiness, 178-182 against deviation, 182-187 against illegality, 187 Wear and tear, 351-353 Whom it may concern, 27 Wife, 69, 101 Worms, marine risk, 344 York-Antwerp rules, 204 '■, . .'^.^'■:.w■».K.>^..>^■■^■.^■.K>■■-.■~».KK^^.^■^^■^--v^fc:v^ i '^ ^H i M ^^^ 1 i ^n ■>5J> ^^mM i| ^R