inc. (BnrnFll ICam ^rlynnl SCibtary Cornell University Library KF 1196.F58 1874 A treatise on the law of fire Insurance 3 1924 019 236 896 Cornell University Library The original of tliis book is in tlie Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924019236896 TREATISE LA¥ OF FIRE INSURANCE. BT HE:NrRY FLANDERS, ATTTBOR OP A "TREATISE ON MARI T I MB CS "W," '*THK LAW OF SHIPPINO, ETC- ETC. SECOND EDITION. PHILADELPHIA: CLAXTON, REMSEN, & H AFF ELPI N GER, 624, 626, AND 628 MARKET STREET. 1874. Entered according to the Act of Congress, in the year 1874, by HENRY FLANDERS, in the office of the Librarian of Congress, at Washington. All rights reserved. COLLIKB, PRIHTBB. TO THE HOXQRABLE JOHN CADWALiDER, WHOSE LEARNING AND ABILITIES HAVE ADORNED BOTH THE BAR AND THE BENCH, IS GRATEFULI?r INSCRIBED BY THE AUTHOR. PKEFACE TO THE SECOND EDITION. In the second edition of this work the author has endeavored to give the reader the results of judicial decision upon the several subjects contained in its pages, since the publication of the first edition. He has made corrections and additions to the text and the notes, and has given in the latter such re- ferences and explanations as will enable the reader readily to verify the statements of the* former. He has, however, not deemed it necessary in particular instances to cite more than the leading cases, which sufficiently explain existing principles. Cases which are merely cumulative, and follow in the beaten track, rather serve to encumber the pages of a book than to add to its value. He ventures to hope that the second edition of his work will receive from the profession the same favor that was accorded to the first. Philadelphia, September, 1874. PREFACE TO THE FIRST EDITION. The author has endeavored in the following work to systematize the principles deducible from the numerous decisions of our courts upon the complex subject of fire insurance, and thus exhibit, in convenient form, the present state of that branch of the law. In going over such an extensive field of inquiry, he cannot flatter himself that he has been so fortunate as entirely to avoid error and mistake. And he would be grateful to his professional brethren, if, in following his footsteps, they would point out to him any defects they may chance to discover in the way, so that he may be able, in any future edition, to correct them. The author has sought to express the results of the cases, and in so doing has employed freely the language of the reports, and, moreover, in his notes has cited at length the decisions which, in his judgment, best serve to illustrate the principles set forth in the text. He has been sparing of adverse criticism, as, in the prac- Vlll PREFACE TO THE FIRST EDITION. tical business of the profession, it is more important to know what the law is, than what in the opinion of the writer it should be. With this brief introduction, the author submits his work to the charitable construction of the profession. CONTENTS. PAGE Index to cases xi — xxix CHAPTER I. Organization of insurance companies, and herein of deposit notes 11 — 36 CHAPTER II. Re-insurance, and herein of double insurance . 31 — 46 CHAPTER III. Other insurance 4T — 72 CHAPTER IV. The policy, and herein of its construction . . 73 — 115 CHAPTER V. When contract of insurance complete, etc. . . 116 — 140 CHAPTER VI. Of the premium 141—173 CHAPTER VII. Of agents 174—222 CHAPTER VIII. Of warranty and representation .... 223 — 258 CHAPTER IX. Of warranty and representation (continued) . 259 — 333 X COTSTTENTS, CHAPTER X. PAGE Of hazardous articles and trades . . . 334 — 359 CHAPTER XI. Of misrepresentation and concealment . . 360 — 375 CHAPTER XII. Of insurable interest 376 — 414 • CHAPTER XIIT. Of insurable interest (continued) . . . 415 — 440 CHAPTER XIV. Of alienation 441 — 480 CHAPTER XV. Of assignment of policy 481 — 509 CHAPTER XVI. Of increase of risk 510 535 CHAPTER XVII. For what losses insurer liable .... 536 — 556 CHAPTER XVIII. Of notice of loss 557 571 CHAPTER XIX. Of preliminary proofs 512 602 CHAPTER XX. Of payment of losses 603 631 CHAPTER XXI. Of the remedy of the insured .... 632 648 TABLE OF CASES. Abbott V. HampdenMut. Ins. Co., 383, 455. Abbott V. Shawmut Hut. F. Ins. Co., 313, 226, 282, 238, 322, 325. Acer V. Merchants' Ins. Co., 50, 56, 435. Adams o. Cordis, 632. Adams v. Lindsell, 119, 134-. Adams v. Eockingbam M. F. Ins. Co., 479. Addison n. Louisville Ins. Co., • 406, 407. ^tna Ins. Co. d. Grube, 233, 251. .^tna Ins. Co. v. Jackson, 472. JEtna Ins. Co. v. Miers, 588, 589. ^tna Ins. Co. v. Tyler, 42, 82, 397, 401, 402, 425, 441, 587, 589, 590, 594, 595. .ffitna Ins. Co. ■». Maguire, 131, 171, 174, 850, 594. jEtna F. and T. Ins. Co. b. 01m- stead, 110, 203, 238. .a;tna Ins. Co. v. Stevens, 574. Albany City F. Ins Co. v. Keat- ing, 521. Aliens. Charlestown Mut. F. Ins. Co., 380, 319, 827. Allen 0. Franklin F. Ins. Co., 407, 415. Allen «. Massasoit Ins. Co., 532. Aliens. Mutual Ins. Co., 378, 514, .'>26. Allen V. Sugrue, 77. Allen s. Vermont Mut. F. Ins. Co., 156. Alliance Mut. Ins. Co. v. Swift, 144. Alsager v. St. Katharine's Dock Co., 84. Alston V. Mech. Mut. Ins. Co., 254, 287. Ames V. N. T. Union Ins. Co., 333, 600, 635, 636. Amesbury v. Bowditch Ins. Co., 635, 688. Anderson v. Fitzgerald, 282. Andrews v. Essex F. and M. Ins. Co., 180. Andrews v. The Union Mut. F. Ins. Co., 541. Angelrodt «. Del. Ins. Co., 44. Annapolis R. R. Co. v. Baltimore F. Ins. Co., 87. Anson «. Winnesheik, 113. Appleby v. Firemen's Fund Ins. Co., 851. Archer ». Merchants' and Manuf. Ins. Co., 98, 335, 843, 490, 506. Ashland Mut. Ins. Co. v. Housin- ger, 612. Ashurst V. Mill, 103. Aspinwall v. Meyer, 144. Associated Firemen's Ins. Co. v. Assum, 332. Atlantic Co. v. Fitzpatrick, 33. Atlantic Ins. Co. ■». Goodall, 20, 146, 150. Atlantic Ins. Co. «. Wright, 282, 898. Atlantic Mut. F. Ins. Co. v. Young, 149. Atwood V. The Union Mut. F. Ins. Co., 616. Audubon v. Excelsior Ins'. Co., 181, 140. Aurora F. Ins. Co. v. Eddy, 88, 197, 228, 229, 804, 346, 447, 515, 519. Austin V. Drew, 536. Ayres v. Hartford F. Ins. Co., 187, 252, 309, 425, 440, 442, 443, 447, 463, 568. Ayres v. Home Ins. Co., 303, 464. Xll TABLE OF CASES. B Babcock v. Montgomery Co. Mut. Ins. Co., 541. Baer v. Phoenix Ins. Co., 63. Bailey v. Gould, 181. Bailey v. Hope Ins. Co., 199. Baker v. Cotter, 200. Baker v. Union Mut. Life Ins. Co., 167. Baltimore Fire Ins. Co. v. Loney, 107, 240. Bangs V. Bailey, 148. Bangs V. Mcintosh, 36, 148. Bangs V. Duckinfield, 34. Bangs i>. Gray, 34. Banks v. Scidmore, 28. Bank of N. J. v. Vanderhorst, 33. Baptist Church d. Brooklyn F. Ins. Co., 119, 133, 163, 165. Barnes v. Ins. Co., 640, 641, 643. Barnes ». Ontario Bank, 163. Barnes v. Union Ins. Co., 61, 331, 480. Baroness of Pontalba «. Phoenix Ins. Co., 382. Barton v. The Home Ins. Co., 550. Barnum t). Childs, 167. Barrett «. Jermy, 515, 518. Barrett v. Union Mut. F. Ins. Co., 109, 110, 209, 327, 333. Barring ii. Pierce, 177. Bartlett ». Union Mut. F. Ins. Co., 560, 566, 568. Bates i>. Com. Ins. Co., 459. Bates V. Equitable Ins. Co. , 490. Batre v. Durand, 419. Battaille v. The Merchants' Ins. Co. of New Orleans, 585. Baxter*. Chelsea Mut. Ins. Co., 160, 161, 194. Baxter v. Massasoit Ins. Co., 73, 131, 140. Bayles v. Ins. Co., 501. Beal 1). The Park F. Ins. Co., 208. Beal D. McKinnan, 211. Beals V. Home Ins. Co., 638, 630. Bean v. Stupart, 339. Beatty «. The Mar. Ins. Co. , 195. Beatty v. Lycoming Co. Mut. Ins. Co., 558, 581, 593. Beebe v. Hartford Co. Mut. F. Ins. Co., 115, 186, 369. Beemer v. Anchor Ins. Co., 640. Bell V. Shibley, 143. Bellville Mut. Ins. Co. v. Van- . winkle, 134. Benedict v. Ocean Ins. Co., 53, 83, 105, 365. Benjamin v. The Saratoga Co. Mut. F. Ins. Co., 411. Bentley v. Columbian Ins. Co., 131, 190, 311. Benton Ins. Co. v. Shea, 63. Bergson i>. Builders' Ins. Co., 499, 639, 640, 645. Bersche v. Globe Mut. Ins. Co., 155, 156. Bibend v. Liyerpool and London Ins. Co., 494, 499, 639. Bidwell V. N. W. Ins. Co., 49, 105, 535. Bidwell v. St. Louis Floating Dock and Ins. Co., 131, 489, 500. Bigler v. New York Central Ins. Co., 58, 89. Bilbrough v. Metropolitan Ins. Co., 254, 591. Billings V. Tolland Co. Mut. F. Ins. Co., 336, 392, 348, 513, 515, 534. Birdsey v. City Fire Ins. Co.,*501, 502. Birmingham v. Empire Ins. Co., 322, 437. Blake v. Exchange Mut. Ins. Co., 44, 50, 73, 85, 345, 599, 603. Blakely v. The Phoenix Ins. Co., 585. Blanchard v. Atlantic Mut. F. Ins. Co., 645. Blanchard «. Waite, 434. Blood V. Howard F. Ins. Co., 393. Boardman v. Merrimack Mut. Fire Ins. Co., 301, 513. Boardman v. New Hampshire Mut. F. Ins. Co., 296. Boatwright v. jEtna Ins. Co., 305. Bodine v. Exchange F. Ins. Co., 190. Bodle V. The Chenango Co. Mut. Ins. Co., 643. Boehen v. Williamsburg Ins. Co. , -156,164,165. Boggs V. American Ins. Co., 363, 372. Boland v. Whitman, 29. Borden v. Hingham Mut. F. Ins. Co., 70, 77. Boston Ice Co. v. Royal Ins. Co , 473. Bouton V, American Mut. Life Ins. Co., 164, 188. TABT.E OF CASES. XIU Bowditch Ins. Co. v. Wiaslow, 271. 307, 319, 363, 486. Boyd V. Dubois, 551. Boyle D. Ins. Co., 601. Boynton r. Clinton and Essex Mut. Ins. Co., 39, 87, 503. Bradford v. Greenwich Ins. Co., 411. Brady v. Northwestern Ins. Co., 540, 636. Bradley ». Potomac Ins. Co., 132, 169. Bragdon v. Appleton Mut. F. Ins. Co., 119. 127, 130, 156, 158. Bragg V. ^. E. Mut. F. Ins. Co., 452. Brewer r. Chelsea Mut. F. Ins. Co., 160, 163, 194. Brichta r. N. Y. Lafayette Ins. Co., 617. Bridge t. Niagara Ins. Co., 585. Brinley «. National Ins. Co., 606. Brookman o. Metcalf, 33. Brouwn c. Appleby, 20, 143, 144. Brouwn v. Hill, 144. Br(^wn B. Cattaraugus Mut. Ins. Co., 55, 105, 376. firown t. Chelsea Ins. Co., 603. Brown v. Com. Mut. Ins. Co., 436, 437. Brown r. Kings Co. F. Ins. Co., 93, 347, 551. Brown r. Overbury. 633. Brown p. Quiuey Ins. Co., 78. Brown o. The "Roger "Williams Ins. Co., 412, 490. Brown r. The Royal Ins. Co., 636. Brown t. The Savannah Mut. Ins. Co., 635. Brown u. Williams, 318, 440. Browning v. Morris, 170. Bryant a. Ocean Ins. Co., 254, 386. Bryant r. Poughkeepsie Mut. Ins. Co., 93. Bnckbu v. TJ. S. Annu., Ins., and Trust Co.. 188. Buckley «. Garrett, 155, 156, 166, 475, 478, 507. Buckley v. The Derby Fishing Co., 163. Bufe V. Turner, 368. Buffalo Steam Engine Works v. Sun Mut. Ins. Co., 415, 416, 476, 485, 503. Buffum 0. Bowditch Mut. Ins. Co., 331. BufTum V. Fayette Mut. Ins. Co., 154. Bumstead v. Dividend 3Iut. Ins. Co., 560, 567, 569, 580, 581. Burbank v. Rockingham Ins. Co., 157. Burger v. Farmers' Mut. Ins. Co., 151. Burgess v. Alliance Ins. Co., 631, 633. Burgher b. Columbian Ins. Co., 648. Burnett ». Eufaula Home Ins. Co., 476. Burritt «. The Saratoga Co. Mut. F. Ins. Co., 333, 374, 339, 363, 363, 866. Busk V. The Royal Ex. Assur. Co., 551. Buxendale «. Harvey, 266. Byrne v. Rising Sun Ins. Co., 591. C Caballero b. Home Mut. Ins. Co., 543. Calvert v. Hamilton Mut. Ins. Co., 337. Campbell v. Adams, 37. Campbell n. Charter Oak P. and M. Ins. Co., 298, 575, 576. Campbell «. Hamilton Mut. Ins. Co., 448. Campbell v. Merchants' and Far- mers' Ins. Co., 343, 247, 381. Canfleld b. Westcott, 443. Carbis, Ex parte, 482. Carpenter o. Am. Ins. Co., 334. Carpenter v. Mut. Ins. Co., 131. Carpenter v. The Providence Ins. Co., 41, 57, 401, 463, 489, 619. Carpenters. Washington Ins. Co., 805. Carrington n. Com. F. and M. Ins. Co., 40. Carroll b. Charter Oak Ins. Co., 67, 183, 184, 505, 535. Carruthers v. Sheddon, 400, 405. Carter a. Boehm, 170, 324, 306, 372. Carter v. Humboldt Fire Ins. Co., 268 379 Carter n. Rockett, 408, 487, 492. Gary ». Nagle, 142, 144, 166. XIV TABLE OF CASES. Case V. Hartford F. Ins. Co. , 538, 539, 541, 581. Catlin 1}. Springfield iF. Ins. Co., . 333, 350, 287, 388, 553, 575, 583. Catron v. Tenn. Ins. Co., 307. Cazenove b. British Assurance Co 282 Cerf «. Home Ins. Co., 347. Chaffee v. Cattaraugus Co. Mut. Ins. Co., 376. Cliandler v. Worcester Ins. Co., 551, 553. Charleston Ins. Co. v. Neve, 503, 594. Chase «. Hamilton Mut. Ins. Co., 164, 178, 182, 251, 364, 319, 378, 440. Chase v. Washington Mut. Ins. Co., 121. Church «. Ayres, 444. Citizens' F. Ins. Co. ®. Doll, 413, 508, 576, 569. Citizens' Ins. Co. v. Marsh, 553. Citizens' Ins. Co. v. McLaughlin, 93, 94, 335. City Bank i>. Adams, 417. City Fire Ins. Co. ». Corlies, 538, 543, 549. City Fire Insurance Co. of Hart-' ford V. Mark, 305, 485, 503. City F. Ins. Co. ii. Carrugi, 61. City of Davenport «. Peoria M. Fire Ins. Co., 73, 119, 130, 139. City of Worcester ». Worcester Mut. F. Ins. Co., 253. Clapp V, Union Mut. F. Ins. Co., 331. Clark v. Blything, 403. Clark 1). City of Washington, 177. Clark B. Firemens' Ins. Co., 383. Clark V. Hamilton Mut. Ins. Co., 43, 233, 370. Clark V. Inhabitants of the Hun- dred, 556. Clark V. Manufacturers' Ins. Co., 170, 355, 362, 365, 370, 515. Clark V. New Eng. Mut. Ins. Co., 57, 234, 383, 465, 557, 563, 567, 594. Clark V. Eussell, 119. Clark V. Union Mut. F. Ins. Co. 381, 360. Clinton b. Hope Ins. Co., 74, 108, 335, 236, 245, 386, 389, 414. Colburn v. Lansing, 108, 888, 638. Coles 1). Ins. Co., 36. Collett ®. Morrison, 102. Collins V. Charlestown Mut. Ins. Co., 91, 329. Columbia Ins. Co. «. Cooper, 19, 112, 315, 333, 309, 380, 603. Columbia Ins. Co. v. Lavfrence, 323, 263, 305, 308, 396, 407, 435, 463, 567, 586, 590. Columbia Ins. Co. v. Stone, 37. Combs ». Hannibal Savings and Ins. Co., 98, 203, 203. Com. Ins. Co. v. Berger, 466. Com. Ins. Co. v. Hallock, 133. Com. Ins. Co. ■». Huckberger, 574. Com. Ins. Co. v. Ives, 115, 210, 221, 246. Com. Ins. Co. i>. Mehlman, 353, 520. Com. Ins. Co. v. Moninger, 233. Com. Ins. Co. ». Sennet, 573, 577, 578, 593, 608, 635, 639. Com. Ins. Co. v. Spankneble, 181, 383, 309, 385, 447, 463, 472. Com. Mut. Marine Ins. Co. v. Union Mut. Ins. Co., 73, 75. Compton V. Jones, 640. Concord Union Mut. F. Ins. Co. V. Woodbury, 396, 401, 403, 410. Conn. Life Ins. Co. v. The N. Y. and N. H. R. R. Co., 556, 648. Conover v. Ins. Co., 196, 333, 447, 643, 647. Conrad «. Atlantic Ins. Co., 415. Converse ». Citizens' Mut. Ins. Co., 395. Cooper V. Curtis, 199. Cooper V. The Farmers' Mut. F. Ins. Co., 104, 436. Cornell v. Le Roy, 564, 566, 590. Cornell «. Milwaukee Mut. F. Ins. Co., 565, 568. Coster «. The Phoenix Ins. Co., 84. Couch V. City F. Ins. Co., 49. Coursin v. Pa. Ins. Co., 377, 568, 600. Courtney ». New York Ins. Co.. 505. Crafts V. Union Mut. F. Ins. Co. . 639. ' Craig v. McHenry, 22, 143. Crawford ». Hunter, 180, 433. Crocker v. People's Mut. F. Ins. Co., 241, 365. Crocker i>. Whitney, 644. Cromie v. Kentucky Mut. Ins. Co., 42, 44. TABLE OF CASKS. XV Crom-svell r. Brooklyn F. Ins. Co., 408, 493, 497, 500. Cropper v. Western Ins. Co., 85. Crowley v. Cohen, 380. Cumberland Valley Mut. Protec- tion Co. «. Douglass, 384, 553. Cumberland Valley Mut. Protec- tion Co. Iut. F. Ins. Co., 450, 478. Dalzell p. Mair, 167. Dana v. Munro, 33, 34, 36. Daniel r. Robinson, 333. Daniels v. Hudson River F. Ins. Co.. 249, 346, 360. Davenport r. X. E. Ins, Co., 337, 371, 307, 333, 436. David 0. Hartford Ins. Co., 59. Davis B. Boardman, 393. Dawes v. N. R. Ins. Co., 195, 586. Day s. Charter Oak F. and M. Ins. Co., 332, 325. Day V. Conway Ins. Co., 267. Dearborn a. Cross, 67. De BoUe v. Pa. Ins. Co., 82. De Forrest v. Fulton F. Ins. Co., 82, 377, 381, 411, 617. De Hahn p. Hartley, 336. Del. Ins. Co. v. Quaker City and Com. Ins. Co., 41, 43. Delonguemare v. The Trades- man's Ins. Co., 92, 283. Dennison v. Thomaston Mut. Ins. Co., 375. 361. Denny v. Conway Stock and Mut. Ins. Co., 248, 349. Desilver v. State Mut. Ins. Co., 236, 569, 601. Devendorf o. Beardsly, 113, 145, 149. Dey 0. Potighkeepsie Mat. Ins. Co., 505. Dickinson v. Phillips, 493. Diehl V. Adams Co. Mut. Ins. Co., 18, 31, 336, 351, 511, 531, 535, 554. Diraismes v. Merchants' Mut. Ins. Co., 144. Dlx V. Mercantile Ins. Co., 475. Dixon V. Sadler, 553. Dobson V. Laud, 398. Dobson «. Sotheby, 85, 263, 345, 534. Dodge Co. Mut. Ins. Co. b. Rogers, 346, 291, 530. Doe V. Laming, 389. Dole V. New England Mut. Mar. Ins. Co., 107. Draper s. Charter Oak Ins. Co., 307, 436. Dreher v. ^tna Ins. Co., 476. Drew v. Clarke, 380. Drinkwater o. London Ass. Co., 549. Duncan v. Sun Ins. Co., 351, 361. Dupin V. Mut. Ins. Co., 550. Durand v. Thouron, 419. Durar v. Hudson Co. Mut. Ins. Co., 196, 197, 483. Button V. N". E. Mut. F. Ins. Co., 439. E Eagle Ins. Co. d. Lafayette Ins. Co., 41. Eastern Railroad Co. v. Relief Ins. Co., 377, 391, 603. Eastern R. R. Co. v. Relief F. Ins. Co., 174. Eaton V. Whiting, 399. Eclipse Ins. Co. o. Shoemer, 349. Edes 0. Hamilton Mut. Ins. Co., 448, 504. Edmonds' Appeal, 106. Edwards v. Baltimore F. Ins. Co., 563, 596. Edwards v. Mut. Safety F. Ins. Co., 44§. Esan V. Mut. Ins. Co. of Albany, ■235. Ela V. French, 180. Eliason v. Hurehaw, 134. Elliott c. Hamilton Mut. Ins. Co., 235, 237, 371, 373, 373, 383. Elliott V. Lycoming Co. M. Ins. Co., 68, 81, 107. Elliott 0. Ryan, 180. XVI TABLE OF OASES. Elliott «. R. B. Ass. Co., 633, 634. Ellis V. Albany F. Ins. Co., 130. Ellis V. Kreutzinger, 409, 499, 500. Ellmaker ». Franklin Ins. Co., 90, 638. Elwell V. Crocker, 35. Embree v. Shideler, 30. Emerson ». Murray, 836. Emery v. Piscataqua F. and M. Ins. Co., 365. Eminence Mut. Ins. Co. v. Jesse, 319, 331. Ennis v. The Harmony F. Ins. Co., 646. Evans v. Trimountain Mut. F. Ins. Co., 539. Evants v. Strode's Adm'r, 98, 380, Everett v. London Assurance, 548. P Pabyan v. U. M. P. Ins. Co., 843. Fairchild v. The L. and L. P. Ins. Co., 44. Palis V. Conway Mut. P. Ins. Co., 319, 383, 335. Fame v. Winans, 398. Farmers' Bank v. Maxwell, 31, 145. Farmers' (The) Ins. and Loan Co. V. Snyder, 375. Farmers' M. P. Ins. Co. v. Mar- shall, 149, 188, 311. Farmers' and Mechanics' Ins. Co. V. Simmons, 346. Payles i>. National Ins. Co., 183. Fell V. McHenry, 80, 81, 143. Perree v. Oxford P. and L. Ins. Co., 483. Ferris «. N. Am. P. Ins. Co., 643. Field V. N. Y. Central R. R., 546. Findley v. The Lycoming Mut. Ins. Co., 475, 477. Finney v. The Fairhaven Ins. Co., 176, 434. Finney ». The New Bedford Com. Ins. Co., 177, 307, 417. Fire Association v. Williamson, 336, 331, 353, 554. Fire and Mar. Ins. Co. of Wheel- ing 1). Morrison, 439, 439. F. and M. Ins. Co. v. Chestnut, 175, 196, 383, 636. Fire Mut. Ins. Co. v. The Mayor of New York, 18. Firemen's Ins. Co. v. Ely, 141. First Baptist Society «. Brooklyn Ins. Co., 133. First N. Bank, etc. ■». Ina. Co. of N. A., 335, 343. Pish V. Cottenet, 73, 75, 137, 451. Fishers. Deibert's Adm'r, 97, 393. Fitzgerald v. Caldwell, 633. Fitzsimmons®. City Fire Ins. Co., 46. Flanagan v. The Camden Mut. Ins. Co., 641. Fletchers. Com. Ins. Co., 305, 308, 431, 433. Flint ». Ohio Ins. Co., 140, 153. Florence v. Adams, 311. Fogg V. Griffin, 178. Fogg ®. Middlesex F. Ins. Co., 483, 485, 489, 491, 641. Folsom V. Belnap Co. Mut. P. Ins. Co., 447, 644. Forbes v. Agawam Ins. Co. , 57, 809. Forbush v. Western Mass. Ins. Co., 53, 386.' Foster ®. Equitable F. Ins. Co., 413, 504, 619. Foster v. Essex Bank, 553. Foundry v. Dart, 164. Fowlers, ^tnalns. Co., 859, 361. Fowler v. The N. Y. Indemnity Ins. Co., 377. Fowler v. Palmer, 399. Fox V. Phoenix Ins. Co., 396, 397, 405. Francis v. Butler Mut. F. Ins. Co., 507. Francis v. Ins. Co., 530, 567. Franklin s. Atlantic Ins. Co. 99, 156, 305, 317, 603. Franklin v. The National Ins. Co., 490. Franklin Fire Ins. Co. d. Brock, 336. Franklin Fire Ins. Co. v. Coates, 366, 305, 379, 600. Franklin Fire Ins. Co. v. Drake', 383. Franklin Fire Ins. Co. v. Findlay, 465. •' Franklin Fire Ins. Co. v. Hamill, 576, 638. Franklin Fire Ins. Co. ■». Massev. 187. Franklin Fire Ins. Co. v. Upde- graff, 85, 335, 572, 582. TABLE OF CASES. XVll Franklin F. Ins. Co. v. Chicago Ice Co., 385, 533, 594, 599. , Friedlander v. London Ass. Co., 88. Friesmuth r. Agawam Mut. F. Ins. Co., 170. 331. Frick T. Hampden Ins. Co., 488, 480, 491, 645. Frisbie !'. Fayette Mut. Ins. Co., 327, 033, 293. Frost c. Saratoga Co. Mut. Ins. Co., 144, 166, 275, 437, 438, 444. Fry f. Fry, 180. Fuller F. Boston F. Ins. Co., 69, 70. 77. Fuller V. "Wilson, 178. Fulton Bank v. N. Y. Sharon Canal Co., 301. Fulton V. Lancaster Ins. Co., 170. G Gahagan o. Union Mut. Ins. Co., 333. Gale V. Belnap, 57. Gale V. Ins. Co., 49, 58. Gales p. Hailman, 403. Gamwell v. Merchants' and Far- mers' Mut. F. Ins. Co., 284. Garcelon v. Hampden F. Ins. Co., 349, 251. Gardiner v. Piscataquis Mut. F. Ins. Co., 29, 526. Gates «j. The Madison Co. ilutual Ins. Co., 270, 274, 284, 285,304, 362, 363, 373, 515, 520, 553. Gavlord v. Lamar F. Ins. Co., 312. Gen. Int. Ins. Co. v. Ruggles, 135. General Ins. Co. v. United States Ins. Co., 164. Gilbert v. Xbrth Am. F. Ins. Co., 398, 446. Girard F. Ins. Co. n. Stephenson, 93, 206, 378, 283, 335, 361, 374, .514, 515, 533. Glen V. Lewis, 326, 511, 514, 529, 530. Glendale Woollen Co. o. Protec- tion Ins. Co., 105, 107, 223,226. Globe Ins. Co. v. Boyle, 98, 389, 390, 594. Gloucester Man. Co. u. Howard Ins. Co., 134, 188, 231. Goddard v. Monitor Ins. Co., 361. Godin i\ London Ins. Co., 499. Goit V. ISI^ational Prot. Ins. Co., 156, 159, 164, 167, 504. Goldstone v. Osborn, 578. Goodall ». N. E. Mut. F. Ins. Co., 119, 413. Gooden v. AmoskeagF. Ins. Co., 636. Goodman v. Harvey, 553. Goodwin v. U. S. A.n. and Life Ins. Co., 195, 197. . Gordon v. F. and M. Ins. Co., 378, 415, 430. Goss V. Citizens' Ins. Co., 83, 84. Gottsman v. Penn. Ins. Co., 331. Gould V. XoTk Co. Mut. F. Ins. Co., 234, 308, 339, 331, 373. Goulstone «. The Royal Ins. Co., 384, 634. Graif ■». Simmons, 143. Granger ». The Howard Ins. Co., 640. Grant v. iEtna Ins. Co., 609 Grant v. Howard Ins. Co., 347, 514, 515, 534. Grant ». Lexington Ins. Co., 600, 636. Graves v. Boston M. I. Co., 97, 98, 391. Graves v. Washington M. Ins. Co., 594. Great Western Ins. Co. v. Staaden, 597, 598. Grevemeyer®. Northern Mut. Ins. Co., 430, 442. Grosvenor ». The Atlantic F. Ins. Co. of Brooklyn, 404, 488, 503, 646. Haauson v. Oliverson, 176. Hackney v. Alleghany Mut. Ins. Co., 18, 149, 177, 178. Hagerdon v. Oliverson, 419. Hale a. Mechanic's Mut. F. Ins. Co., 160, 485, 489, 490, 503, 641. Hale V. Union Ins. Co., 58. Halev ». Dorchester Mut. F. Ins. Co"., 391. Hall ffl. People's Ins. Co., 245, 260, 280, 281, 303. Hall V. Railroad Co., 402, 556. Hallock V. Ins. Co., 118, 128, 135, 153, 156, 159, 165. XVIU TABLE OF CASES. Hamilton a. Lycoming Ins. Co., 73, 116, 118, 119, 133, 180, 131. Hamilton Mut. Ins. Co. ». Hobart, 31. Hannings v. Chenango Mut. Ins. Co., 394. Hardy «. Union Mut. Ins. Co., 57, 359, 270, 383, 363. Hare v. People's Mut. F. Ins. Co., 513. Harkins ■».. Hamilton Mut. Ins. Co., 639. ' Harkins v. Quincy Mut. F. Ins. Co., 561. Harmony v. Bingham, 578. Harper «. The Albany Mut. Ins. Co., 83, 93, 93,96,34?. Harper i>. N. Y. City Ins. Co., 83, 93, 93, 335. Harris B. The Columbian Ins. Co., 104, 315, 351, 533. Harris v. Eagle P. Ins. Co., 81, 616. Harris ®. Ohio Ins. Co., 44, 50, 51. Harris v. Phoenix Ins. Co., 635. Harris v. Protection Ins. Co., 585. Harris v. York Mut. Ins. Co., 383, 384, 549. Harrison v. City F. Ins. Co., 399. Hart V. Achilles, 33. Hart V. Western R. R. Co., 403, 547, 556, 648. Hartford F. Ins. Co. v. Ross, 475. Hartford Fire Ins. Co. v. Wilcox, 73, 180, 183. Hartford Protection Ins. Co. v. Harmer, 305, 333. Hastie v. De Peyster, 38, 39, 40. Hathorn v. Qermania Ins. Co., 171. Haverhill Ins. Co. v. Prescott, 139. . Hawkes v. Dodge Co. Mut. Ins. Co., 395. Hayes v. Jones, 169. Hay ward v. Liverpool and London F. & L. Ins. Co., 543, 543. Hayward «. New England Mut. F. Ins. Co., 307, 436. Hayward «. National Ins. Co., 184. Hayward v. Northwestern Ins. Co., 83. Hazard v. The Franklin Mut. F. Ins. Co., 39, 451. Heaton ». Manhattan F. Ins. Co., 156, 159, 451. Helme ». Phil. Life Ins. Co., 173. Henderson v. The Western M. and F. ins. Co., 608. Henning v. The United States Ins. . Co., 76. Henon v. Peoria Marine and F. Ins. Co., 333,394. Herckenrath «. Am. Mut. Ins. Co., 40, 41. Herkimer v. Rice, 108, 386, 388, 430. Herricka. The Union Mut. F. Ins. Co., 395. Herron v. The Peoria M. and F. Ins. Co., 597. Hewitt v. Franklin Ins. Co., 379. Hide V. Bruce, 838. Hildebrand ». Fogle, 98. Hill V. Cumberland Valley Mut. Protec. Co., 436, 443, 444. Hill V. Lafayette Ins. Co., 374. Hillier v. Alleghany Co. Mut. Ins. Co., 539. Hirsey v. Merrimack Co. Mut. P. Ins. C, 78. Hitchcock V. N. W. Ins. Co., 4,59. Hobbs v. Memphis Ins. Co., 476. Hobby ». Dana, 288. Hodges v. Tenn. M. and F. Ins. Co., 108. Hodgkins v. Montgomery Co. Mut. Ins. Co., "333, 558. Hoffman v. .^tna Ins. Co., 340, 348,468, 469, 580, 584, 609. Hoffman v. The Western M. and P. Ins. Co., 607. Holbrook v. Am. Ins. Co., 65, 66, 378, 400, 408, 463. Hollingsworth v. Germania Ins Co., 171. Holmes v. Charlestown Mut. F Ins. Co., 70, 90, 105, 243. Home Ins. Co. v. Favorite, 99. Hone ». Allen, 143, 144. Hone V. Ballin, 144. Hone 1). Boyd, 143, 144. Hone V. Polger, 144. Hone ». Mutual Safety Ins. Co.. 39. Honore v. Lamar P. Ins. Co., 401. Hood i>. Manhattan P. Ins. Co . 107. Hookset V. Concord R. R. Co., 548. Hooper v. The Hudson River P. Ins. Co., 443, 468, 485. TABLE OF OASES. XIX Hope Mut. Ins. Co. v. Brolaskey, 423. Hope jMut. F. Ins. Co. «. Buck- man, 30, 153. Hougli !'. City F. Ins. Co., 99, 113, 113, 115, 190, 395, 305, 809, 314, 317, 425, 436. Hough 0. People's Ins. Co., 107. Houghton V. Man. Mut. Ins. Co., 250, 353, 253, 257, 360. Howell V. Baltimore Equitable Society, 351, 528, 554. Howitz V. Equitable Ins. Co., 60, 99, 156, 184, 305. Rowland v. Meyer, 196. Howard v. Albany Ins. Co., 377, 476. Howard v. Ky. and Louisville Ins. Co., 304, 520. Howard F. Ins. Co. v. Bruner, 338, 333, 365, 370, 439. Howard F. and M. Ins. Co. ■». Cor- nick, 385. Howland v. Edmonds, 34. Howson o. Hancock, 170. Hoxsie V. The Providence Mut. F. Ins. Co., 451, 503, 503. Hoyt V. Gilman, 170. Hubbard®. Hartford F. Ins. Co., 59. Huckins v. People's Ins. Co., 551, 612,615. Hunt V. Rousmanier, 103. Huntley v. Bucher, 30, 150, 151. Huntley v. Merrill, 149, 155. Huntley 'v. Perry, 30. Hurst's Lessee ». Kirkbride, 393. Hussey v. Farlow, 633. Hutchins v. Cleveland Mut. Ins. Co., 448. Hutchinson v. Western Ins. Co., 184. Hyatt V. Wait, 30, 443, 509. Hyde v. Lynde, 146, 147. Hygum V. .lEtna Ins. Co., 343. Hynds v. Schenectady Co. Mut. Ins. Co., 343. Ide V. Phoenix Ins. Co., 130, 600. Illinois Central Ins. Co. v. Wolf, 143. 111. Mut. F. Ins. Co. V. Fix, 63, 503. 111. M. F. Ins. Co. ». O'Neile, 44, 68. 111. F. Ins. Co. V. Stanton, 19, 193, 443, 646. Independent Ins. Co. v. Agnew, 539. Ingersoll v. Stockbridge and Pitts- field R. R. Co., 547. Inland Ins. and Deposit Co. v. Stauffer, 438, 558, 565,. 593. Inman v. The Western F. Ins. Co., 562, 564, 567, 578. Innes i>. Dunlop, 640. Ins. Co. 1). Chase, 378, 434. Ins. Co. V. Connor, 21. Ins. Co. c.'Qottsman, 333, 336, 436, 487. Ins. Co. V. Harvey, 31, 38, 33. Ins. Co. V. Jarvis, 143. ^ Ins. Co. «. Johnson, 131, 186. Ins. Co. V. Mitchell, 333. Ins. Co. of N. A. V. McDowell, 49, 78, 79, 305, 3l7, 346, 373, 511, 558, 603. Ins. Co. of North America v. Hope, 597, 635. Ins. Co. of Pa. d. Smith, 167. Ins. Co. of Pa. ■». Trask, 493. Ins. Co. V. Southard, 333, 236. Ins. Co. V. Stockbower, 39, 54, 68, 155, 156, 438. Ins. Co. «. Transportation Co., 548, 544. Ins. Co. v. Tweed, 546. Ins. Co. v. Updegraflf, 404, 429, 430, 619. Ins. Co. v. Webster, 120 . Ins. Co. V. Weides, 579, 584. Ins. Co. V. Wilkinson, 303, 381. Ins. Co. V. Woodruff, 305, 319, 378, 398, 401, 631. Iowa State Ins. Co. •». Prosser, 39. Irving ». The Excelsior Fire Ins. Co., 309, 573, 574. Irving V. Richardson, 439. Jackson v. .(Etna Ins. Co., 89, 379. Jackson v. Farmers' Mut. F. Ins. Co., 646. Jackson v. Mass. Ins. Co., 57, 447. Jacobs V. Eagle JIut. F. Ins. Co., 344. XX TABLE or CASES. Jefferson Ins. Co. v. Cotheal, 233, 260, 261, 288, 514. Jenkings v. Chenango Mut. Ins. Co., 288. Jenkins v. Quincy Mut. F. Ins. Co., 322, 323, 333, 399. Jennings v. The Chenango Mut. Ins. Co., 104, 106, 233, 274, 290, 511, 512. Jessel o. The Williamsburg Ins. Co., 640. • Johns V. The Rutgers F. Ins. Co., 249. Johnson v. Berkshire Mut. F. Ins. Co., 551, 553. Jolly V. Baltimore Equitable So- ciety, 514. Jones V. The Fireman's Fund Ins. Co., 356, 358. Jones Man. Co. v. Man. Mut. F. lus. Co., 232, 251, 514, 519, 524. Jones V. Maine M. F. Ins. Co., 62. Joyce i>. Maine Ins. Co., 384, 511, 522, 524. K Keane v. Brandon, 179, 180. Heeler ■». Niagara F. Ins. Co., 475, 478, 491. Keenan v. Dubuque Mut. F. Ins. Co., 156. ^ Keenan v. Mo. State Mut. Ins. Co., 150, 200, 201. Keith V. Quincy Mut. F. Ins. Co., 298. Kelly B. Commonwealth Ins. Co., 131, 183, 139, 140. Kelly V. Home and Croton Ins. Co 355 Kelly's. Troy F. Ins. Co., 202, 281. Kelly V. Worcester Mut. F. Ins. Co., 352, 554. Keniston v. Merrimack Co. Mut. Ins. Co., 541. Kennebec Co. v. Augusta Ins. and Banking Co., 177. Kennedy v. House, 235. Kennedy v. St. Lawrence Mut. Ins. Co., 104, 106, 226, 275, 276. Kern «. South St. Louis Mut. Ins. Co., 523, 534, 536. Kernochan -o. New York Bowery F. Ins. Co., 97, 103, 874, 401, 403, 404, 410, 567, 598. Keim ®. Home Mut. F. and M. Ins. Co., 116. Keith ». Globe Ins. Co., 181, 369, 393. Kenton Ins. Co. v. Shea, 49. Ketcham v. Protection Ins. Co., 590. Kibbe «. Hamilton Mut. Ins. Co., 333 Kill V. Hollisten, 634. Kimball v. ^tna Ins. Co., 354, 286, 288. Kimball «. The Hamilton F. Ins. Co., 595. Kimball v. Howard Ins. Co., 50, 52, 55, 57, 831. King V. State Mut. Ins. Co., 377, 401, 404, 408, 411. Kingsley v. N. E. Mut. F. Ins. Co., 239, 242, 558, 644. Kitts V. Massasoit Ins. Co., 459. Klien ». The Franklin Ins. Co., 576. Kohne d. Ins. Co. of N. Am., 126, 130. Koontz V. Hannibal Savings and Ins. Co., 852. Kunzze v. Am. Ex. F. Ins. Co., 134. Lamatt v. Hudson R. Ins. Co., 110. Lancey v. Phoenix Ins. Co., 108, 477. Lane v. Maine Mut. F. Ins. Co., 466, 467. Langdon v. The New York Equi- table Ins. Co., 388, 289. Laurent ». Chatham F. Ins. Co , 77, 421. Lawrence v. Holyoke Ins. Co.. 503. Lawrence v. Nelson, 145. Lawrence v. St. Mark's F. Ins. Co., 434. Lazarus ». Com. Ins. Co., 398, 430, 443, 509. Leadbetter v. ^tna Ins. Co . 586. ■' Leary v. Blanchard, 199. Leathers v. Farmers' Ins. Co . 58 822, 828. ' Lee V. Adsit, 108, 179. TABLE OP CASES. XXI Lee ('. Ho-ward F. Ins. Co., 104. lOG, 109, 114, 831, 336, 343, 351, 511, 514, 533. Legsett B. Ins. Co., 343. Le Roy ». The Market F. Ins. Co., •234. Le Roy v. The Park F. Ins. Co., 336. Lewis p. Monmoath Mut. F. Ins. Co., 601. Lewis D. Springfield F. and M. Ins. Co., 87, 548. Lexington Ins. Co. p. Paver, 361. Liberty Hall Association v. Hou- satonic Mut. F. Ins. Co., 24.5, 248. Liddle v. Market F. Ins. Co., 49. Liebenstien v. jEtna Ins. Co., 87. Liebenstien v. Baltic Ins. Co., 86. Liebenstien v. Metropolitan Ins. Co., 86. Lightboy v. !N"orth Am. Ins. Co., 120, 127, 174, 17.1. 189. Lindeman v. Desborougb, 361, 363. Lindsay v. Union Mut. Ins. Co., 251. Liscomc. Boston Mut. F. Ins. Co., 604. Lister v. TVebb, 144. Locke V. North Am. Ins. Co., 360, 430, 436. Loehner v. Home Mut. Ins. Co., 302, 332, 332. London Ass. Co. v. Sainbury, 648. London and Northwestern R. R. Co. V. Glyn, 380. Longhurst s. Star Ins. Co., 379, 637. Long Pond Co. v. Houghton, 33, 149. Lorillard F. Ins. Co. v. McCul- loch, 24.i, 291, 312, 425. Loring v. ilanuf. Ins. Co., 456, 480, 485, 488, 491, 503, 645. Loud u. Citizens' Mut. Ins. Co., 226. Lounsbury v. Protection Ins. Co., 339 3.51, 511, 575. Lovejoy v. Augusta Mut. Ins. Co., 331. Lowell V. Essex M. F. Ins. Co., 440. Lowell V. Middlesex F. Ins. Co., 317, 318, 435,436,440,643. Lucas v. Jefferson Ins. Co., 42, 46. Lnce V. Dorchester Ins. Co., 78, 283. Lucena v. Crawford, 37, 379, 396, 400, 419. Ludwig V. The Jersey City Ins. Co., 74. Luling V. Atlantic Mut. Ins. Co., 623. Lungstrauss v. German Ins. Co., 164. Lycoming Ins. Co. v. Mitchell, 68, 77, 155, 310, 336, 327, 337, 501. Lycoming Ins. Co. v. Schaffer, 561, 569, 577, 578, 640. Lycoming Mut. Ins. Co. v. Sailer, 98, 335. Lycoming Co. M. Ins. Co. v. Schollenberger, 155, 156, 166, 192, 571, 587. Lycoming Co. M. Ins. Co. v. Updegraff, 87, 560, 581. Lynch v. Dalzall, 376, 386, 481, 482. Lynn v. Burgoyne, 139, 144. Lyon V. Com. Ins. Co., 300, 373. M Jlacarty v. Com. Ins. Co., 383. Macomber ji. Howard F. Ins. Co., 336, 343, 4.54, 601. Macomber v. The Cambridge Mut. F. Ins. Co., 489. Mactier v. Frith, 134. Malleable Iron Works v. PhcEnix Ins. Co., 112, 181, 365. Mancius v. Sergeant, 443. JEanhattan Ins. Co. ». "Webster, 99, 332, 391, 392. Manley v. Ins. Co. of North Am., 505. Manlove v. Bender, 30. Manlove ». Naw, 29. Mann v. The Herkimer Co. Mut. Ins. Co., 643. Marblehead Co. v. Allen, 34. Marblehead Ins. Co. v. Allen, 39, 134, 135. Marblehead Ins. Co. a. Under- wood, 32, 148. Marcliesseau v. The Merchants' Ins. Co. of N. 0., 007. Marks v. Hamilton, 378. Marland v. Royal Ins. Co., 116, 133. xxu TABLE OP CASES. Marsh ». Northwestern Ins. Co., 167, 490. Marshall v. Ins. Co., 324, 343, 346, 381, 307, 319. Marshall v. Qridley, 107. Maryland F. Ins. Co. v. White- ford, 349. Mason «. Harvey, 573, 578, 580, 581. Mason v. Sainsbury, 556, 648. Masters v. Madison Co. Mut. Ins. Co., 370, 443. Mayor of New York v. Brooklyn F. Ins. Co., 284, 287, 290, 347, 423. Mayor of New York v. Exchange Fire Ins. Co., 348, 424. Mayor of New York v. Hamilton Ins. Co., 343, 347, 416, 636, 637. McOullough V. Eagle Ins. Co., 130. ■ McDonald v. Adm'r of Black, 396. McEvers v. Lawrence, 195. McEwen v. Montgomery Co. Mut. Ins. Co., 231. McGivney v. Phoenix Ins. Co., 425. Mclntire v. Norwich Ins. Co., 475. Mclntire v. Preston, 141, 143. McLaren v. Hartford P. Ins. Co., 449. McLaughlin «. Washington Co. ■M. Ins. Co., 580, 585. McMastersD. Westchester Co. Ins. Co., 438, 574. McMustin v. Ins. Co. of N. A., 48. Mead «. N. W. Ins. Co., 294, 352, 353, 354, 511, 554. Meadowcraft v. Standard Fire Ins. Co., 206. Melledge ». Boston Ins. Co., 197. Mellen o. The Franklin F. Ins. Co., 497. Mer.'and Man. Mut. Ins. Co. ii. Washington Mut. Ins. Co., 346, 361, 363, 372. Merchants' Ins. Co. ». Edmond, 107. Merchants' and Manuf. Ins. Co. V. Curran, 358. Merchants' Mut. Ins. Co. v. Leeds. 144. Merri'am v. Middlesex Mut. F. Ins. Co., 515. Merrick v. Germania F. Ins. Co.. 44. Merrill v. Farmers' and Mechan- ics' Mut. F. Ins. Co., 319. Michael v. Mut. Ins. Co., 335. Mildmay «. Folgham, 386. Miles i>. Com. Ins. Co., 226. Millandou v. New Orleans Ins. Co., 543, 634. Millandou v. Atlantic Ins. Co., 578. Miller v. The Hamilton F. Ins. Co., 505. Miller v. The Western Farmers' Mut. Ins. Co., 304, 372. Miltonberger v. Beacom, 380, 418, 419, 431, 434. Miss! Mut. Ins. Co. «. Ingram, 605. Missouri F. and M. Ins. Co. v. Spore, 36. Mitchell V. Lycoming Mut. Ins. Co., 18, 68, 155, 186. Mitchell !). Mut. Ins. Co. of Nash- ville, 167. Mix V. Hotchldss, 398, 403. M. and M. Ins. Co. ®. Washing- ton Ins. Co., 93, 96. Moadinger «. Mechanics' F. Ins. Co., 87, 88. Mobile Marine Dock and M. Ins. Co. V. McMillan, 73. Moliere v. Pa. F. Ins. Co., 97, 114. Monmouth M. F. Ins. Co. v. Lowell, 36. Montgomery v. "Firemen's Ins. Co., 543. Moore v. Protection Ins. Co., 343. 345. Morgan i). Mather, 75. Morrell v. Irving F. Ins. Co., 628, 631. Morris v. Summer!, 180. Morris v. Rockingham Ins. Co., 645. ' Morrison v. Middlesex Mut. F. Ins. Co., 531. Morrison v. Tennessee M. and F Ins. Co., 305, 459, 461. Motteaux v. London Ass. Co., 97, 102. Mound City P. and M. Ins. Co. v. Curran, 150, 182, 198, 442. ' Mt. Vernon Manuf. Co. ■». Summit Co. Mut. F. Ins. Co., 450. Mulrey v. Shawmut Mut. F. Ins Co., 160, 161, 168, 313. > TABLE OF CASES. XXUl Murdock «. Chenango Co. Miit. Ins. Co., 33G, 355, 375, 394,476, 511, 530. Murgatroyd «. Crawford, 373. Murray v. Columbian Ins. Co., 391. Mutual Ins. Co. in Bait. Co. ». Deale, 319, 330, 485. Mut. Safety Ins. Co. ■». Hone, 46, 50, 57. Mussey v. Atlas Mut. Ins. Co., 51. Myers u. Keystone Mut. Life Ins. Co., 136. Mygatt V. K. T. Prot. Ins. Co., 153. N Nash ■». Union Mut. Ins. Co., 36. National Bank 'd. Norton, 311. National F. Ins. Co. ». Crane, 49, 490. National Mut. F. Ins. Co. «. Teo- mans, 20. Nave 0. Home Mut. Ins. Co., 551. Neale v. Keid, 408. Neely v. Onondaga Mut. Ins. Co., 30, 150. N. E. Fire and M. Ins. Co. v. Schettler, 49, 55, 57, 113, 321. N. E. Fire and M. Ins. Co. v. Wet- more, 340, 284, 388, 394, 503, 511, 641. N. E. Mut. F. Ins. Co. b. Belknap, 21, 82, 34. N. E. Mut. F. Ins. Co. e. Butler, 31, 146, 343. N. H. Mut. F. Ins. Co. ti. Rand, 38. N. J. Central Ins. Co. ■». Nat. Prot. Ins. Co., 40. Nelson «. Cowing, 113, 199. Nelson v. Eaton, 145. Neptune Ins. Co. ■». Robinson, 552. Neve v. Columbian Ins. Co., 63. Neville «. Mer. and Man. Ins. Co., 134. Nevins ®. Rockingham F. Ins. Co., 566, 633, 634. New Castle Ins. Co. ■». Macmoran, 338, 361, 361, 512. Newhall v. Union Mut. F. Ins. Co., 258, 426, 439. Newmark v. London and Liver- pool F. and L. Ins. Co., 540, 577. N. Y. Bowery F. Ins. Co. v. New York Fire Ins. Co., 38, 39, 369. New York Central Ins. Co. v. Watson, 59, 76, 184. N. Y. Central Ins. Co. v. National Prot. Ins. Co., 40, 156, 157, 167, 174, 183, 211, 562, 563. N. Y. Equitable Ins. Co. v. Lang- don, 343. N. Y. Fireman's Ins. Co. v. Ely, 129. New York State Marine Ins. Co. v. Protection Ins. Co., 39, 40, 44. Niagara Fire Ins. Co. ■». DeGrafF, 335, 342, 355, 358. Niblo v. North Am. F. Ins. Co., 305, 308, 309, 383, 431, 605. Nichols a. Baxter, 396, 487. Nichols v. Fayette Mut. Ins. Co., 50. Nicolet ». Ins. Co. , 614. NicoU v. Am. Ins. Co., 190, 233. Noonan v. The Hartford F. Ins. Co., 586, 593. Norcross v. Ins. Co., 461, 473. North Am. F. Ins. Co. ». Throop, 90, 105, 110, 112, 303, 238, 369. North Am. Ins. Co. s. Whipple, 97. North Berwick Co. v. N. E. Fire and M. Ins. Co., 156, 157, 185, 375. Norton v. Rensselaer and S. Ins. Co., 580 North Western Ins. Co. «. The Phcenix Oil and Candle Co., 635. Norwich F. Ins. Co. ■». Boomer, 400, 410. Norwich and N. Y. Transporta- tion Co. v. Western Mass. Ins. Co., 583, 594. Norwood, Ex parte, 38. Noyes v. Canfleld, 98. Noyes ®. Ins. Co., 568, 600. Nute V. Hamilton Mut. Ins. Co., 637. O Oakman v. Dorchester Mut. F. Ins. Co., 395, 433. Obermeyero. Globe Mut. Ins. Co., 57. XXIV TABLE OF CASES. Ocean Ins. Co. «. Carrington, 134. Ogden V. Andre, 35. Ogden V. East Kiver Ins. Co., 44, 54, 72. Ogden V. Eaymond, 35. Ohio Mut. Ins. Co., v. Marietta Woollen Factory, 153. Oliver v. Mut. Com. Mar. Ins. Co., 103, 103, 176, 179. Olmstead i). jEtna Live Stock Ins. Co., 113. O'Neil V. Buffalo Ins. Co., 368, 384, 388, 393, 513, 534, 569, 589, 591, 594. Oriental Bank «. Tremont Ins. Co., 633. Orrell v. Hampden F. Ins. Co., 474. Owen V. Farmers' Joint Stock Ins. Co., 578, 593. Owen V. Pendry, 153. Pacific Insurance Co. ■». Catlett, 309. Pacific Mut. Ins. Co. ®. Guss, 84. Paddleford v. Providence Mut. Fire Ins. Co. , 555. Page V. Foster, 458. Page V. Fry, 391. Paine v. Miller, 438. Palm «. Medina Ins. Co., 130, 130. Parker i>. Bridgeport Ins. Co., 241, 365. Parkers. Eagle F. Ins. Co., 636. Parks ». General Interest Assur. Co., 617. Parry v. Ashley, 387. Patrick v. Ins. Co., 558, 562, 567, 568, 593, 685. Fatten.®. Ins. Co., 112, 823, 326. Pawson u. Watson, 339. Peacock v. The N. Y. Life Ins. Co., 595. Pechner v. The Phcenix Ins. Co. , 185. Peck V. New London Mut. Ins. Co., 99, 114, 183, 317, 394. Penn. Ins. Co. v. Gottsman, 436, 437. Pennsylvania R. R. Co. v. Kern, 546. " Pentz V. Receiver ^tua Ins. Co., 588, 542. People V. Resolute F. Ins. Co . 503. People's Ins. Co. v. Allen, 34. People's Ins. Co. ». Spencer, 95, 306, 535, 537. People's Ins. Co. v. Babbitt, 35. People's Ins. Co. v. Kuhn, 844. Peoria Ins. Co. ■». Frost, 556, 648. Peoria M. and F. Ins. Co. v. Botts, 171. Peoria Mar. and F. Ins. Co. v. Anapow, 45. Peoria Mar. and F. Ins. Co. v. Hall, 156, 307, 333, 858, 393, 393, 635. Peoria Mar. and F. Ins. Co. «. Hervey, 641. Peoria Mar. and F. Ins. Co. v. Lewis, 78, 86, 89, 156, 338, 563, 568. Peoria Mar. and F. Ins. Co. v. , 'Perkins, 268. Peoria Mar. and F. Ins. Co. v. Whitehill, 588, 594, 635, 636. Peoria Mar. and F. Ins. Co. «. Wilson, 610. Perkins «. Washington Ins. Co., 130, 139, 131, 164, 174. Perley v. Eastern R. R. Co., 547. Perrin e. The Protection Ins. Co. , 543. Perry v. Merchants' Ins. Co., 505. Perry Co. Ins. Co. «. Stewart, 363, 439, 443, 514, 515, 519, 532. Perry B. The Lorillard F. Ins. Co., 479. Peters v. Warren Ins. Co., 538. Phelps 1). Gebhard F. Ins. Co., 386, 459. Phila. F. and L. Ins. Co. v. Mills, 466. Phila. Ins. Co. v. Washington Ins. Co., 37. Philbrook v. New England Mut. Ins. Co., 57, 333. Philips V. Knox Co. Mut. Ins. Co., 323, 334, 433. Philips v. Merrimack Mut. F. Ins Co., 488, 616, 641, 644. Phillips ffl. Protection Ins. Co., 558, 569, 583, 588, 598, 594. Phoenix Ins. Co. v. Cochran, 553, 604. ' ' Phojnix Ins. Co. v. Favorite, 89. Phoenix Fire Ins. Co. v. Qurnee, 103, 103, 261. TABLE OF CASES. XXV Pha?mx Ins. Co. v. Lawrence, 194, 331,458,465,472. Phoenix Ins. Co. v. Taylor, 343, 601. Pirn V. Reed, 517, 539. Pindar v. Continental Ins. Co., 336. Pindar v. Kings Co. Ins. Co., 93, 96, 335, 343. Pindar v. Resolute F. Ins. Co., 337, 339. Pindon v. Am. Mut. Ins. Co., 62, Pinkham v. Morang, 319, 333, 324. Pitney v. Glen's Falls Ins. Co., 6'4, 105, 597. Plahto V. Merchants' and Manuf. Ins. Co., 198. Plumb V. Cattaraugus Mut. Ins. Co., 99, 105, 113, 203, 303, 204, 309. Pollard V. Somerset Mut. F. Ins. Co., 447. Porter v. Nelson, 458. Post 1). ^tna Ins. Co., 74, 75, 131, 133, 139, 156, 160, 184, 591, 593, 594. Post?). Hampshire Mut. Ins. Co., 71, 616. Potter V. Ontario and Livingston M. Ins. Co., 443. " Powers ■». Ocean Ins. Co., 439, 450. Pratt «. The N. Y. Central Ins. Co., 133, 413, 453. Prieger v. Exchange Mut. Ins. Co., 347, 361. Priest V. Citizens' Mut. Ins. Co., 160, 343. Protection Ins. Co. v. Hall, 338. Protection Ins. Co. ii. Harmer, 237, 353, 307, 361, 362, 594. Protection Ins. Co. ■». Pherson, 589. Protection Ins. Co. v. Wilson, 642. Providence F. and M. Ins. Co. v. Murphy, 20. Providence Life Ins. Co. v. Fen- nell, 167. Putnam v. >Iercantile Mut. Ins. Co., 377, 379. R RaflFerty v. The New Brunswick F. Ins. Co., 288, 343. Rathburn v. CityF. Ins. Co., 155, 358. Real Estate M. P. Ins. Co. v. Roessle, 133. Reaper City Ins. Co. v. Brennan, 317. Reese v. Mut. Benefit Life Ins. Co., 376. Reynolds v. Com. F. Ins. Co., 85, 337, 358. Reynolds «. Mut. F. Ins. Co., 144, 480. Reynolds b. The State Mut. Ins. Co., 311, 435. Rex V. Ins. Co., 361, 401,457, 466, 614. Reed v. Lukens, 439. Rhinehart «. The Alleghany Co. M. Ins. Co., 150. Rhodes v. Railway Pass. Ins. Co. , 73. Rice V. Bird, 326. Rice V. Tower, 465, 473. Richards v. Protection Ins. Co., 336, 339, 340, 515. Richmondville Seminary®. Hamil- ton Mut. Ins. Co., 237, 371, 383. Riddlesburger «. Hartford Ins. Co., 635. Ripley «. The ^tna Ins. Co., 104, 333, 335, 635, 637, 645. Rising Sun Ins. Co. v. Slaughter, 57. Bitter v. Sun Mut. Ins. Co., 523. Rix V. Mut. Ins. Co., 565. Roberts v. Chenango Co. Mut. Ins. Co., 336. Robertson «. French, 84. Robinson v. Ins. Co., 515. Robinson v. N. Y. Ins. Co., 379. Robinson «. Tourney, 108, 103. Rockingham Mut. Fire Ins. Co. v. Barker, 556, 648. Rogers v. The Traders' Ins. Co., 415, 418. Rollins V. Columbian Ins. Co., 447, 641. Roots V. Gin. Ins. Co., 43. Ross V. Western R. R. Co., 547. Roth V. City Ins. Co., 335. Roumage v. Ins. Co., 558, 586. Routh V. Thompson, 176, 419. Rowley v. The Empire Ins. Co. , 48, 99, 105, 113, 156, 303, 303, 319, 535. Russell V. Marine Ins. Co., 379. Russell V. Southard, 398. Ryan v. N. Y. Central R. R., 546, 547. XXVI TABLE OF OASES. S Sadler's Co. v. Budcock, 376, 483. SaflFord d. Wykoflf, 163. Salvin «. James, 169. Sanborn ». Firemen's Ins. Co., 73, 131. Sanders v. Hillsborougli Ins. Co., 418, 458, 459. Sanders v. Winship, 398. Sandford «. Hardy, 113, 199. Sandford v. The Trust F. Ins. Co., 138, 165. Sands o. Ale Brewing Co., 408, 500. Sands ». Hill, 39. Sands v. Ins. Co., 83. Sands «. St. John, 36. Sanford v. Mechanics' Mut. F. Ins. Co.^ 555. Sarsfield v. Metropolitan Ins. Co. , 368, 290. Satterthwait v. Mut. Benef. Ins. Ass., 863, 365, 867. Savage v. Howard Ins. Co., 107, 390, 458, '459. Savage v. Medbury, 23, 36, 26, 34. Sayles «. North Western Ins. Co., 328, 379. Schenck ». Mercer Co. Mut. F. Ins. Co., 536, 568, 567. Schmidt e. Peoria M. and F. Ins. Co., 329, 511,513, 519, 533. Schroeder v. Keystone Ins. Co., 637. Scott V. Avery, 638. Scott «. The Phcenix Ins. Co., 586. Scott ». The Quebec F. Ins. Co. , 261. Scripture v. Lowell Manuf. F. Ins. Co., 587, 542. Seamans v. Loring, 379. Security Ins. Co. v. Fay, 49, 67, 68, 184, 603. Security BKre Ins. Co. v. Kentucky M. and F. Ins. Co., 73. Sexton V. Montgomery Mut. Ins. Co., 221, 237, 277, 516, 517, 529, 575, 576, 577. Shaw V. jEtna Ins. Co., 381. Shaw V. Robberds, 534, 551, 552. Shaw V. St. Lawrence Co. Mut. Ins. Co., 333, 334. Shawmut Mut. F. Ins. Co. v. Thomas, 213. Shearman v. The Niagara Falls Ins. Co., 181, 283, 413, 443, 535. Sheldon v. Atlantic F. and M. Ins. Co., 156, 158, 163, 167, 184. Sheldon v. Conn. Mut. Life Ins. Co., 164, 182, 188, 189. Sheldon v. Hartford F. Ins. Co., 105, 336. Shepperd v. Union Mutual F. Ins. Co., 343, 449, 640, 645, 646. Shotwell V. Jefferson Ins. Co., 439, 445, 446, 497, 498. Sillem V. Thornton, 515, 518. Simpson v. Accidental Death Ins. Co., 169. Simpson «. Pa. F. Ins. Co., 54. Sims V. State Ins. Co., 91, 137, 586, 587, 591. Singleton v. Boone Co. Home M. Ins. Co., 607. Siter, James & Co.'s Appeal, 439. Siter V. Morrs, 379. Smith D. Bowditch Mut. F. Ins. Co., 318, 440. Smith V. Empire Ins. Co., 318, 319, 331. Smith V. Haverhill Mut. F. Ins. Co., 568. Smith V. Ins. Co., 106, 338, 358, 400, 405, 406. Smith ». The London and S. W. B. R. Co., 548. Smith «. Mech. and Trad. Ins. Co., 388, 390, 304, 513, 513. Smith V. Packard, 409, 410. Smith e. Saratoga Mut. F. Ins. Co., 460, 461, 483. Snyder ®. The Farmers' Ins. and Loan Co., 333, 236. Sohier v. Norwich F. Ins. Co., 538. Solms J). Rutgers Fire Ins. Co., 105, 508. Somers v. Atheneum F. Ass. Co., 387. Soys B. Merchants' Ins. Co., 383. Spitzer v. St. Marks Ins. Co., 49. Spring Garden Ins. Co. v. Evans, 595. Spring Garden Ins. Co. ■». Scott, 98. Springfield F. and M. Ins. Co. v. Allen, 107, 401. Springfield Ins. Co. v. Brown, 377. Staoey «. Franklin Ins. Co., 44, 50, 57. Stanley i>. "Western Ins.- Co., 95, 539, 545. TABLE OF OASES. XXVU State Mutual F. Ins. Co.«. Arthur, 106, 223, 237, 333. State Mutual F. Ins. Co. ■». Rob- erts, 508. State Mut. F. Ins. Co. ■». John Roland, 558. Stebbens v. Globe Ins. Co., 333, 278, 287, 304, 514, 515, 530. Stedwin v. Anderson, 108. Steele v. Franklin Ins. Co., 381, 416. Steinbach v. Ins. Co., 341. Stephens v. 111. Mut. Fire Ins. Co. , 407, 408. Sterling v. Mercantile Mut. Ins. Co., 148. Stetson ». Mass. Mut. F. Ins. Co., 260, 458, 459, 514, 519. Stimpson v. Monmouth Mut. F. Ins. Co., 558, 641. St. John v. Am. Mut. F. and M. Ins. Co., 542, 543, 544. St. Louis Ins. Co. v. Glasgow, 551. St. Louis Mut. F. Ins. Co. v. Boecliler, 146, 147, 148. St. Louis Mht. F. Ins. Co. v. Kyle, 563, 563, 567. Stocking V. Fairchild, 236. Stokes V. Cox, 515, 518, 527. Storer v. Elliott F. Ins. Co., 43, 97. Stout «. Fire Ins. Co. of New Haven, 501. Stout V. Royal Ins. Co., 43. Strong®. Man. Ins. Co., 305,407, 435, 436, 465. Suffolk F. Ins. Co. v. Boyden, 401. Susquehanna Ins. Co. v. Perrine, 105, 217, 279. Sussex Co. Mut. Ins. Co. v. Wood- ruff, 308. Suydam v. Columbus Ins. Co., 131. Swamscot Machine Co. v. Part- ridge, 623, 630. Sweeny ■». Franklin Fire Ins. Co., 482. Swift B. "Vermont Mut. F. Ins. Co., 820, 398. Sykes «. Perry Co. Mut. F. Ins. Co., 527. T Taintor v. Keys, 397. Tallman v. The Atlantic Ins. Co., 48, 443, 474. Tapping v. Bickford, 197. Tarleton v. Stainforth, 169. Tate ». Citizens' Mut. Ins. Co., 193, 647. Tayloe v. The Merchants' F. Ins. Co., 123, 130, 134, 135, 155, 437, 438, 573, 593, 594, 599. Tesson v. Atlantic Mut. Ins. Co., 360. Thayer v. Middlesex Mut. F. Ins. Co., 133 Thomas v. Vonkaff, 408, 487. Thompson v. Emory, 689. Thornton v. Enterprise Ins. Co. 405 Thurston v. Murray, 578. Tibbitts V. The Hamilton Mutual Ins. Co., 203, 227, 259, 273, 373. Tillou V. The Kingston Mutual Ins. Co., 255, 475, 503. Tilton «. Hamilton F. Ins. Co., 539. Tittemore v. Mut. F. Ins. Co., 458. Tohey v. Russell, 35. Toland v. Manuf. Ins. Co., 634. Townsend ®. Northwestern Ins. Co., 331, 533. Traders' Mut. F. Ins. Co. v. Stone, 35. Traders' Ins. Co. v. Roberts, 396, 50S. Trask v. The State Ins. Co., 558, 563, 567, 568. Treadway v. Hamilton Mut. Ins. Co., 318, 333, 625, 438. Trench v. The Chenango Co. M. Ins. Co.,333, 335, 237, 276. Troy F. Ins. Co. v. Carpenter, 198. Truettell v. Barandon, 199. Trull V. Roxbury Mut. F. Ins. Co., 77, 80, 639. Trull «. Skinner, 326. « Trumbull «. The Portage Co. Mut. Ins. Co., 426, 443. Trustees of Baptist Church «. Brooklyn Ins. Co., 73, 74, 119, 133, 156, 159, 163. Tuckerman v. Bigler, 144, 166. Tuckerman d. Brown, 38. Turley v. North Am. Ins. Co., 228, 588, 590. Turner v. Burrows, 418, 419. Tuttle V. Robinson, 29, 156, 157. XXVIU TABLE OF OASES. Tyler ii. Mtna, Ins. Co., 48, 56, 305, 306. Tyrie v. Fletcher, 170. U ■Underbill v. Agawam Ins. Co., 243, 353, 563, 567, 594, 604. Union Ins. Co. ■«. Groom, 543. Union Ins. Co. i). Hoge, 152. Union Mut. Ins. Co. v. Com. Ins. Co., 131. Upton «. Pratt, 31. U. S. F. and M. Ins. Co. of Balti- more V. Kimberley, 388, 392, 393, 511, 513. U. S. V. Fisher, 415. U. S. 11. Hove, 415. Utica Ins. Co. i>. Toledo Ins. Co., 211. Van Deusen v. Charter Oak F. and M. Ins. Co., 474. Van Valkenberg «. Lenox F. Ins. Co., 173. ' Vavasour ». Ormand, 239. Veale v. Germania Ins. Co., 603. Vemon v. Smith, 408. Viall V. Genesee Mut. Ins. Co., 166, 437. Vogel «. People's Mut. F. Ins. Co., 329, 343, 473. Von Bories «. The United L. F. and Mut. Ins. Co., 61. Vose V. Eagle Life and Health Ins. Co., 309, 271. Vose V. The Hamilton Ins. Co., 44. W f Wadsworth v. Davis, 147. Walden v. Louisiana Ins. Co., 369, 371. Walker ii. Metropolitan Ins. Co., 126, 189, 598. Wall «. East River Mut. Ins. Co., 268, 288. Wall V. Howard Ins. Co., 224, 326, 283, 356. Wallace «. Ins. Co., 624. Wallingford v. Home Mut. F. and Marine Ins. Co., 122. Walters ii. Louisville Merchants' Ins. Co., 538, 542, 552. Waring «. The Indemnity F. Ins. Co., 381, 430. Warner v. Peoria M. and F. Ins. Co., 269. Warner «. Middlesex Mut. Ass. lus. Co., 322, 323. Wash. F. Ins. Co. v. Kelley, 396, 401, 444. Washington Ins. Co. v- Davison, 48, 49, 350, 515, 533. Washington Mut. Ins. Co. v. The Merchants' and Manuf. Mut. Ins. Co., 85, 90, 93, 226, 522. Waters v. Allen, 170. Webbers. Eastern R. R. Co., 523. Weed V. Boston and Salem Ice Co., 473. Welcome v. People's Equitable Mut. P. Ins. Co., 571, 576. Wells 1). Archer, 499. Wells, F. & Co. V. Pacific Ins. Co., 85. West Branch Ins. Co. v. Helfen- stein, 284, 398, 466, 467, 468, 470, 496, 504, 505, 558, 561. Western Mass. Ins. Co. «. DuflFey, 75. Western Mass. Ins. Co. v. Riker, 68, 184, 464. Westfall V. The Hudson River F. Ins. Co., 353. Wheeler v. Field, 55. Wheeling Ins. Co. ■». Morrison, 487. Whitaker ». Farmers' Union Ins. Co., 118. White v. Brown, 398, 407. White ». Haight, 23. White ■». Hudson River Ins. Co., 484. White V. Madison, 192, 380. White ». Mut. F. Ins. Co., 551. Whitehurst ii. Fay Mut. Ins. Co., 553. Whitemarsh v. Charter Oak Ins. Co., 336, 343. Whitwell V. The Putnam F. Ins. Co., 54, 110. Wightman v. Western M. and F. Ins. Co., 573. Wilber v. Bowditcb Mut. F. Ins. Co., 333, 334, 337. Wilkinson ii. Coverdale, 179. Williams ». Albany City Ins. Co., 169. TABLE OP CASES. XXIX Williams ■». Babcock, 149. Williams v. New England Mut. P. Ins. Co., 70, 323, 333. Williams ». Roger Williams Ins. Co., 878, 400. Willis V. Boston Ins. Co., 605, 611. Wilmarth v. Crawford, 141. Wilson V. Conway Fire Ins. Co., 317, 249, 250, 251. Wilson V. Genesee Mut. Ins. Co., 186, 475. Wilson V. Hampden Fire Ins. Co. , 283. Wilson v. Herkimer Co. Mut. Ins. Co., 277, 378, 331. Wilson V. Hill, 396, 413, 442, 490, 504, 640, 644. Wilson V. Trumbull M. P. Ins. Co., 28, 39, 166. Wing V. Harvey, 188. Winnesheik v. Holzgrave, 107, 133. Witherell «. Maine Ins. Co., 334, 337, 540. Wolfe -D. Security F. Ins. Co., 443, 469, 470. Wolfe ». The Howard Ins. Co., 610. Wood V. The Hartford F. Ins. Co., 339. Wood V. The Northwestern Ins. Co., 437. Wood V. Poughkeepsie Mut. Ins. Co., 156. Woodbury Savings Bank jj. Char- ter Oak Ins. Co., 107, 108, 109, 113, 181, 315, 435. Woodfin V. The Asheville M. Ins. Co., 571. Woods D. Atlantic Mut. Ins. Co., 259, 264. Woolmer v. MuUman, 511. Worcester Bank v. Hartford P. Ins. Co., 55. Worcester ». Worcester Ins. Co., 352, 554. Work V. Merchants' and Farmers' Mut. P. Ins. Co., 419. Workman v. Ins. Co., 85. Works 1). Farmers' Mut. F. Ins. Co., 567, 571. Worsley v. Wood, 573, 586. Worthington v. Bearse, 450, 458. Wright V. Sun P. Ins. Office, 605. Wustam V. City P. Ins. Co., 399. Wymann v. People's Equity Ins. Co., 585, 595. Wyman v. Prosser, 386, 388. Wyman v. Wyman, 387, 388, 638. X Xenos V. Wickham, 118, 490. Yates V. Whyte, 648. Yonkers and New York Ins. Co. B. Hoffman Ins. Co., 38, 39, 269, 577. York Co. M. P. Ins. Co. «. Tur- ner, 147. Young D. Eagle P. Ins. Co., 479. FIRE INSURANCE. FIRE INSURANCE. CHAPTER I. 1. Definitions. premises does not discharge de- 2. Insurers. posit note. 3. Member of mutual company 8. Alienation of the insured pre- estopped to deny validity of its mises discharges deposit note, un- charter. less, etc. 4. Deposit notes. 9. Agent of the company can- 5. Premium note cannot be not discharge deposit note unless treated as stock note ^without mu- specially authorized. tnal consent. 10. Assessments must be made 6. When liability on deposit in accordance with the charter, note ceases. 11. Assessments made on depo- 7. Destruction of the insured sit notes although policies condi- tionally annulled. Definitions. 1. Insueance against fire is a contract to in- demnify the insured for loss or damage to his property, occasioned by that element, dm-ing a specified period. The contract itself is called a policy, and the consideration of the contract is called the premium. The one party is called the insurer or underwriter, and the other the insured or assured. The thing insured is called the sub- ject of insurance, and the interest which the in- sured has in it is called his insuraile'interest. 2 18 PIEE INSUEANOE. Insurers. 2. Insurers in this country, fire, life, and ma- rine, are almost universally incorporated compa- nies. These companies are of two kinds, mutual and joint stock companies. In joint stock com- panies the capital is limited to the sum mention- ed in the act of incorporation ; in mutual compa- nies it is unlimited, and depends on the amount they may earn and invest for the purposes of their business. The capital, however, in these compa- nies is made up differently. In the former it is made up by the contributions of the members composing them, such capital being commonly divided into shares, of which each member pos- sesses one or more, and which are transferable by the owner; in the latter by deposit -notes,- by the premiums paid on insurances, and by the sums earned in their business. The insured in a mu- tual company becomes by the mere fact of in- surance a member of the company, and is bound, therefore, to take notice of its rules and the authority of its agents.^ Membership, however, does not begin till the contract is complete and » Fire Mutual Insurance Com- Adams County Mutual Insurance pany v. The Mayor, etc. of New Company, 8 J>. F. Smith, 443 ■ Tork, 8 Barb. 450 ; Hackney Mitchell v. Lycoming Mutual In- «. Alleghany Jffiutual Insurance surance Company, 1 P. F. Smith Company, 4 Barr, 185 ; Diehl v. 403. INSURESIS. 19 the policy has issued.^ As to all preliminary negotiations the agent acts only on behalf of the company.^ 2a. Although a company may be organized on the mutual plan, yet if in pursuance of its charter, insurance is made on a designated property for a definite period, and for a sum certain, without any premium note being given, the insurer does not become a member of the company, and stands in no different relation to it than to a stock com- pany.^ In other words, the character of the con- tract determines whether the insurance is on the stock or mutual plan. Member of a mutual company estopped to deny validity of its charter ; cannot allege the want of insurable interest^ hy-laws in conflict with the charter not binding. 3. A member of a mutual insurance company who has contracted with it as a valid corpora- tion is not in a position to object to the regu- larity of the incorporation or formation of the company. The rule is that a defendant who has contracted with a corporation de facto is never ■ Cumberland Valley Mutual ' Columbia Insurance Company Protection Company v. Schell, 5 s. Cooper, 14 Wr. 331. Casey, 31. ' Illinois Fire Ins. Co. v. Stan- ton, 57 111. 354. 20 I'IKB INSUKAJirCB. permitted to allege any defect in its organiza- tion, as affecting its capacity to contract or sue ; all such objections, if valid, are only available on behalf of the sovereign power of the State/ Nor will the member of a mutual insurance company be permitted to avail himself of the objection that he was not the owner of the pro- perty insured at the time the policy was exe- cuted, and hence that the policy did not take effect, and therefore no liability could attach to his premium note. He is estopped from setting up the want of an insurable interest in a policy, by virtue of which he has become connected as a member of the company, and his deposit note has become a part of the capital of the company, upon the basis of which all assessments are re- quired to be made.^ An assessment may be ■ Sands i). Hill, 42 Barb. 651 ; mutual company there are mutual Fell V. McHenry, 6 Wr. 41. See promises, limited only by the also Hope Mut. Fire Ins. Co. ■». amount of the deposit note. It is Bukman, 47 Mo. 93 ; National upon the strength of these notes Mut. Fire Ins. Co. ■». Teomans, 8 ' that insurances are authorized to R. I. 25 ; Providence Fire and be made. Upon these notes all Mut. Ins. Co. V. Murphy, 8 R. I. assessments are to be made, pro 131 ; Brown «. Appleby, 1 Sandf. rata, to meet losses. Herein is 158. the great difference between these ' N. E. Mutual Fire Insurance deposit notes and the payment of Co. «. Belnap, 9 Cnsh. 140. It a premium to a stock company, might and doubtless would be See also Huntley d. Perry, 38 Barb, otherwise in the case of a stock 571. The decision in this case company; but in the case of a went upon the ground that the INSURERS. 21 made by a mutual insurance company on the whole amount of a deposit note, although' the assured has an insurable interest in a part only of the property covered by the policy.^ On the other hand, when the assured has duly become a member of a mutual insurance company, and the company subsequently mal?e by-laws, without his assent, which are in conflict with the charter, and which would in fact change and impair his rights under his contract, such by-laws are void as to him.* facts -which avoid a policy, may illustrate or reconcile the differ- be treated by the company as ences of decision that are found in voidable only, and if they choose the reports. Carroll e. Charter Oak by their act or agreement to regard Ins. Co., 38 Barb. 403; Diehl v. it as valid after the facts have Adams Co. Mut. Ins. Co., 8 P. F. come to their knowledge they are Smith, 443. at liberty to do so. See also, to ' New England Mutual Fire same effect, Atlantic Ins. Co. ■». Insurance Company v. Belnap, 9 GoodaU, 35 N. H. 338. If a Cush. l4o. policy is absolutely void, it cannot ' Insurance Company «. Har- be made efiEectual by acts consti- vey, 45 N. H. 393 ; New England tuting a waiver; but if, on the Mut. Fire Ins. Co. v. Butler, 34 other hand, it is invalid, or not Me. 351 ; Hamilton Mut. Ins. Co. binding, it is capable of ratification v. Hobart, 3 Gray, 543; Ins. Co. or confirmation by subsequent acts v. Connor, 5 Harris, 136. See also, of the- company ; either directly as to personal liability of directors aflirming it or waiving their ob- arising under statute law, Upton jectione to it. The line of distinc- v. Pratt, 103 Mass. 551 ; Ins. Co. tion is narrow, but it may serve to v. Connor, 5 Harris, 136. 22 FIEE INSURANCE. Deposit notes. 4. When a note is given in the course of the formation of a mutual insurance company, and for the purpose of constituting a part of the capi- tal stock, under the provisions of an! act of As- sembly requiring the capital stock to be not less than a certain amount, the maker of such note is liable for its full amount without regard to whether his pro rata share of losses and expenses would equal or fall short thereof The directors of the company may negotiate such a note, and the holder may enforce payment whether losses have occurred or not.^ 4a. So too when the charter of a company pro- vides that it may receive notes for premiums in advance, of persons who are to receive its policies, and may negotiate such notes for the purpose of paying claims or otherwise in the course of busi- ' A negotiable promissory note the company may make mth the payable absolutely upon its face, maker of such note in respect to its and given to a mutual insurance payment, without the assent or company, may be negotiated by knowledge of the indorsee, will not such company in the usual and or- affect his rights or the rights of a dinary course of business. When lonafide holder of the same. The the company has negotiate^ such Farmers' Bank «. Maxwell, 33 N. note in the usual course of busi- Y. 597 ; see also Craig v. McHen- ness, the title thereto is vested ab- ry, 11 Casey, 130, and Fell ®. solutely in the indorsee ; and any McHenry, 6 Wr. 41. subsequent arrangement which BEPOSIT NOTES. 23 ness, such notes may be negotiated or transferred as collateral security.^ Parties receiving nego- tiable pa^er as collateral security are entitled to be protected as l)ona fide holders, to the same extent and under the same circumstances as parties who become owners of such paper.^ It win be observed, therefore, that there is a wide distinction between the liability of those who give notes to form the capital stock and those who give notes for premiums after the stock is made up and the company brought into existence. The former are liable on their notes irrespective of losses ; the latter class are liable only for the pro rata share of such losses in common with all other available premium notes held by the com- pany.' 45. A capital stock note is, in legal effect, payable on demand and from its date, notwith- standing by its terms payment is to be made at such times and in such proportions as the directors may require. And such note is subject to the statute of limitations and is barred after the' 1 BrookmanB.Metcalf,33N.T. Hart «. Achilles, 28 Barb. 576; 591 Dana v. Munro, 38 Barb. 538; 2 The Bank of N. Y. ■». Van- Tuckerman v. Brown, 33 N. T. derhorst, 32 N. T. 553. 297 ; Savage v. Medbury, 19 N. 5 White v. Haighi, 16 N. Y. 810; Y. 82. 24 FIBE INSUKAKCE. expiration of the limited period.' On the other hand, a premium note is not payable absolutely, or at the mere will of the holder, but is only asses- sable for losses, and there can be no recovery on such note except for an assessment. And in the case of such notcthe statute of limitations only begins to run after an assessment has been made, and with respect to such assessment.^ Premium note cannot he treated as a stock note without mutual consent. 5. An applicant for insurance, however, can- not be made a stockholder, and liable for the full amount of his premium note, when he neither knows that he is assuming such an obligation, nor intends to assume it. Hence when the agent of an insurance company in process of formation applied to "A" and told him he would like to take his application when the company was ready to receive it; that it was not yet organized, but soon would be ; and subsequently the agent in- formed " A" that the company was ready to re- ceive applications, but made no intimation that any liability would be incurred beyond that in- curred by every person insuring in such a com- ' Rowland a. Edmonds, 34 N. « Howland o. Edmonds, supra; Y- 307. Savage «. Med^ury, 19 N. Y. 33. DEPOSIT KOTE8. 25 pany, it was held that the company could not treat the note of "A" as a stock note, and that he was only liable pro rata on his note for any assessments that might be made upon it in the ordinary course of business.^ 5a. But, on the other hand, when a note is in form a premium or deposit note, and payable at such time or times as the directors of the company may require, no recoyery can, ordinarily, be had ' Dana o. Munro, 38 Barb. 258. fore the organization of the com- "I am satisfied," said Mullin, J., pany, it affords ground. for thein- in delivering the opinion of the ference that the note was intended court, "the defendant never in- to be used as a part of its prelimi- tended to become a subscriber for nary capital; and if there is no- the stock of this company ; and I thing in the terms of the note to am also satisfied that if the com- indicate the contrary, this might pany intended that their agents perhaps be sufficient alone to es- should obtain subscriptions, for the tablish the fact. But where the stock in the manner it was done note is not made payable abso- in this instance, they deliberately lutely, nor at any specific time, intended to cheat the persons ap- but "in such portions and at such plying for insurance. A contract time or times as the directors" thus obtained should be declared might, agreeably to their charter, void. To make a valid contract, require, the inference is repelled, the minds ofthe parties must meet. Dana o. Munro, 23 N. Y. R. 564. They must both intend to enter See also Elwell«. Crocker, 4Bosw. into the engagement expressed by 22. In this case Woodruff, J., in the terms of the contract. When delivering the judgment of the this element is wanting, there is court examines very fully the New no contract." Dana v. Munro, York Act of 1847 with regard to supra. When a note is given to the organization of insurance com- a mutual insurance company be- panics. 26 PIRE INSURANCE. on such a note unless it has been duly assessed.'' But it may be alleged and proved that the note, notwithstanding its form, was given and taken as and for a capital stock note, and used as such in organizing the company, and the company may recover the entire amount thereof, without show- ing that it has been assessed ; because such notes are payable absolutely at maturity.^ The ques- tion whether a note given to a mutual insurance company was given as a premium or stock note must be determined by the facts and circum- stances attendant upon its making, and is a question for h jury. When liability on deposit note ceases. 6. The surrender of a policy by the insured, and its cancellation by the insurer, dissolve the relation of the insured as a member of the com- pany, and the company have no further claims upon him, except for unpaid assessments on losses previously made. The premium note is part and parcel of the contract of insurance, and with the policy constitutes the whole of the transaction. One part cannot be cancelled and ' Savage v. Medbury, 19 N. Y. = Sands v. St. John, 34 Barb. . 33; Dana e. Munro, 23 N. T. 638. 564. DEPOSIT NOTES. 27 the other remain in full force, without the con- sent of both parties.^ And where, as the result of a compromise, the policy is cancelled and the premium note given up, a subsequent assessment cannot be made upon such note on account of losses sustained pi'ior to the settlement.^ 6a. And a proposition by the insured, assented to by the agent of the insurer, that he might cancel his policy, paying a pro rata premium, and thereupon receive back his note, is not such an agreement as will exempt the note from liability, in case by an injunction the company's property is seized and held for the benefit of its creditors. The note, in common with its other assets, must be applied in payment of its liabilities. Such an unexecuted agreement to cancel is no defence to an action upon the note.^ Destruction of the insured premises does not discharge deposit note. 7. Where, by the act of incorporation, it is provided that the persons insuring in the com- pany should become members thereof during the ' Campbell v. Adams, 38 Barb. ' Columbia Ins. Co. v. Stpne, 3 133. Allen, 385. 2 Wadsworth «. Davis, 13 Ohio H. H. 133. 28 riEB IKSUEANOE. period they should remain so insured and no longer; and also that every member of the com- pany should be bound to pay for losses in pro- portion to his deposit note ; and that the com- pany should have a lien on the insured premises to the amount of such note, which should con- tinue during his policy; the destruction of the insured premises and the payment of the loss by the company do not sever the relation of assurer and assured. The latter's liability to assessments upon his deposit note continues during the whole time for which the policy issued.^ Alienation of the insured premises discharges deposit note, unless, etc. 8. Ordinarily an alienation of the insured premises dissolves the insured's relation to the company, and terminates his future liability on his deposit note.^ But where it is a condition of ' Banks ». Scidmore, 34 Barb, law wliich declares that alienation 29; S. C, 21 N. Y. 136; N. H. of the property shall, ipso facto Mut. Fire Ins. Co. o. Band, 4 Fost. avoid the policy, is of no con- 428. The decisions in these cases sequeifce ; for such, without it, is depend on the conditions of the the law of the contract. Interest policies ; in other words, upon the in the property insured is an construction put upon the contract essential link in the relation of in- of the parties. surance. It is therefore an inci- ' Wilson V. Trumbull M. F. dent of such relation that it may Ins. Co., 7 Harris, 372. "The by- be dissolved by the insured by DEPOSIT NOTES. 29 the contract, that, upon the occurrence of an event which discharges the insurance, the insured shall parting with liis interest. . . He that Bells his insured property ex- cludes himself from membership, , and from all its liabilities thereafter accruing. And if assessments are made after he ceases to be a mem- ber, the deposit note cannot be used as a means of enforcing them. When he ceases to be a member, his deposit note is thereby cancel- led." Lowry, J., in Wilson v. Trumbull M. F. Ins. Co., awpra; Hazard v. Franklin Fire Ins. Co., 7 R. I. 429. See also Boland v. Whitman, 33 Ind. 64. There are cases which hold, contrary to Wilson ■». Trumbull M. F. Ins. Co., supra, and with great ap- parent force, that when by the acts .of the assured the company may defend against claims for losses, yet the assured is bound "for assessments," as where there has been a misdescription of the insured buildings, or a misrepre- sentation as to the occupation of them, or other insurance fcot as- sented to, or alienation, or want of insurable interest. If the as- sured is a member of the company he is liable to assessments, and he cannot defeat this liability by his own act. But it must appear that he is legally a member of the com- pany, or this liability does not at- tach. Boynton a. Clinton and Essex Mut. Ins. Co., 16 Barb. 254; Philbrook v. New England Mut.Ins.Co.,37Me. ; also Gardiner V. Piscataquis Mut. Fire Ins. Co., 38Me.439. Seenote2,p.30. When the company declare a policy Toid, they do not thereby deprive them- selves of the right to recover the assessments iAera due upon the note given by the assured. The Iowa State Ins. Co. n. Prossee, 11 Iowa, 115. An assessment, however, after forfeiture of the policy, with knowledge of such forfeiture, and for subsequently occurring losses, waives the forfeiture, and re- instates the insurer's liability to indemnify the assured under the policy. Ins. Co. ■». Stockbower, 2 Casey, 199; Sands s. Hill, 43 Barb. 651 ; Tuttle v. Robinson, 83 N. H. 104. In Manlove ». Naw, 39 Indiana R. 289, it was held that a person becoming a member of a mutual insurance company by insuring therein, is liable for his proportionate share of the losses which may occur while he is a member ; that is, for the time during which his policy 30 riRE INSURAN-CE. surrender his policy to the company, to be can- celled, and thereupon shall be entitled to receive his deposit note, upon paying his proportion of all losses and expenses that had accrued prior to such surrender; in such a case the deposit note remains in full force, notwithstanding the sale of the property by the assured, he not having paid the assessments standing against him. Although the policy may be void by reason of the alienation, the insured nevertheless remains liable upon his deposit note, as well for losses occurring after as before the alienation until all assessments are paid.^ The condition is that the policy shall be surrendered, and the liabilities already incurred be paid, and until this condition is complied with, the deposit note stands proprio vigore? runs, aad no longer. It is neces- * In Hyatt, v. Wait, supra, the sary, therefore, to show, among policy provided that the interest of other things, that the losses which the assured in the policy, or in the are to be paid with the money to property insured, was not assign- be collected from-the assessments able without the consent of the occurred during the time the de- insurers in writing ; and that in fendant was a policy holder and a case of any transfer or termination member of the company. See also of such interest without such con- Manlove v. Bender, Id. 371 ; sent, the policy should thenceforth Embree «. Shideler, 36 Ind. 423. be void and of no effect. It was ' Hyatt V. Wait, 37 Barb. 29. also one of the conditions of the See, also, Neely v. Onondaga Mut. insurance that upon the alienation Ins. Co., 7 Hill, 49, and Huntley of the insured property by sale or V. Bucher, 30 Barb. 580. otherwise, the policy should be DEPOSIT KOTE8, 31 Agent of the company cannot discharge deposit note unless specially authorized. 9. A member of a mutual fire insurance com- pany is not discharged from his liability on his surrendered to the directors of the new member into the society. Not company to be cancelled, and one of these conditions had been thereupon, the assured should be complied with The most entitled to receive his deposit note serious diflSculty which the plain- upon the payment of his proper- tiffhastomeetinthecase, appears tion of all losses and expenses to me to arise from the 13th see- that had occurred prior to such tion of the ch3,rter, which is as surrender. The policy not having follows : ' All persons who shall been surrendered, the question insure with the said company, and was whether the assured remained also their heirs, executors, admin- liable on his deposit note. istrators and assigns, so long as Sogeboom, J., in delivering the tJiey shall be insured in said corn- opinion of the court said ; "I ap- pany, shall be and continue mem- prehend the defendants could not bers thereof, and no longer.' It is withdraw from the membership said that the sale of the premises of the company without the plain- insured, without the consent of tiff's consent. The contract was the company, has avoided the mutual and obligatory upon both, policy — ^has prevented a recovery and each had a right to insist on by either of the defendants in case its performance and its obliga- of loss or damage by fire ; and tions. The parties had chosen to that therefore they are no longer agree upon the terms on which a insured, and hence no longer dissolution of the membership members of the company, nor could be had. There were, among liable to contribute for losses in- others, a surrender of the policy, curred. But I think, notwith- a payment of all assessments in standing this section, that they arrears, and a consent on the part are members of the company ; of the company to a parting with that they cannot cease to be mem- theold, and to the introduction of a bers by their own volition, with- 32 FIRE INSUEAIirCE. deposit note, for losses already accrued, by the cancellation of his policy by a general corre- sponding agent of the company, accompanied by a promise to surrender the note, unless he proves the authority of such agent to surrender the note.^ Otherwise the promise of an agent of an insurance company that the company will sur- render a premium note on condition of the payment by the maker of the amount of the assessment made thereon, and the surrender by him of his policy, is without consideration and void.* out complying with the terms of cumstances, be discharged as to the contract, upon which member- future liability, it is not necessary ship is to cease ; that there is at to decide now. In some cases, as least' a qualified membership, for that of alienation, it is directly the purpose of compelling the pay- provided that it may cease, by ment of the deposit note, and all surrendering the policy, and pay- assessments for losses legally im- ing all liabilities up to that time, posed, for the purpose of enforcing So here, it may be that, upon a the obligations of the contract ; surrender of the policy when the and that whether or not they are party found he had insured pro- members of the company in the pertynothisown, andin whichhe strict and technical sense of the had no insurable interest, and paid term, they are not by their own all assessments and liabilities, he wrongful act released from en- might from that time be dis- gagements which they have un- charged." dertaken to fulfil." ' Marblehead Insurance Com- In New England Mut. F. Ins. pany lo. Underwood, 3 Gray, 310. Co. a. Belnap, 8f Cush. 140, Bewey, « Sands v. Insurance Company, J., said: "Whether such deposit 43 Barb. 651. notes may not, under certain cir- DEPOSIT NOTES. 33 Assessments on the notes of the memhers must he in accordance with the charter of the company. 10. When the charter of an insurance company provides for different classes, in one or other of which the property of the assured shall be em- braced ; and also that the premium notes of each class shall be held and assessed to pay the losses occurring only in its respective class, an assess- ment which includes losses and expenses properly chargeable to the first class, cannot be enforced against members of the second or any other class. The directors must settle and determine the sums to be paid by the members of the several classes ; and an assessment which includes expenses and liabiUties incurred before the assured became a member of the company is invalid as against him.^ The burden is on the insurer to show that an assessment made against the assuri^d is an assessment to which he is legally liable.^ Ordi- ' Insurance Company v. Har- by the directors, and for this pur- vey, 45 N. H. 293 ; Long Pond pose to produce proper evidence Company ». Houghton, 6 Gray, of their act of incorporation and ^i}'^ by-laws, so that it might appear 2 Atlantic Company «. Fitzpa- that their provisions had been trick, 3 Gray, 379. "The plain- substantially complied with in tiffs, in order to maintain this making the assessments." By the action, were bound to show that Court, Atlantic Co. v. Fitzpatriok, legal assessments had been made supra. 3 34 FIEE INSUKANOE. narily, however, substantial accuracy in making assessments is sufficient.^ And the record of losses kept by a mutual insurance company is sufficient prima facie evidence that such losses have occurred, in a suit to recover assessments.^ 10a. But the mere passage of a resolution by the bo^rd of directors making an assessment is not sufficient to show a right to recover. The defendant is not liable at the mere discretion of the directors. They must show that payment of the assessment is necessary to meet losses and expenses. In other words, assessments on pre- mium notes, under a condition that they shall be paid "in such portions and at such times as the directors may, agreeably to their charter and by- laws, require," cannot be made unless the neces- sity therefor properly and legally arises. Hence that losses and expenses have actually occurred must be alleged and proved.^ 106. The directors of a company, in operation, cannot make an excessive assessment on the ' policy holders, and where assessments were made » New England Insurance Com- ' Pacific Mut. Ins. Co. v. Guss, pany®.Belnap,'9Cush.l40;Mar- 49 Mo. 339. See also Bangs v. blehead Company v. AUen, 3 Gray, 3 Kern, 477; Savage ». Gray, 310. Medbury, 19 N. T. 33 ; Bangs v. ^ People's Insurance Company Duckinfleld, 18 N. T. 592. ^ 9. Allen, 10 Gray, 297. BEPOSIT NOTES. 35 for more than double the deficiency to be paid, they were held invalid.^ But a different rule is applied in the case of an insolvent company, closing its business through a receiver. A rate of assessment that would be excessive for a sol- vent company might not be excessive for an in- solvent one.^ "Where a subscription or advance premium note, given,to an insurance company, is duly endorsed, transferred, and delivered by the company, it is no defence that the president of the company endorsed the note without being author- ized by a resolution of the directors, or that the note was obtained from the maker by fraud.^ Assessments may he made on deposit notes although policies conditionally annulled. 11. Where the by-laws of an insurance com- pany authorize the directors upon the payment of assessments becoming delinquent, to recover the whole amount of the premium notes, and at their option annul the policy of insurance; and they accordingly give notice that the policies of ' People's Ins. Co. v. Babbitt, of the State, authorizing assess- 7 Allen, 238 ; Trader's Mut. Fire ments additicAial to those made by Ins. Co. s. Stone, 9 Allen, 485. the company. s .Tobey v. Russell, 9 R. I. 58. ' Ogden v. Andre, 4 Bosw. 583 ; In this case the assessment was Ogden v. Raymond, 3 Abbott's made in pursuance of a decree of Decisions, 397. the Supreme Court, under a statute 36 PiEE ustsueancb. delinquent holders should, after a certain date, and during and until the assessments were paid,- be of no effect, during such conditional annul- ment of their policies the holders are debarred any benefit from their contract, but nevertheless are liable for any subsequent assessments which may be made upon their policies.^ 11a. "Where the charter of a company requires the directors to determine the assessments, and fix the respective portions of losses to be paid by the members, this must be done by the directors, or a majority of their number. A minority has no right to do it. Their charter gives no such authority to the minority, and the directors can- not legally delegate such authority to them. Assessments made by the minority, in such case, are invalid and cannot be recovered.^ ' Coles o. Insurance Company, Nash v. Union Mut..Ins. Co., 43 18 Iowa, 435 ; Bangs v. Mcintosh, Me. 343. 23 Barb. 591 ; Missouri F. & M. 2 Monmouth Mut. Fire Ins. Co. Ins. Co. V. Spore, 33 Mo. 36 ; v. Lowell, 59 Maine, 504. CHAPTER IL 1. Ee-insurance. 5. First insurer no claim on re- 2. Primitive insurer must dis- insurer. close character of the insured. 6. Double insurance. 3. Proof of loss ; extent of re- 7. Effect of consolidating two insurer's liability. stocks of goods, each being in- 4. Effect of the insolvency of sured. the re-assured. 8. Ko contribution for excess paid by co-insurers. Me-insurance. 1. The first insurer, to relieve himself in whole or part from the risks he has undertaken, often re-insures with other underwriters j the liability to pay losses which he has incurred by his in- surance gives him an insurable interest in, the subject matter, and thus enables him to devolve the burden of his liability upon others, called re- insurers. Ee-insurance is but a modification of the contract of insurance, and, like that, operates not on the risk but on the thing insured.^ The ' Lucena s. Crawford, 3 Bos. surable interest in every portion & Pull. 75 ; Phila. Ins. Co. ■». of his risk, which by re-insurance Washington Ins. Co., 11 Harris, he throws on another." Wood- 250. The first insurer may re- ward, J., in Phila. Ins. Company insure the whole or a part of the v. Washington Ins. Co. , 11 Harris, risk he has undertaken. "Be- 250. In other words, the re-in- cause the greater contains the less, surance need not be for the same the whole the part, he has an in- specific risk insured against in the 38 FIBB INSUEANOB, re-insured may not only coyer the amount he has insured in his re-insurance, but the premium also which he pays to the re-insurer. Primitive insurer must disclose character of the insured. 2. An underwriter, obtaining a policy of re-ih- surance, is bound to communicate such informa- tion as he possesses in reference to the character of the party insured; and if he omit to do so, whether from misapprehension of the probable effect of such communication when made, or from design, and the information be material to the risk or the amount of premium to be charged, the policy of re-insurance will be void.^ Pi^of of loss; extent of re-insurer's liability. 3. The re-insured, in order to recover against the re-insurer, must prove the extent of the loss in the same manner as the original insured must prove it against him.^ The preliminary first policy. Hence, ia marine Fire Ins. Co. v. New York Fire insurance, wWle the original in- Ins. Co., 17 Wendell, 359. surer may jae bound by bis con- ' 17 Wend. 359. tract for any voyage the insured « The Yonkers and New York vessel may make within a period Ins. Co. ■». Hoflfinan Ins. Co., 6 of five months, the re-insurers Robts. (N. Y.)316; Hastie ». De may be bound by their contract Peyster, 3 Caines, 190 ; Ex parte only for one voyage made within Norwood, 3 Bissell, 504. that time. Ibid. N. York Bowery EB-INSUEAKCE. 39 notice and proofs of loss, however, are complied with if the party originally insured gives such notice and proofs to his immediate underwriter, and he forthwith transmits the same to the re- insurers/ Having done this, the re-insurer is bound to pay to the re-assured the whole loss sustained by the subject of insurance. The pri- mitive insurer is entitled to recover, not what he has paid, but all that he ought to pay, or has be- come liable to pay.^ Hence it is not necessary that he should actually have paid the loss to the first insured before proceeding against the re- insurer.^ Effect of the insolvency of the re-assured. 4. Indeed, if the first insurer should become insolvent, and should on a compromise with his creditors pay only a certain percentage of the loss sustained by the insured, the re-in- ' New York Bowery Fire Ins. amount for which he is re-assured, Co. B. New York Fire Ins. Co., without regard to the circumstance supra; The Yonkers & New York that the re-assured may have pro- Ins. Co. B.Hoffman Ins.Co., sM^ra. cured an abatement from the first ■ 2 Hone D. Mut. Safety Ins. Co., insured, or maybe unable in con- 1 Sandf 137. sequence of bankruptcy to pay the 2 Hone B. Mut. Safety Ins. Co., latter in full. Emerigon, tome 1, supra; Mutual Safety Ins. Co. «. p. 347-350. • New York State Ma- Hone, 3 Comst. 335. Emerigon rine Ins. Co. ». Protection Ins. says that in case of loss the re- Co., 1 Story, 458 ; Hastie v. De insurer is held to pay the whole Peyster, supra. 40 riRE INSUEANOE. surer nevertheless is bound to pay to the re-as- sured the full amount of such re-assurance,^ And he is also liable to the insurer for the costs and expenses incurred in defending a suit brought by the party originally insured, although the ground of this liability, upon the face of the contract, is not very clear.^ The first insurer no claim on re-insurer. •5. The first insurer has no claim on the re- insurer; there is no contract, no privity between them. And if the primitive insurer becomes insolvent, the person originally insured has no equitable lien or preferable claim upon the sum due from the re-insurer. That belongs to all the creditors of the insolvent underwriter ratably. From the nature of the contract of re-insurance, and the want of privity between the re-insurer and the first insured, it does not come within the ' Herckenrath «. Am. Mut. Ins. assurers were adjudged to pay Co., 3 Barb. Ch. R. 63; Carring- their proportion of the costs and ton «. Com. F. & M. Ins. Co., 1 expenses, including the fees of the Bosw. 153. attorneys and counsel employed 2 In New York State Mar. Ins. in the defence. 1 Am. on Ins. ' Co. V. Protection Ins. Co., supra, 389 ; New "York State Marine Ins. Story, J., has fully stated the Co.e. Protection Ins. Co,,' 1 Story, grounds on which the re-insurer, 458 ; Hastie v. De Peyster, supra; in his opinion, is liable for costs N. Y. Central Ins. Co. ». National and expenses in a suit against the Prot. Ins. Co., 30 Barb. 468. first insurer. In this case the. re- EK-INSUEANCE. 41 rule that the principal creditor, in equity, is en- titled to the benefit of all counter bonds and col- lateral securities given by the principal debtor to his surety.' On the other hand, the re-insurers are entitled to make the same defence that the original insurers could make to the policy, and if the oi'iginal insurer is not liable on the policy, he cannot recover against the re-insurer.^ For in that case he had no insurable interest.' ' Herckenrath v. American Mut. for by the terms of the policy of Ins. Co., 3 Barb. Ch. R. 63. re-insurance, their liabilities are 2 New York State Marine Ins. to be bounded in all things by the Co. V. Protection Ins. Co., 1 Story, terms of the original policy. This 458 ; Eagle Ins. Co. ». Lafayette incorporates into the policy of re- Ins. Co., 9 Ind. 443. In the lat- insurance, the six months' limita- ter case, Perkins, J., said: "In tion clause, as between the origi- determining what defences might nal and re-insurers." In this case be made by the original insurers, it was held that the original in- we look at the case as it stands at surers could not avail themselves the time when the re-insurers are in defence, of a clause in the first sued, except as to the fact of pay- policy requiring suit to be brought ment by the original insurers, within' six months after the loss ; Where they have not paid nor that such stipulation was void. Al- adjusted the losses, and the case though this is in accordance with stands between them and the ori- the current of decisions in Indiana, ginal assured upon the terms of it is opposed by the later and more the policy and the facts connected authoritative exposition of the law with the loss, at the time the re- elsewhere, insurers are sued, we think the ' Carpenter v. The Providence re-insurers should be permitted to Ins. Co., 16 Peters, 495 ; Del. Ins. make every defence the original Co. ■». Quaker City and Com." Ins. insurers could then make. Espe- Co., 3 Grant's Cases, 71. "In cially should it be bo in this case ; the case of a technical total loss, 42' • I'lEE IN"SUEAN"OB. DmMe insurance. 6. "When the assured makes two or more insur- ances on the same subject, the same risk, and the same interest, it is called douhle insurance^ but in case of loss the assured cannot recover a double satisfaction. The object of insurance being in- demnity, the party insured can only recover the real amount of his loss, and if he recovers from one insurer- the whole of his loss, that insurer may compel the other insurers to contribute their ratable proportion,^ As, to constitute a case of double insurance, the risks must be on the same property, and the liability must be precisely the same, it follows that if the insured takes policies upon different parts of the same building, or of the merchandise within the building, or upon different interests in both, it is not a case of double insurance.^ For by the abandonment the salvage Bead, J., in Del. Ins. Co. i>. Qua- passes to the insurer, and accord- ker City and Com. Ins. Co., 3 ing to its value reduces practically Grant's Cases, 71. the amount to be paid by the un- i Lucas v. Jefferson Ins. Co., 6 derwriter, and the re-insurer in Cowan, 635 ; .aitna Ins. Co. o. settling with the insurer is thereby Tyler, 16 Wend. 385; Cromie v. entitled to this credit whatever it Kentucky Mut. Ins. Co., 18 B. maybe. The re-insurer has there- Monroe, 433. fore a deep interest in the disposi- ^ Roots v. Cin. Ins. Co., 1 Dis- tion of the salvage, and has a- ney's R. 138; Clark v. Hamilton right to ask that it should be pru- Mut. Ins. Co., 9 Gray, 148. dently and carefully managed." DOUBLE IKSURANCE. 43 example, where insurance is effected on a stock of goods in a building described in a policy, and insurance is also effected in another company upon a stock of merchandise " in the chambers" of the same building, parol proof is admissible in a suit on the last policy to show that the goods in the chambers were not intended to be included in the first policy, and hence that it is not a case of double insurance, and that the insurers on the second policy ai-e liable for the whole loss ; and cannot avail themselves of the clause restricting their liability to a ratable share of the amount insured.^ Nor, it seems, is it a case of double insurance, where the policy in one company covers the building, and a subsequent policy in another company covers the building and machinery, tools, etc., and stock.^ ' Storer«. Elliott Fire Ins. Co., parent contradiction of the case 45 Me. 175. cited in the text, 13 Wright, 14, to 2 Stout V. Royal Ins. Co., 13 be a case of double insurance, and Wr. 14. Where there are general the general and special policies policies against loss by fire of all must contribute ratably in paying the property described and em- the loss on the property specifically braced within certain specified insured, and covered by both limits ; and specific policies insur- classes of policies, and this not- ing portions of the same property withstanding a clause in the gene- within parts of the buildings, and ral policies as follows : "If, at the on portions of property designed happening of any fire, the assured for special use, within said specified ahall have insurance under a float- limits, it was held by the Supreme ing policy or policies, not specific, Court of Pennsylvania, and in ap- but covering goods generally in 44 PIRB INSTJKAlirOB. Mffed of consolidating two stocks of goods with insurance on each. 7. In Vose v. The Hamilton Insurance Com- pany/ it appeared that the goods in store liTo. 148, after removal thereto of goods from store iN'o. 146, were one consolidated stock, not kept separate, but replenished from time to time up to various places not designated, and ciflc policies covering the same yet within limits which indude property, Angelrodt v. Del. Ins. the propei-ty herein insured, such Co. , 31 Mo. 593 ; Blake ®. Exch. policy, as between the assured and Mut. Ins. Co., 13 Gray, 345; this company, shall be considered Fairchild v. The L. & L. F. Ins. as covering' any excess of sound Co., 51 N. Y. 65 ; Ogden v. East value of the subject insured be- River Ins. Co., 50 N. Y. 388 ; yond the amount covered by the and Cromie v. Kentucky Mut. specific insurances thereon; and Ins. Co., 15 B. Monroe, 483, to determine the amount for which where it was treated as double in- this company is liable in case of surance and ratable contribution loss, such floating pplicy shall be although some of the policies considered an insurance on the covered other property as well as property to the extent of such ex- the specific property, the subject cess." Merrick ». Germania Fire of all the insurances. Ins. Co., 4 P. F. Smith, 377. This And in Harris v. Ohio Ins. Co., clause was not held to mean that 5 Ohio, 467, it was held a case of thq general policies should contri- double insurance, although one bute to the excess not covered by policy was on the goods, and the the specific policies, but ratably on other on the store and goods. See the actual loss. It was treated as also 11 Upper Canada, Q. B. 516, obscure, and was virtually disre- 111. M. P. Ins. Co. s. O'Neile, 13 garded as unmeaning so far as the 111. 89 ; Stacey v. Franklin Ins. case before the court was con- Co., 3 Watts and Serg. 506. cerned. ' 39 Barb. 303. See, also, as to general and spe- DOUBLE INSURAITCE. 45 the fire. On the goods in ]^o. 148 there was an in- surance in one company ; on those in No. 146 an insurance in another company. From the time the two stocks were united there was a double insur- ance.^ The two policies attached to the consoli- dated stock, and to the goods brought in from time to time to replenish it. The policy on the goods in JSTo. 146 contained this condition, that " in case any other policy of insurance has been or shall be issued covering the whole or any part of the property insured by this company," the said policy shall be void unless there has been notice to and consent by the company. It was contended that the removal of the goods from 'No. 146 to No. 148 created additional insurance in violation of this condition, and inasmuch as the company had given no consent and received no notice of the insurance on the goods in No. 148, although consenting to the consolidation of the two stocks, they were discharged. . But the court, while conceding that it was a close question, held that they were liable, notwithstanding the above recited clause.^ ' See also Peoria Mar. and F. and the court held that if there Ins. Co. V. Anapow, 45 111. 86. was either double insurance, by 2 In Peoria Mar. & F. Ins. Co. ». the union of the goods, or fraud, Anapow, supra, there was a con- the insured could not recover, solidation of two stocks, the same "The question in this case," said as in the case of Vose «i. Hamilton, the court, "is, whether the Ana- 46 FIEE IFSUEANCE. 2fo contribution foi^ excess paid by co-insurers. 8. "When all the policies on the property of the insured contain the usual clause, that only a rata- ble proportion shall be paid by each insurer, this does not give an insurer who pays more than his due proportion, a claim for contribution against his co-insurers. He must in such a case seek his remedy against the insured for the excess paid him, and he cannot call upon the other com- panies to contribute. All the companies must pay their ratable proportion, and although some of them may pay more than their proportion and the insured thus receive more than his loss, the companies thus paying an excess can only have recourse to the insured.^ pow tobacco did, upon its pur- for the jury, and should have chase by Michelson, or at any been submitted to them." time before the fire, become a ' Fitzsimmons «. City Fire Ins. part of his stock and thereby fall Co., 18 Wis. 234 ; Lucas v. Jeffer- under the protection of his policy, son Ins. Co., 6 Cowen, 635 ; Mut. Whether it thus became a part of Safety Ins. Co. ■». Hone, 2 Comst. his stock was a question of fact 235. CHAPTEE III. 1. Other insurance. 9. Effect of invalidity of subse- 2. Insurance effected by a third quent policy. person, etc. 10. When insurer estopped from 3. Effect of written clause per- denying notice. mitting other insurance. 11. Additional insurance on 4. Clause as to amount already goods. insured. 12. Other insurance by assigns 5. Effect of change in the addi- of insured. tional insurance. 13. Waiver of forfeiture arising 7. Whether renewal of policy from other insurance. is obtaining other insurance. 14. Eestrictions upon amount 8. Vendee need not give notice of insurance. of prior insurance by vendor un- less, etc. Other insurance. 1. Policies of fire insurance usually provide against any other insurance by the assiired on the same property, without notice to and consent of the underwriter. ilSTotice is required in order that the latter may know the amount of insurance on the property, and thus be able to determine whether it is prudent longer to take the risk; and also that he may know the extent of his lia- bility, as well as the other underwriters who are to share it with him. The clause, however, requir- ing notice of other insurance relates only to other insurance by the assured himself. Other insur- ance on the same propei-ty by another person is 48 FIRE INSURANCE. no defence, and is not a violation of this provision of the policy/ And if the insurer has actual knowledge of the existence of other insurance at the time he issues his policy, he will not be per- mitted to set up that fact to evade a liability which he has deliberately assumed.^ Nor will he be permitted to say that he had no notice of ' Rowley b. The Empire Ins. amount, and both were altered , Co., 40 N. Y. 557; Tyler v. ^tna in the same particulars before the Ins. Co., 16 Wend. 385; McMus- premiums were paid, which were tin V. Ins. Co. of North America, paid to both companies on the 64 Barb. 536. same day : Held, that the policy ' Rowley v. The Empire Ins. issued by the Maryland Fire In- Co., supra; Tallman v. The At- surance Company was neither lantic Ins. Co. , 40 N. Y. 87. Wash- prior, nor subsequent, to the policy ington Ins. Co. v. Davison, 30 issued by the Washington Fire Md. 93. Insurance Company, but took ef- In Washington Insurance feet contemporaneously with it ; Company «. Davison, supra, it and therefore the non-indorse- appeared that the Washington In- ment in writing on the 'policy surance Company, having been issued by the Washington Fire applied to for insurance on certain Insurance Company, that another property, for its own convenience insurance had been effected in and without the request or au- the Maryland .Fire Insurance thority of the party seeking the Company, did not render the insurance, ' applied to the Mary- former policy void under the pro- land Fire Insurance Company to viso contained therein, that " if share the risk. The premises were any other insurance has been or examined by the secretaries of shall hereafter be made on the the two companies together, with said property" without the consent a view, to taking the risk con- of the company in writing in- jointly; both policies as originally dorsed thereon, the policy shall drawn were precisely similar, of be void, the same date, for the same OTHEE INSURANCE. 49 other insurance when such insurance was made by himself. In such case he had full knowledge of it, and notice from the assured would furnish him with no additional information.^ And if the insured at the time he obtained his policy in- formed the agent of the insurer that he already had other insurance, he will be entitled to re- cover in case of loss notwithstanding the agent neglected to enter it in writing on the policy.^ " Bidwell V. N. W. Ins. Co., 24 260; Liddle v. Market Fire Ins. N. T. 302; Washington Ins. Co. Co., 4 Bosw. (N. T.) 179; Ins. «. Davison, 30 Md. 92 ; Gale v. Co. of N. A. ■». McDoweU, 5Q 111. Ins. Co., 41 N. H. 170. 120. ' N. E. Fire & Mar. Ins. Co., In Couch v. City Fire Ins. Co., 38 HI. 166. (But see Spitzer b. 38 Conn. 181, the charter of the St. Marks Ins. Co., 6 Duer, 7.) company made the policy void The Kenton Ins. Co. v. Shea, 6 "unless such double insurance Bush. (Ky. ) 174. In this case, it shall exist by consent of said •was held that parol notice of other company indorsed upon the policy insurance to the agent of the com- under the hand of the secretary." pany, who communicated such It was held that this provision of notice to the company, and who the charter could not be waived thereupon delivered the policy, by the company, and that it was but without indorsing thereon' not competent for the insured to their assent to the prior insurance, prove the consent of the company was virtually written assent to the double insurance by any thereto. In other words, the de- other evidence than the indorse- livery of the policy, under the ment of such consent on the circumstances stated, was deemed policy under the hand of the see- the written assent required by the retary. This is in accordance terms of the policy. But whether with the Mass. cases. See also so or not, the written assent was Security Ins. Co. v. Fay, 32 Mich, in legal effect waived. National 467, as to power of agents to Fire Ins. Co. v. Crane, 16 Md. waive consent to other insurance. 4 50 FLEE INSUEAXCE. Insurance effected hy a third person, etc. 2. Although the by-laws of the underwriter may provide that "if a previous policy exists and is not disclosed, the policy in this company will be void," yet a previous insurance effected by a third party (who had an interest in the pro- perty) in the name of the assured, but without his knowledge or consent, is not in violation of such provision.^ And the clause in a policy, " other insurance" permitted without notice until required," relates to and covers insurance ex- isting at the date of the policy as well as in- surance effected subsequently.^ And the clause that "persons insuring property at this office must give notice of any other insurance made on their behalf on the same, and cause such other insurance to be indorsed on the policy," applies to subsequent insurance as well as to insurance which had been made prior to the date of the policy.* ' Nichols V. Fayette Mut. Ins. ' Harris v. Ohio Ins. Co., 5 Co., 1 Allen, 63; Acer v. Mer- Ohio, 466; Stacey v. Franklin chants'Ins. Co.,57Barb. 68;Mut. Ins. Co., 3 Watts & Serg. 506. Safety Ins. Co. ■». Hone, 2 N. T. In Stacey b. Franklin Ins. Co., 235- Sogers, J., said: "The second 2 Kimball v. Howard Ins. Co., ground is, that the condition ap- 8 Gray, 33 ; Blake v. Exchange plies to a prior, not a subsequent Mut. Ins. Co., 13 Gray, 365. insurance, and in the absence of OTHER INSURATSrCE. 51 I^ect of written clause permitting other insurance. 3. A clause inserted in writing upon the face of a policy (whose printed provisions required notice of prior and subsequent insurance to be indorsed thereon, otherwise to be void) in these words, "other insurance permitted without notice until required," is applicable as already stated to prior as well as to subsequent insurance, hence a prior policy does not avoid this one. The effect of the written clause is to annul the printed all authority, I should have in- warranties against insurance be- clined to that opinion, because yond this sum ; subsequently two when an insurance company uses of the owners insured their in- ambiguous language, capable of terest in the vessel to the amount different grammatical construe- of $10,000 by two other policies, tions, it should be construed in which latter contained provisions the sense most favorable to the that they should become void if insured. But words precisely any other insurance be made ex- similar in a policy have received ceeding this sum. It was held an interpretation in a sister State ; that the subsequent policies were and as it is desirable that the rules valid and rendered the first two which regulate the commercial in- void. "I agree," said CowsiocA;, tercourse of citizens of the Union, J. , " with the Supreme Court, that should conform to each other as this {sTiall become void if any other nearly as possible, I do not feel insuranee he made which together myself at liberty to depart from with this insurance shall exceed it." Harris ®. Ins. Co., supra, the sum of ten thousand dollars) In Mussey v. Atlas Mut. Ins. Co., relates to subsequent and not to 14 N. T. 79, two policies were ef- prior insurance ; and there being fected on a vessel owned by three none subsequent, it follows that persons for account of owners to the policies are valid." the amount of |11,000, containing 52 FIBE INSURANCE. formula, as to prior and subsequent insurance.^ And where at the time of insurance the insurer writes across the policy, "privilege for $4500 additional .insurance," such indorsement author- izes the insured to effect additional insurance upon the property to that amount, without noti- ■ fying the insurer, notwithstanding a printed clause of the policy requires notice of any addi- tional insurance. The indorsement is equivalent to a declaration that the insurer deemed addi- tional insurance to that amount reasonable, and that it was not necessary to inform him of such insurance, as he would not regard it as a reason for terminating his contract, ol* as a ground for any action or objection.^ Clause as to amount already insured. 4. "When a clause in a subsequent policy re- cites that a certain portion of the amount covered by the contract is insured in another company, and it appears that the prior policy contained a stipulation that in case any subsequent insurance should be made by the assured on the same pro- perty without the assent of the company, signi- fied in writing by the president or secretary, ' Kimball v. Howard Ins. Co., = Benedict v. Ocean Ins. Co., 8 Gray, 33. , 31 N. Y. 389. OTHER INSURANCE. 53 such policy should be void, and such assent not being obtained the prior policy becomes void ; yet the second insurers are liable for the whole amount of any loss.^ The statement in the sub- sequent policy that the premises were then under insurance in another office was true, but this was not a warranty, if a warranty at all, that such insurance should continue so long as the second policy remained in force, or for any time what- ever.^ JB^ect of change in the additional insurance. 5. When the policy provides that notice must be given not only of additional insurance but of all changes in such additional insurance, al- though no change may be made in the aggregate of the sums insured, if there is a material alter- ation in their distribution upon the different subjects of insurance, such alteration must be notified or the insurer is discharged. Thus, where insurance was effected for |10,000, $1000 upon the building, |2000 upon the stock, and $7000 upon the machinery; and afterwards a new policy in lieu of the old was taken out for the same amount, but with changes in its distri- ' Forbusli ■». Western Mass. * Ibid. Ins. Co., 4 Gray, 337. 54 riEE INSUKANCE. bution upon the building, stock, and machinery, of which no notice was given to the other insurer, it was held. that he was thereby discharged. It was not suflacient that he was notified of the amount of the new policy ; he was entitled to notice of the change in its distribution.^ 6. An insurance on merchandise or liquors and spirits held by the insured for sale, covers property of the same description which is sub- stituted for that sold ; and other insurance upon the substituted property is within the condition requiring notice of such insurance, and if other insurance is effected upon a part of the insured property, without the required consent of the insurer, it. invalidates the whole insurance.^ "Where the underwriter has notice of additional insurance, and although not formally giving his assent thereto, yet by his acts, such as collecting assessments, treats the policy as in full force, it will be a waiver of the right to resist a recovery upon that ground. But the implied waiver arising from the acts of the insurer will not de- ' Simpson v. Pa. Fire Ins. Co., when a specific parcel of property 2 Wr. 350. is insured by one policy, and the 2 Wliitwell V. The Putnam Fire same property is covered by an- Ins. Co., 6 Lansing, 166. See,also, other policy, which includes other Ogden «. East River Ins. Co., 50 property also, this constitutes other N. Y. 388, where it was held that insurance. Ante, p. 43, note 3. OTHER IKSUEANOE. 55 prive him of the benefit of a stipulation that in the event of other insurances, only a proportion- ate part of the amount insured should be de- manded on the policy.^ Whether renewal of policy is ohtaining other insurance. 7. The renewal of a policy of insurance is not within the terms or spirit of a subsequent policy which requires notice in ease of making other insurance.^ . Where notice of subsequent insur- ance is required by the terms of the contract, it must be given seasonably, in other words, with reasonable diligence. And what constitutes that is a question of law for the court.^ And notice to the agent of the underwriter of the insured's intention to procure other insurance upon the property, is not a compliance with the stipula- tion which requires actual notice of the subse- quent insurance after it is obtained, and an indorsement of it on the policy, or the under- writer's written acknowledgment t' .reof/ ' Ins. Co. V. Stockbower, 3 * Kimball «. Howard Ins. Co., Casey, 199. tupra ; Worcester Bank v. Hart- 2 Brown o. Cattaraugus Mut. ford Fire Ins. Co., 11 Cusb. 365. Ins. Co., 18 N. T. 385. But see N. B. Fire & Mar. Ins. » Kimball v. Howard Ins. Co., Co. v. Schettler, 38 111. 166. 8 Gray, 33 ; Wheeler v. Field, 6 Met. 295. 56 PIEE INSURANCE. Vendee need not give notice of prior insurance by vendor unless, etc. 8. "Where by the terms of a policy it is pro- vided that in case the assured shall already have any other insurance, not notified, the policy shall be void, and it is declared that in case of any other insurance upon the property, whether prior or subsequent, there shall be only a pro rata re- covery in case of loss, and one of the conditions attached to the policy is, that notice of all pre- vious insurances shall be given at the peril of forfeiting the policy ; in such case, it has been held that the purchaser of a dwelling-house who effected insurance upon it, was not bound to give notice of a previous policy effected by his vendor, unless such previous policy was assigned to him. *• 'No one," said Chancellor "Walworth, " can sup- pose for a moment that these underwriters in- tended to be so unreasonable as to require a per- son insuring with them, under the penalty of a forfeiture of his policy, to give notice of every insurance which any former owner, of the pro- perty might have made thereon, although he had no interest in that insurance, and the rights of the company could not in any way be affected thereby.'" ' Tyler v. ^tna Ins. Co., 16 chants' Ins. Co., 57 Barb. 68, it "Wend. 385. In Acer d. Mer- was a condition of the policy that OTHER INSUEAKCE. 57 .Effect of invalidity of subsequent policy , 9. It is well settled that if the second policy against which the contract stipulates is itself a void one, or one that cannot be enforced, it does not avoid the first, notwithstanding the clause of forfeiture.^ And a temporary over-insurance does not defeat the insured's right of recovery, if the over-insurance had ceased to exist or been waived at the time of the fire.* if the assured or any other person ' Obermeyer ». Globe Mut. Ins. or parties interested should have Co., 43 Mo. 573; Gale ■». Belnap, existing during the continuance 41 N. H. 170 ; Stacey v. Franklin of the policy, any other interest or Ins. Co., 3 Watts & Serg. 514; agreement for insurance (whether Jackson v. Mass. Ins. Co., 33 valid or not), on the insured pro- Pick. 418 ; Philbrpok v. New Eng. perty, not consented to by the Mut. F. Ins. Co., 37 Me. 187; company, etc., then the insurance Clark b. New Eng. Mut. Ins. Co., to be void and of no effect. The 6 Cush. 343 ; Forbes v. Agawam question was, whether the "other Ins. Co., 9 Cush. 470; Hardy «. persons or parties interested," re- Union Mut. Ins. Co., 4 Allen, 217 ; ferred to parties interested in the Rising Sun Ins. Co. a. Slaughter, plaintiff's insurance, or to parties 20 Ind. 520 ; Kimball «. Howard having a different interest in the Ins. Co., 8 Gray, 83. property, from that held and ^ n. e. P. & Mar. Ins. Co. ■». owned by the plaintiff, and who Schettler, 88 111. 166 ; Mitchell v. might obtain insurance upon their Lycoming Mut. Ins. Co., 1 P. F. interests in the same property. It Smith, 403 ; Obermeyer «. Globe was held that the clause was Mut. Ins. Co., stipra. In Car- limited to, and applied only to penter «. Providence Ins. Co., 16 parties of the former class. See, Peters, 495, it was held that where also, Mut. Safety Ins. Co. v. Hone, a policy was procured by mis- 2 N. T. 335. representation, it is not, therefore. 58 PIRB INSURAN-CB, When insurer estopped from denying notice. 10. In a recent case the policy contained a clause which provided, that, if the insured should to be treated as utterly void ab another's loss, only in case he initio. It is merely Toidable, and pleases to do it. " may be avoided upon due proof of In Mitchell ». Lycoming Mat. the facts; but until avoided it Ins. Co., 1 P. F. Smith, 403, must be treated, for all practical Agnew, J., adopts the distinction purposes, as a subsisting policy. which Bell, J., suggests. He Bell, J., in Gale v. Ins. Co., 41 says : "The over-insurance "was N. H. 170, in commenting on attempted to be surmounted by this case, says: "The policy was the alleged invalidity of the sub- neither utterly void, nor was it sequent policies. We think the voidable, in the sense that it was court adopted the proper distinc- a valid and binding contract, and tion — if they were void at the time to be so treated, for all practical of the loss they constituted no purposes, until it was avoided, obstacle ; but if voidable only by On the contrary, it was an instru- reason of some breach of condition ment invalid and inoperative, enabling the insurers to avoid binding upon nobody, until and them, but which they had waived, unless it should be ratified and the over-insurance undoubtedly confirmed by some further act on exists. . None of the cited cases to the part of the assurers, with be looked upon as authority carry knowledge of the facts which the doctrine beyond." cause the invalidity, either by an In Bigler ■». New York Central express assent to be bound, or by Ins. Co., 32 N. Y. 403, it was held some implied waiver of the objec- that procuring subsequent insur- tions. Hale i). Union Ins. Co., 33 ance, where the assured was pro- N. H. 299 ; Leathers v. Farmers' hibited from obtaining other m- Ins. Co., 24 N. H. 363. There is surance without consent of the an intrinsic absurdity In holding insurer, invalidated the policy, that to be an insurance by which and discharged the insurer with- a party is bound to make good out reference to the question OTHEE INSUE4.N-0E. 59 procure any other insurance, and should not with all reasonable diligence giye notice to the com- wlietlier the subsequent insurance and valid, or ultimately held to be was Talid or inralid, void or void- illegal and invalid. The evil they able. "The agreement between intended to guard against, was the parties," sa,iAI>avies, J., "was not to be controlled by that fact, that the policy of the defendants They meant to have the plaintiffs was to cease and be of no further take some risk themselves in refer- eflect if the plaintiffs thereafter ence to the insured property, and ' should make any other insurance this was secured by its not being upon the same property.' It was insured to its full value." See the act of making another insur- also David ■». Hartford Ins. Co., ance which was to vitiate and 13 Iowa, 69 ; Hubbard v. Hartford render null the defendants' policy. Fire Ins. Co., 33 Iowa, 825. In We think it was no answer for the the latter case, it was held that a plaintiffs to make, to allege that breach of the condition as to other the other insurance might legally insurance does not absolutely have been resisted and avoided, render void and of no effect the This was not what the parties had policy ; it simply renders it voida- agreed to. For reasons before ble — its binding force and effect alluded to, the insurer and the being subject to be defeated at the assured agreed that if the latter option of the company issuing the thereafter made any other insur- instruments (but see, contra, N. ance on the property, such act T. Central Ins. Co. v. Watson, should vitiate the policy. We are 33 Mich. 486) ; and that in order not at liberty to make a new con- to avoid a policy on account of a tract for the parties, but to inquire subsequent insurance against an whether that made has, in fact, express condition therein, it must been violated. We can well see appear that such subsequent in- that the defendants did not intend surance is valid, and thatthepolicy to have the validity of their policy upon which it is made is capable tested, or the risk they incurred of being' enforced. If it cannot depend on the question whether be enforced, it is no breach of the the subsequent insurance should prior policy, be finally adjudged to be legal 60 riRE INSUKANCE. pany, and have the same indorsed on the policy or otherwise acknowledged in writing, the policy should cease and be of no further effect. The application was for insurance to the amount often thousand dollars. The agent of the company in- formed the applicant that by the rules of the com- pany it could not take but five thousand dollars . on any one risk, but at the same time offered to procure insurance for the remaining five thousand dollars. This the agent accomplished the next day, and notified the insured, who subsequently paid the premium and received his policy. On this state of facts, it was held to have been the duty of the company, upon being notified by its own agent of the additional insurance, to have in- dorsed the same upon the plaintiff's policy, or to have notified him of the refusal of the risk, and that, having failed to do so, it was estopped from setting up as a defence the failure to have such additional insurance indorsed upon the policy.^ ' Horwitz ». Equitable Ins. Co., void, unless such double insurance 40 Mo. 557. The charter of an subsist -with the consent of the insurance company provided that directors, signified by indorse- " if insurance on any house . . . ment on the back o^ the policy, shall be and subsist in said com- signed by the president and secre- pany, or in any other company , tary." . . at the same time, the insur- In the application for insurance, ance made in and by this com- which was by the mortgagees pany, shall be deemed and become whose mortgage had been pre- OTHER INSUEAKOE. 61 A.dditional insurance on goods. 11. Insurance on goods in a store is not addi- tional insurance under a policy insuring the viously foreclosed, to the question, "Is there any insurance on the property?" the answer was "No." Bell, C. J. — "The erroneous statement in the application did not render the policy void. The defect was not of that class which renders a policy absolutely and incurably void. Its utmost effect was to render it voidable at the election of the company. Till then it remained so far in force as to be at all times capable of ratification or confirmation, and when confirmed it was thence- forth valid, as if no defect had ever existed in it. The company must be taken to be aware of the error, and of all the facts con- nected with it, aince the previous policy was in their own company. Their own records did or should show, when it was to terminate, and when it 'was in fact dis- charged." Barnes «. Union Co., 45 N. H. 21. In the recent case of City Fire Ins. Co. of Hartford ». Carrugi, 41 Ga. 660, when the agent of the insurer was notified of the exist- ence of other insurance, but failed to have it consented to by the Company in writing, and men- tioned in or endorsed upon the policy, as required by the policy, it was held that the receipt of the premium, and the issuing of the policy, was a waiver of the en- dorsement. "It would be a fraud," said the court, "to take a man's money with a full knowl- edge of the facts, and then set up that a particular mode of proving the fact, agreed upon by the par- ties, but not required by law, had not been resorted to." In Von Bories v. The United Life, Fire, and Mut. Ins. Co., 8 Bush. 133, both policies were issued by the same person, who, with the knowledge and assent of the defendant company, was at the time acting as general agent at Louisville for both companies. The second insurance did not render the first insurance abso- lutely void. The stipulation was that it should render the "policy of no binding effect upon the com- pany. ' ' The insurer had the elec- tion, after notice of the violation 62 FIRE INSURANCE. building and prohibiting any other insurance on property connected with it. Shepley, J, "To connect, is to join one thing to or unite it with another. And a liberal exposition of the lan- guage of the eighth section of the by-laws would not prohibit the plaintiff from insuring his stock in trade in another office. That would be a very forced construction which should regard goods deposited in a warehouse for a few days, to be again removed, as connected with it. And goods in a shop for sale are placed there for safe keep- ing and exhibition until sold ; and they have no necessary union with that, more than with any other shop. And they cannot by any proper use of the word be considered as connected with it."^ And insurance on a building is not invalidated by a subsequent insurance on goods in the building of the contract, to cancel the duty to his principal, could not policy by returning a proper pro- prejudice the rights of the insured, portion of the premium, or to See also Baer «. Phoenix Ins. Co.,. retain the premium and permit it 4 Bush. 247 ; Benton Ins. Co. v. to remain in full force. This Shea & O'Oonnell, 6 Bush. 177. notice it had from the very mo- The Massachusetts doctrine is ment its general agent issued the otherwise (see particularly Pin- policy in the Benton Insurance don v. the Am. Mut. Ins. Co., 13 Company, and yet no action was Cush. 469), but it is opposed by taken in the premises, until after the general current of recent the loss occurred. The failure of authority. the agent to notify the 'officers of ' Jones «. Maine M. F. Ins. the company of the second insur- Co., 18 Me. 155. ance, although a violation of his OTHER INSURANCE. 63 without the consent of the first insurer under a clause against other insurance. Such clause re- lates to other insurance upon the building.^ The question whether the stock of goods described in one policy is the same as those described in an- other, is a question properly for the jury ; and their finding will not be disturbed.^ 11a. A joint owner of property procured insurance thereon in his own name, but on receiving the policy and finding that it did not include the interest of the other joint owner, returned it to the agent, with the request that it should be corrected so as to insure the interest of the latter. The agent thereupon in- serted in the policy the following clause : " In case of loss, if any, one-half payable to G. P. as his interest may appear." A loss occurring, the owner who procured the insurance brought a suit upon the policy, which was defended on the ground that he had other in^rance on his own ' 111. M. F. Ins. Co. V. O'Neile, of the policy, the court held that 13 111. 89. In 111. Mut. F. Ins. the whole policy was not thereby Co. V. Fix, 53 111. 151, when there defeated, but that the jury, in was insurance on a dwelling and making up their verdict, must ex- brewery for a certain amount, and elude the amount insured in the on the fixtures for a certain policy upon the fixtures, amount, and when additional in- ' Neve «. Columbian Ins. Co., surance was obtained on the fix- 3 McMullan, 230. tures in violation of the condition 64 FIEE INSURANCE. -interest in the property, not consented to in writing by the insurer, as required by the eon- tract. It was held that the insurance was upon the joint property ; that the circumstances of the transaction clearly showed that such was the in- tention of the parties ; and that in order to avoid the policy by other insurance, such other in- surance must be on the same title and interest. An insurance on the interest or title of one of the joint owners was not within the fair import or legal signification of the clause respecting ad- ditional insurance.^ Subsequent insurance effected hy assigns of insured. 12. Under a clause in a policy which provides : " And if the said insured, or their assigns, shall hereafter make any other insurance on the same property, and shall not forthwith give notice thereof to this corporation, and have the same indorsed on this instrument, or otherwise ac- knowledged by them in writing, this policy shall cease and be of no further effect," it has been held that the word assigns does not apply to an absolute purchaser of the property, who does not become the assignee of the policy with the assent of the oface, for such a purchase, of itself, puts ' Pitney a. Glen's Falls Ins. Co., 61 Barb. 335. OTHER INSURANCE. 65 an end to the policy. !N"or does it apply to one who merely acquires a lien, or other interest by way of mortgage, becau^se he is not properly the assign of the insured, whose interest and property have not passed to him, but who by virtue of his general property has created a qualified and spe- cial interest only, and conveyed that. Moreover, unless the'mortgagee insures for the account of the mortgagor, insurance by him is not within the mischief intended to be guarded against, which is such further insurance as would lessen the interest of the insured in the preservation of the property. If the insured can have no benefit from the subsequent insurance, it can have no such efiect, and he can have no benefit from it if procured by the mortgagee for his own account and at his own expense.' But if the mortgagee covers the whole property, and were in any man- ner authorized to do so by the mortgagor, then, in that case, there would be subsequent insurance by the latter ; for it would be wholly immaterial in whose name it was done. The object of the clause is to guard against such subsequent in- surance as would lessen the interest of the insured in the preservation of -the property; and this includes all subsequent insurance, which, when • Holbrook v. Am. Ins. Co., 1 Curtis, 193. 5 66 PIRE INSUKAKOE. recovered, will go to the benefit of the insured in the first policy. And so if the mortgagee does in fact cover his own special interest as mortgagee, and the mortgagor^ pays the expense of the in- surance, then, although the mortgagee would have a lien on the insurance money, as security for his debt, yet the mortgagor could compel its application to the payment of the debt, and any surplus would belong to himself. Hence the subsequent insurance, being effected by the au- thority of the insured for his benefit and at his expense, must be deemed to be effected by him within the meaning* of this clause in the policy.^ Waiver of forfeiture arising from other insurance. 13. "When the contract of insurance is rendered void by reason of notice not being given of other insurance, and having the same " mentioned in or indorsed upon" the policy^ it may be revived and rendered binding by subsequent acts of the insurers, manifesting an intention to treat it as a valid and subsisting contract, notwithstanding 'the forfeiture; And this right of waiver is not curtailed by an express provision of the policy that none of its conditions " can be waived ex- ' Holbrook «. Am. Ins. Co., 1 Curtis, 193. OTHEE INSUEAJSrCE. 67 cept in "writing signed by the Secretary." It is competent for the parties to rescind or modify this provision, by a valid agreement even by parol, and an executed agreement to renew the policy clearly has that effect.^ ' Carrol v. Charter Oak Ins. Co., 38 Barb. 402 ; Dearborn v. Cross, 7 Cowen, 48 : Carrol v. Charter Oak Ins. Co., 40 Barb. 293. In Dearborn v. Cross, supra, D. bound himself, by bond, to sell land to C, who gave his notes for the consideration money and took possession; but afterwards, in pur- suance of a parol agreement, it was surrendered to D., who finally sold it. Though the bond was < • not cancelled or surrendered, it was yet held that it was dis- charged, and that no action would lie on the notes ; the whole con- tract of sale being discharged by the new parol executed agree- ment. When the policy declares that, " if, without written consent here- on, there is any prior or subse- quent insurance, this policy shall be. void," and when also both policy and renewal declare them invalid unless countersigned by the general agent ; and when a local agent writes upon the policy, "and other insurance is hereby permitted," but omits by mistake his signature, it is held that in as- much as the policy was not to be valid unless countersigned by the general agent, the consent to the additional insurance should be signed by him also. The unsigned consent cannot be sustained in the absence of the general agent's signature, without distinct proof that it was made by some one who was in fact, or by their conduct feirly supposed to be, authorized to bind the company in that way, or so recognized and acted upon afterwards as to bind them by some sort of estoppel. Security Ins. Co. V. Fay, 32 Mich. 467, 47L In the recent case of New York Central Ins. Co. v. Watson, 33 Mich. 486, it was held that two policies to the same person and on the same interest, containing , the usual clause with regard to other insurance, become absolutely void at once upon the obtaining of the last insurance without con- sent. Nothing could revive them but a new contract on vsflid con- 68 I'lEB INSURANCE. Bestrictions upon amount of insurance. 14. It is a usual condition in policies of in- surance that the insured shall not effect insurance beyond two-thirds of the estimated value of the property, and a breach of this cpndition on his part works a forfeiture of the policy.^ -And a condition of this kind is not the subject of waiver, except by the officers who exercise the corporate powers of the company, or by an agent whose powers relate to the very subject out of which the estoppel arises.^ But an over-estimate of the value of the property by the agent of the in- surance company will not avoid the policy, un- less the assured has taken some fraudulent part in it ; and this is the case notwithstanding the by-laws of the company prohibit an insurance that exceeds two-thirds of the estimated value of the property insured — such prohibition being sideration, or such, conduct as, by Smith, 403. When the stipulation misleading the insured to their of the policy is that the aggregate prejudice, -would operate as an of insurance shall not exceed two- estoppel. See also Western Mass. thirdsof the estimated cash value, Ins. Co. ■». Riker, 10 Mich. 279 ; this refers to the estimated cash Security Ins. Co. ». Fay, 33 Mich, value at the time of the insurance, 467. as settled by the parties and named ' Lycoming Ins. Co. v. Mitchell, in the policy. Elliott v. Lycoming 13 Wr. 968 ; Ins. Co. v. Stock- Co. Mut. Ins. Co., 16 Smith, 33. bower, 3 Casey, 199 ; Mitchell •«. = ]V[itchell «. Lycoming Mut. Lycoming^Mut. Ins. Co., 1 P. F. Ins. Co., 1 P. F. Smith, 402. OTHEE INSURANCE. 69 merely directory, and not a condition of the con- tract.^ As the insured is usually restricted as to ' Cumberland Valley Mut. Co. sary consequence fix a valuation V. Schell, 5 Casey, 81; Fuller v. at sucli a sum that, the sum insured Boston F. Ins. Co., 4 Met. 206. shallnot exceed three-fourths of it. In this latter case the opinion of The result is, that as the valuation the Court was delivered by Shaw, is thus proposed on the one side, C. J. On the point stated in the and after the proposition is con- text he said : " Several questions sidered and modified, it is acceded have been argued ; one of them, to on the other, and the amount and a principal one, is, whether insured and the rate of premium, the valuation of the property, as assessment, and liability establish- stated in the policy, under the cir- ed on the same basis, it is, in the cumstances, is to be deemed con- highest sense, a valuation by mu- clusive evidence of the actual tual agreement. Then the ques- value for the purpose of adjusting tion is, whether a valuation thus the loss. It is not contended that deliberately and carefully made there was any designed or fraudu- by mutual agreement, as a part lent over- valuation, or any collu- of the original obligation — when sive valuation, or any wilful mis- each party is independent of the representation of the value. The other, and at liberty to contract case arises upon a polidy made by or not, as they are or are not re- a mutual insurance company that spectively satisfied with the terms had no authority to insure over — shall, in the absence of all fraud, three-fourths of the value of the collusion, and misrepresentation, buildings In determining be taken as the best evidence of what amount shall be insured, the the actual value of the premises company necessarily determine insured. See Borden v. Hingham the value of the building, or rather Mut. Fire Ins. Co., 18 Pick. 523. they fix a valuation, over which it The same reason which applies to shall not be rated, for the purpose other cases of contract applies to of insurance. Being limited to this ; and the general rule is, that insure not exceeding three-fourths parties capable of contracting, and of the value, in determining the who enter into a contract, without Bum to be insured, they by neces- fraud or imposition, are bound by 70 riKE INSURANCE. the amount of insurance by his policy, so the in- surer is frequently prohibited by his charter from insuring beyond a certain proportion; yet if voluntarily, and without fraud or misrepresenta- tion he insures more, the policy is not thereby made void •} but in case of loss he will be held only for such proportion. For example, if the charter of a company prohibits an insurance that exceeds three-fourths of the value of any pro- perty, and it issues a policy for $.3500 on a house represented in the proposal for insurance to be worth $4000, the assured in case of loss can re- cover only $3000.' law to abide by it. ... A valua- larger sum at the time of the in- tion deliberately and honestly surance. But such evidence is fixed by agreement, a valuation inadmissible, and the valuation, byvrhich the premium and assess- if made in good faith, is binding ments to be paid by the assured on both parties. The converse of are fixed, as vrell as the amount this proposition has arisen in two to be paid by the company in case cases upon fire policies, and in of loss, IS the best evidence of the them it is distinctly settled that the actual value." two coilapanies were concluded in ' Williams v. New England the question of over-valuation, the Mut. F. Ins. Co., 31 Maine, 219. same not being fraudulent. Bor- ^ Holmes v. Charlestown .Mut. den v. Eingham Mutual Fire Ins. F. Ins. Co., 10 Met. 211. In this Co., 18 Pick. 533 ; Fuller v. Bos- case, Subhard, J., said: "On ton Mutual Fire Ins. Co., 4 Met. referring to the application, the 206. If, then, underwriters are value of the building is agreed to precluded from going into evi- be four thousand dollars ; and the dence to show an over-valuation, plaintifrs now ask liberty to show when no fraud is alleged, owners that it was, in fact, worth a much must in like manner be concluded OTHER. INSURANCE. 71 15. For the purpose of ascertaining the loss in case of over-insurance when several parcels are insured together by one policy for an entire sum, and one of the parcels is insured separately when the property is undervalued. Liscom «. Boston Mut. Fire Ins. The value being fixed at four thou- Co., 9 Met. 205. In the present sand dollars, the contract does case, the insurance was $500 on not by law cover more than three- the house, which was valued at fourths of that sum ; for it is ad- $750, and $500 on furniture, which mitted, and very properly, that was not valued. By the charter the words ' and the fixtures in the of the defendants, they cannot same' do not constitute the subject insure to an amount exceeding of a separate insurance. The fix- three-fourths of the value of the tures are a part of the building it- property insured ; and they, in the self, and are included in the esti- rules and regulations adopted by mates of its value. They are Uke them, reserved a right to have a the term 'appurtenances,' when valuation made anew, in case of applied to the insurance on a ves- loss, without regard to the valua- iel." tion in the policy. The jury have In Post v. Hampshire Mut. Ins. found the value of the house to be Co., B?MW, C. J., very clearly $600, and of the furniture $400; stated the principle on which the and it is conceded by the defehd- loss is adjusted in a case like that ants that the actual loss, on each in the text, as follows : " The only subject, exceeded the amount in- question is, for what sum, accord- sured. We are of opinion, there- ing to the finding of the jury, fore, that the plaintiff is entitled judgment shall be entered. In to recover three-fourths of these cases of fire insurance, the assured two sums, to wit, $450 on the is entitled to the amount of the house and $300 on the furniture, real loss sustained by him, if it be with interest ; and the verdict is within the amount insured, with- to be amended, and judgment to out regard to the distinction be- be entered accordingly." Post v. tween a total and a partial loss, Hampshire Mut. Ins. Co., 12 Mejf. as in' cases of marine insurance. 555. 72 riEE INSURANCE. by another policy, the sum insured by the first policy is distributed among the several parcels in the proportion which the sum insured by that policy bears to the total value of all the parcels.' ' Ogden«. East River Ins. Co., 50 N. Y. 388; Blake «. Exch. Mut. Ins. Co., 13 Gray, 365. CHAPTEE lY. 1. Wliether a policy of insur- 7. Courts give effect to intention ance must be in Trriting. of parties. 2. Open and valued policies. 8. Construction of policy as to 3. Fraudulent over-valuation. manufacturing pursuits. 4. Adjustment of loss. 9. Whether policy may be va- 5- Whether fire policy is trans- ried by parol. ferable. 10. Parol proof inadmissible to 6. Construction of written and exclude a warranty, unless, printed clauses. WTiether a policy of insurance must be in writing. 1. The general usage is to reduce the contract of insurance to writing ; but this is not a require- ment of the law, an oral contract being equally binding.^ So, too, a parol acceptance of a written proposal for insurance is a binding contract for insurance in the absence of any statute requiring such contract to be in writing.^ And equally • Hamilton v. Lycoming Co., 5 Sanborn «. Firemen's Ins. Co., 16 Barr, 339 ; The Trustees of Bap- Gray, 448 ; Khodes v. Railway tist Church v. Brooklyn Ins. Co., Passenger's Ins. Co., 5 Lansing, 19 N. Y. 305 ; Com. Mut. Marine 71 ; Security Fire Ins. Co. v. Ins. Co. V. Union Mut. Ins. Co., Kentucky M. and F. Ins. Co., 7 19 How. 318 ; City of Davenport Bush. 81 ; Mobile Marine Dock V. Peoria M. Fire Ins. Co., 17 and Mut. Ins. Co. v. McMillan, 31 Iowa, 276. See also Baxter v. Ala. 711 ; Hartford Fire Ins. Co. Massasoitlns. Co.,13 Allen, 320; v. Wilcox, 57 111. 180 ; Fish v. Union Mut. Ins. Co. v. Com'. Cottenet, 44 N. T. 538. Mut. M. Ins. Co., 2 Curtis, 524; « 2 Curtis, 524. 74 FIRE IN-STJEANCB. binding is a parol contract to renew a policy.^ We may here add, that when such contract is made, and nothing is said respecting the amount to be charged, the insured has a right to assume that the renewal is to be at the rate formerly paid." It is not essential to the validity of the contract of insurance that the name of the person to be ' insured should be named in the policy. Extrinsic evidence may be resorted to to ascertain who was in the mind of the parties when the contract was made, and when ascertained the insurance will enure to his benefit.^ It has been suggested, that, under the inter- nal reveime acts, which require a stamp to be affixed to a policy of insurance, it may now be ' The Trustees of Baptist Church 39 Centre Street, and to the former B. Brooklyn Ins. Co., supra. In policy, but expressing in itself no Ltidwig «. The Jersey City Ins. restriction as to the first- floor of Co., 48 N. Y. 379, the policy the building, HeU, that the con- covered the assured's goods on tract was modified by the renewal the first floor of the building 39 receipt, and by the knowledge of Centre Street. The policy being the insurer as to the situation of about to expire, and the goods, the goods, and that thereby the meanwhile, having been removed insurance was applied to the goods to an upper story of the same in the upper stories, building, the assured notified the ' Post v. .Sltna Ins. Co., 43 agent of the company of such Barb. 351. change of location, paid the re- " Clinton e. The Hope Ins. Co., newal premium, and received a 45 N. T. 454. renewal receipt referring to No. POLICY OF INSURANCE. 75 necessary to have the contract in writing.^ But while our courts are not likely to hold that an agreement between competent parties is void, because the evidence of it is not found in a writ- ten, stamped paper, nevertheless every prudent person should insist on having his contract for insurance promptly incorporated in a regular policy. "We may here observe, that although it should be provided by law that an insurance company can make a valid policy only by having it signed by the president, and countersigned by the secretary, yet such a law is only directory as to the formal mode of signing policies, and is not applicable to agreements to make insurance.^ ' Western Mass. Ins. Co. n. Dnf- rived from it. In Fish ». Cotte- fey, 2 Kansas, 347. The case of net, 44 N. Y. 538, it was urged Morgan v. Mather, 3 Vesey, Jr. that the contract was void for want (Am. ed.), 15, has been supposed of a stamp. Hunt, J., "Agree- to countenance the notion that the ments when in writing must be contract of insurance must be in stamped. A stamp upon an oral writing and stamped, otherwise it agreement is an impossibility." would be an evasion of the stamp ' Com. Mut. M. Ins. Co. ■». act. No doubt if the contract Union Mut. Ins. Co., 19 How. is reduced to writing it must be 318; Post v. .Sltna Ins. Co., 43 stamped, but it is a very different Barb. 351. See infra, Chap. V. In thing to say that it must be re- Com. Mut. M. Ins. Co. v. Union duced to writing in order that it Mut. Ins. Co., supra, Curtis, J., may be stamped. What was said in delivering the opinion of the by Lord Commissioner Wilson in court, said : " The respondents' that case does not at all support counsel has argued that their pre- the inference that has been de- sident had not authority to enter 76 FIRE nS-SURANOB. O'pen and valued policies. 2. In marine insurance there are what are termed "open" and "valued" policies. In the^ former the amount for which the insurer is to be into an oral contract binding the limitation. Besides, the supposed company to make insurance. They limitation would be inconsistent admit it has been usual for the with the authority itself. It is, in president to make such contracts; effect, that though the president is but they say that when he has authorized to make oral promises done BO, the policy was not issued to effect insurance, the company until the next day, and no risk is are at liberty to execute those understood to have commenced promises, or refuse to do so, at under such an undertaking until their option." the policy issues. Whether a risk InHenning «. The United States be commenced when the contract Ins. Co., 47 Mo. 425, it was held for insurance is made, or only that a corporate body can act only when the policy issues, must de- in the manner prescribed by the act pend on the terms of the contract, of incorporation which gives it ex- Where, as in the present case, istenee 4 and where by the act of there is an express contract to incorporation " all the conditions take the risk from a past day, of policies issued by aaid company there is no roMn for any under- shall beVritten or printed on the standing that it is not to commence face thereof ;' ' and where the by- until a future day. Such an un- laws made in pursuance of the derstanding would be directly re- charter require that the president pugnant to the express terms of the shall sign all policies or other con- contraet. And if the defendants tracts by which the company are have held out their president as bound, and that every proposal for authorized to make oral contracts insurance shall be by written ap- for insurance, no secret limitation plication, signed by the applicant of this authority would affect third or his agents, such a company can persons, dealing with him in good make no original and binding con- feith and without notice of such tract by pajol. POLICY OF INSURANCE. 77 liable in case of loss is not stated, but is to be ascertained by evidence; in the latter it is de- termined beforehand and inserted in the policy. ►A " valued" policy does not merely value the in- sured property, but values ?he loss, and is equi- valent to an assessment of damages in the event of loss.^ This distinction between "open" and "valued" policies obtains as well in fire as in marine insurance, and in both forms of insurance a valuation, if made in good faith, is binding on each party .^ The underwi'iters are precluded from going into evidence to show an over-valua- tion when' no fraud is alleged, and the insured in like manner is concluded when the property is under-valued.^ But if the policy stipulates that ' Lycoming Ins. Co. t. Mitchell, The cases to which we are referred 12 Wr. 372 ; Allen a. Sugure, 8 for the support of it, so far from B. & Cress. 561. sustaining the proposition, are de- ' Laurent «. Chatham Pire Ins. cisiye against it, and proceed upon Co., 1 Hall. 41. In this case the the basis that insurances against claim was that it was a valued and loss by Are are open policies upon not an open policy. The court, interest, and protect the assured by Jones, C. J., said : " The plain- to the extent only of his insurance tiff insists that this is not an open on his interest in the premises." policy ; and if he is correct in ' Borden v. Hingham Mut. Fire that opinion, and the contract is to Ins. Co., 18 Pick. 523; Trull v. be deemed a yalued policy, there Roxbury Mut. F. Ins. Co., 3 Oush. could no longer be any question 263 ; Fuller ®. Boston Mut. Ins. of his right to recover to the full Co. , 4 Met. 206 ; Holmes v. CharleSr amoant of his insurance. But I town Mut. P. Ins. Co., 10 Met. cannot accede to that opinion. 211. Said Putnam, J., in Borden 78 FIRE IN"SURAN"CB. the insurer shall not be liable beyond the sum insured, nor beyond three-fourths of the actual cash value of the property insured at the time of the loss or damage, nor beyond such sum as will enable the insured to replace or restore the property lost or damaged, in such case, the valua- tion stated in the application is not conclusive, and the actual value of the property at the time of the loss may be proved.^ V. Hingham Mut. F. Ins. Co., su- and are bound by it aa ^rell aa we pra: " If a great calamity by the are.' We think that the parties destruction of property insured did not intend that the value of agaiifst Are had happened, and the buildings insured should there- assessments had been made upon afterwards be drawn into ques- the members, we think the plain- tion. The plaintiff's made, and the tiffs could not have been allowed defendants accepted, the estimate ; to claim a deduction from their d,nd the contract was made upon contribution, premium, and de- that basis. No fraud, conceal- posit, on the ground of an over- ment, or gaming is suggested. We valuation. The answer would are all of opinion that the plain- have been ready and effectual, tiffs are 'entitled to recover the The defendants would have said, whole amount insured, it bang ' We took your own estimate of the less than the amount destroyed by value;' and the plaintiffs would the fire." Ins. Co. of N. A. v. have been concluded by it. And McDowell, 50 111. 120 ; Peoria M. now, when the defendants come and F. Ins. Co. v. Lewis, 18 111. for an allowance, and claim to 553. make the same objection, we think 'Brown «. Quincy Ins. Co., the plaintiffs may well answer, 105 Mass. 396. See also Luce o. ' You have accepted our estimate, Dorchester Ins. Co., id. 297. POLICY OP INSUEATSrCE. 79 Fraudulent over-valuation. 3. It will of course be understood that it is only innocent and unintentional over-estimates that the courts will undertake to revise. If an appli- cant for insurance in a mutual company fraudu- lently over- value the property insured, the policy issued upon such over- valuation may be avoided by the company on that ground.^ And the rea- son is obvious. By the fraud of the insured, the insurer was induced to make a different contract than but for that fraud he would have made. In other words, he took a larger risk upon the pro- perty than he would have taken if a true and just valuation had been exhibited to him.* Adjustment of loss. 4. In most cases a loss by fire is not a total loss. Hence the actual value to be replaced has ' Hirsey v. Merrimack Co. Mut. policy ; and, of course, too, un- Fire Ins. Co., 7 N. H. 149. See less fraud is alleged. The court Ins. Co. of N. A. 9. McDowell, 50 further said, that when the agent 111. 120, were it was said that an knows or can judge of the value over-valuation in the application of the property, and accepts an for insuranceis of no consequence, application without objection, ■ provided the risk taken is less than even if the valuation is higher its value, or provided the value at than it should be, they could not the time of loss exceeded the say that it is so far material as to amount covered by the insurance, vitiate the policy, unless, indeed, the contract con- • Hirsey v. Merrimack Co. Mut. tains an express condition that Fire Ins. Co., 7 N. H. 149. over-valuation shall avoid the 80 riEB ISrSUEANOE. to be ascertained by investigation. "Whatever that loss may be, the assured recovers the whole of it, if within the amount insured, and not, as in marine insurance, only such a proportion of the actual loss as the sum insured bears to the value of the property at risk. Thus, when two build- ings were insured for one thousand dollars each, and upon their being burnt the insurers elected to rebuild, as they were entitled to do under the provisions of the contract, the cost of rebuilding was $1450. Subsequently the new buildings wei'e burnt, and it was held that the insurers were bound to pay $550, being the difference between the sums insured and the sums paid for former losses on the two buildings.^ Where the whole property insured is valued at a certain amount, and a portion, being of the same kind and quality as the whole, is lost, it is to be paid for in proportion to the amount of the valuation. Thus 380 kegs of tobacco were in- sured upon an estimated value of 9600 dollars ; 157 kegs were lost. The insurers were held to pay the insured at the rate of valuation in the > Trull «. Roxbury Mut. F. Ins. contract, and the insurer's lia- Co., supra. The rule, as stated in bility for a breach of it is not the text, is applied in Massachu- measured by the amount of in- setts ; but in New York it is held, surance named in the policy. See that the election to rebuild con- post, Chap. XX. sec. 18. verts the policy into a building POLICY OF nsrsuRA^rcE. 81 policy. ""Where there is an actual total loss of any article, distinctly valued in the policy, that valuation, I apprehend, must govern in all cases. The valua'tion in a policy is in the nature of liqui- dated damages, to save the necessity of proving them.'" 4:a. In Elliott v. Lycoming County Mutual In- surance Company,'^ the condition of the policy was, that the aggregate amount of insurance on the property should not exceed two-thirds of the estimated cash value, and the question was, what was meant by these terms ? Was it the estimated cash value at the time of the insurance, as settled by the parties and named in the policy, or the actual cash value at the time a second or further insurance was effected? Held, the former, and this notwithstanding the insured subsequent to ' Thorrtpson, J., 'H&rris v. 'Eagle words. Thus, the words that " the FireCo.,5 Johns. 368. The words said 0. being the lessee of said " ?iafe«(J a<" are the usual criterion mill for one year, and having paid of a valued policy ; but inasmuch the rent therefor of $3000, which as a contract for insurance, like interest, diminishing day by day other contracts, is to be construed in proportion to the whole for the upon an examination of the whole year, is hereby insured," have instrument, and the intention of been construed to mean a valued the parties to be determined there- policy. Cushman«. Northwestern from, it follows that effect will be Ins. Co., 34 Me. 487. given to such intention, irrespec- ' 16 P. F. Smith, 33. See ante, tive of any particular form of p. 68 et seq. 6 82 riEE INSUEAIfCB. the delivery of the policy made improvements which greatly augmented the actual cash value, and the company had notice of these alterations and indorsed a certificate that the risk was not thereby increased. Whether fire policy is transferable. 5. A marine policy is most commonly general in its terms, comprehending in its indemnity all who are interested in the subject of insurance ; while the fire policy limits its protection to those who are specially named in it, and stipulates against a transfer of the policy without the con- sent of the insurers.' But neither a five nor marine policy is in its own nature assignable, and what- ever difference prevails between them in this respect results from the variances and stipula- tions of the policies themselves.** ' De Forrest a. Fulton Fire Ins. consent of the underwriters. If Co., 1 Hall. 84. the assured, therefore, sells the ' De Forrest ». Fulton Fire Ins. property, or retains only a partial Co., 1 Hall. 114 ; De BoUe v. Pa. interest, his policy -will only pro- Ins. Co. , 4 Whart. 68. Policies tect such Insurable interest as he against Are are personal contracts had in the property at the time of •with the assured, and they do not the loss, .aitna Ins. Co. v. Tyler, pass to an assignee or purchaser of 16 Wend. 385. the property insured without the POLICY OF INSURAN-CE. 83 Construction of the written and printed clauses. 6. The greater part of the printed language in a policy of insurance has acquired from use and practice a known and definite meaning. !N^ever- theless, when there is repugnancy between the written and printed portions of the policy, the written portions must prevail.^ Because the ' Harpers. N.T. City Ins. Co., and the printed form in such a 22 N. T. 441 ; Hay ward o. North- case yields to the deliberate writ- western Ins. Co., 19 Abb. Pr. (N. ten expression. And in Harper Y.) 116 ; Benedict o. Ocean Ins. v. The Albany Ins. Co., 17 IST. Y. Co., 31 N. Y. 389 ; Goss «. Citi- 194, it was held that the insurers zens' Ins. Co., 11 La. (An. R. 47). were liable for a loss occasioned In Harper v. New York City Ins. by the necessary and customary Co. the insured building in the use of camphene in the business written part of the policy was of the insured, although the use " privileged for a printing-office of that article was prohibited in and bindery." In the printed general terms in the printed con- condition, however, the insurer ditions annexed to and forming a was exempted from liability for part of the contract, any loss occasioned by the use of In Benedict v. Ocean Ins. Co., camphene. But the proof was supra, one of the printed clauses that the use of camphene in the prohibited other insurance with- business of printing was usual and out notice and consent, but writ- necessary. The court held, there- ten in the policy were these words, fore, that the printed condition, "privilege for |4500 additional exempting the underwriters from insurance." In this repugnancy loss when occasioned by this arti- between the written and printed cle, should therefore be construed clauses, the court held that the as referring to uses not within the written clause must prevail, and privilege thus granted. Other- was in fact pro ianio a waiver of wise the two parts of the contract the printed clause, would be repugnant to eagh other, In Hay ward v. Nojthwestern 84 PIKE INSUKANCE. written words are the immediate language and terms selected by the parties themselves for the expression of their meaning, and are entitled, therefore to have a greater effect attributed to them than the printed words.^ Each stipula- tion, however, whether printed or written, should have effect, unless ■ givipg effect to one ^ould destroy the other.^ Courts give effect to tJie intention of the 'parties. 7. The courts endeavor to give effect to the intention of the parties in construing policies of insurance. Hence in ascertaining what they Ins. Co., SMpra, the printed condi- "If the written clause varies tion was that the company would from the printed, it is evidence of not he liable "for any loss or a special contract made in that damage caused by or consequent particular case, diflferent from the upon the bursting or collapsing usual contract of insurance ; and of a steam-boiler, or steam -pipe," it must necessarily be considered while the written portion specifi- as the real agreement of the par- cally insured the steam-engine, ties. If the written and the printed Held, that the written clause must clauses can be reconciled by any prevail, and that the insurer was fair construction, it ought to be liable, although the fire which de- done f if they cannot, the former stroyed the insured property was must prevail." caused by an explosion of the ^ Robertson «. French, 4 East, steam-boiler. ^ 129. See also Alsager ». St. Ka- In Coster «. The Phoenix Ins. tharine's Dock Co., 14 M. & W. Co., a Wash. C. C. 51, Wmh- 794. ington, J., applied the principle ' Gross v. Citizens' Ins. Co., stated in the text, as follows : supra. POLICY OF INSUEANCB. 85 were designed to cover they look at their general gcope as well as at the collocation of the particu- lar words. And as the language of an insurance policy is the language of the company, and they can therefore provide for every proper case, it is to be taken in the sense most favorable to the assured.^ For example, an insurance on " mer- chandise," such as is usually kept in country stores, covers hardware, china, glassware, looking- glasses, etc., although not specifically mentioned, if the articles are such, as are usually kept in country stores, that being a question for the jury.^ And an insurance on a house includes everything appurtenant and accessary to the main building, and hence rear buildings, although separated from the main building by a small yard, they being accessary to the main building — and used by the occupants thereof in part for kitchens and privies.^ So, too, the term "factory" may apply ' Cropper v. Western Ins. Co., Mut. Ins. Co. v. The Merchants' 8 Casey, 351 ; Dobson «. Sotheby, and Manufacturers' Mut. Ins. Co., t M. & Mul. 90 ; Reyn6lds v. 5 Ohio St. R. 450. In Blake v. Com. Fire Ins. Co., 47 N. T. Exchange Mut. Ins. Co., 12 Gray, 597 ; Wells, F. & Co. ■». Pacific 265, the insured was allowed to Ins. Co., 44 Cal. 397. show, as matter of local designa- 2 Franklin Fire Ins. Co. v. Up- tion, what structure was named degraff, 7 Wr. 350. and known as Davenport & Co.'s ' Workman «. Ins. Co. , 2 Louis, car factory ; and the court instruct- 507; Blake v. Exchange Mut. Ins. ed the jury that if the wings and Co., 12 Gray, 265; Washington main building were connected by 86 FIEE INSUKANCE. to several buildings, where they are used in con- nection with each other, for a common purpose, and stand together in the same inclosure. Hence a policy on "stock contained in a chair factory," includes, not only stock in the main building in which the men and machinery work, but also that in the eugine building, which is appurtenant to the other, although ten feet distant. Both build- ings are necessary to constitute the factory. The saws and other machines are in one building, and the engine which keeps them in motion is in the other. Both are component parts of the factory.^ But where the policy describes the goods as " all contained in the two-story frame building occupied by the assured as a chair manufactory, situate on thie north side of said street," the risk a wall and door, and were all tinct entrances, and the fact that used in the business of manufac- the wings did not touch Main tunng cars, and part of the wing Street, the plaintiff's property, if in which the plaintiff's property in the wing, was "in the brick was contained at the time of the building situate on Main Street, Are was in the process of manu- known as Davenport & Co.'s car facture, and the motive power of factory," and the description in the whole structure came from one the policy was correct, source, and the front and wings, ' Liebenstien «. Baltic Ins. Co., as a whole, were known as "Da- 45 Ills. 801. See also Peoria Ma- venport & Co.'s car factory," rine and Fire Ins. Co. ®. Lewis, then, notwithstanding the sepa- 18 111. 562 ; Liebenstein o. Metro- rating wall, small opening for politan Ins. Co., 45 111. 305. communication, distinct roofs, dis- POLICY OF INSURASrOE. 87 will not be extended so as to make it cover stock not contained in the specific building to which reference was had in the policy.^ And where insurance is procured on cars and engines, con- tained in car and engine houses marked ;N]o. 1 and No. 2, they are not covered by the policy when out of such car and engine houses. The danger of loss being greater when cars and engines are in buildings liable at all times to be burnt than when upon the road, in charge of conductors and brakesmen, it was the obvious intention of the parties to cover them by insurance in the former case, and not in the latter.^ So, too, a policy on a baker's stock " contained in a frame dwellinsr- house and bake-house, front and rear, situate at 1^0. 17 Thames Street," does not cover flour stored in a shed leading from the bake-house to the front house.' But an insurance on "his stock in trade" as a "baker," includes not only the stock of bi'ead and flour on hand, but everything necessary to carry on the business of a baker — that is, his fixtures and implements of business. The meaning of the term " stock in trade" varies ' Liebenstien s. ^tna Ins. Co., Lewis v. Springfield F. & M. 45 111. 303. Ins. Co., 10 Gray 159 ; Lycoming 2 Annapolis R. R. Co. a. Balti- Co. Ins. Co. ■». Updegraff, 4 Wr. more Fire Ins. Co., 33 Md. 37. 333. See also Boynton v. Clinton & » Moadinger «. Mechanics' Fire Essex Ins. Co., 16 Barb. 358; .Ins. Co., 3 Hall, 490. 88 riEE INSURANCE. according to the business to which it is applied. For example, the stock of a merclfant would com- prehend articles entirely different from the stock of a farmer ; and in all cases the term is limited to personal property only.^ In Aurora Fire Insurance Company v. Eddy/ the court thought insurance on a flax factory would cover the erection and putting into opera- tion machinery for the manufacture of rope. But if not, then the insurer was estopped to claim a forfeiture of the policy, because his agent, at the time the risk was taken, was notified by the assured that he intended to put in rope machinery, and was told by the agent that it would not effect the policy, as the term flax factory was broad enough to embrace it. The insurer was held bound by the construction given to the policy by his agent. An insurance on goods described to be "in the dwelling-house" of the assured, covers the goods notwithstanding the assured had but one room as a lodger, in which the goods were kept. In such a case the dwelling-house of the assured means the ho.use in which he dwells.'. And a policy on a "steam saw-mill" includes all the ■ Moadinger v. Mechanics' Fire ' Friedlander e. London Assur- Ins. Co., Bupra. ance Co., 1. M. & Rob. 171. ' 55 111. 213. POLICY or INSUBAIirCE. 89 machinery and fixtures therein, necessary to make it a steam mill*n all its parts.^ So too a "starch manufactory" substantially includes the fixtures, etc., necessary to the processes involved in such a manufacture.^ And it seems that the descrip- tion in a fire policy of the stock and articles con- tained in a " pork-house" is usually understood as including the hogs and meat of the various owners placed and contained in it, as well as the instruments and materials necessary for carrying on the business in its various stages.^ In Phoenix Insurance Company v. Favorite,* and in Home Insurance Company v. Favorite,^ where the policies covered "cattle and hogs, and the product of the same, and salt, cooperage, boxes, and articles used in (for) packing, in their stone and frame packing establishment, sheds and yards adjoining, their own or held by them on commission," it was decided, that coal in the yard, bought for the purpose of carrying on the business, and a quantity of barrels and tierces held by the insured on storage, were included by the foregoing clause of the policy. Whether insurance on a steam flouring mill includes and ' Bigler s. New Tork Central ' Jackson «. ^tna Ins. Co., 16 Ins. Co., 30 Barb. 635. B. Monroe, 342. 2 Peoria Marine and Fire Ins. * 49 111. 359. Co. «. Lewis, 18 111. 553. » 46 111. 263. 90 FIRE INSUEANCE. covers a kiln-drying corn-meal mill as an inci- dental part of the flouring mill, is a question of fact for the determination of a jury.^ On the other hand, it is only those things which by necessary implication belong to the principal subject, or are included in its descrip- tion, that are covered by a policy of insurance. Thus an insurance on an unfinished house does not cover materials, although designed for the house, which are deposited elsewhere. If actually within the house for which they were designed at the time of the fire, they would be covered by the policy.^ And where the insurance is on " the stock, lumber, and goods manufactured or in process of manufacture in said building," this will not be construed to cover property in the yard adjoining the building.^ INor does a policy on fixtures cover furniture and movables which are chattels, and not included in the former term.* • Washington Mat. Ins. Co. v. ' The North Am. F. Ins. Co. v. The Merchants' and Manufaotu- Throop, 22 Mich. 146. rers' Mut. Ins. Co., 5 Ohio St. R. < Holmes v. Charlestown Mut. 450. • F. Ins. Co., 10 Met. 211. ' EUmakera. Franklin Ins. Co., 5Barr, 183. POLICY OF INSURANCE. 91 Construction of fire policy as to manufacturing pursuits. 8. A fire policy covers whatever is necessary or essential to the reasonable and proper carrying on of the particular manufacture insured. For example, insurance on a building used " for the manufacture of lead pipe," or of "lead pipe only," includes the manufacture of wooden reels on which to coil the lead pipe, provided they are essential to the proper carrying on of the busi- ness.^ And a policy insuring a "china factory," or a "tannery," or "printing office," or other manufacturing establishment, includes, unless expressly excepted, whatever is necessary and essential in conducting the particular business. If dangerous trades or inflammable material are ' Collins V. Charlestown Mut. hogsheads was such an incident of Ins. Co., 10 Gray, 155. In Sims the business as to be included in «. State Ins. Co., etc., 47 Mo. 54, it, was a question of fact for the the application for'insurance con- jury. And the proper mode of . tained the inquiry, " for what presenting such question to the purpose is the building used ?" jury is, whether it is so generally and the insured answered, " to- customary for those engaged in bacco-pressing ; no manufectur- the business of tobacco-pressing ing." The evidence showed that to prepare their own hogsheads, in a shed — an addition to the main and in the building where the building — tobacco hogsheads were business is conducted, that such manufactured. It was held that preparation can properly be called whether the manufacture of the an incident of the business. 92 riRE INSURANCE. among the usual means or processes of conduct- ing the business, the insurance is presumed to have been made in view and with reference to that fact, and is valid, notwithstanding a general printed prohibition against the use and exercise of such material and trades. The printed pro- hibition is taken, in all such cases, in a qualified and restricted sense, so as to confine it within the declared purpose and intention of the parties as expressed in the written clauses. Hence the express written agreement of an underwriter to insure a manufactory of chinaware in full opera- tion, necessarily authorizes the exercise of those trades and avocations in the building insured, which appertain to such an establishment, and are required for the judicious management and transaction of its accustomed operations and business. And therefore a general printed clause against the exercise of extra-hazardous trades, must be restricted in its operation to trades which the conductors of a china manufactory do' not require for the transaction of the ordinary business of the establishment, and cannot be applied to any trade or avocation necessarily or usually attached to such manufactories.^ ' Delonguemare a. The Trades- 520 ; Harper ». The Albany Mut. man's Ins. Co., 2 Hall, 589 ; Har- Ins. Co., 17 N. Y. 194 ; Bryant v. per ». The City Ins. Co., 1 Bosw. Poughkeepsie Mut. Ins. Co., Ibid. POLICY OP INSUEANCE. 93 A policy on goods such as are usually Icept in a country store includes spii-its of turpentine 200 ; Wasliington Mut. Ins. Co. v. The Merchants' & Manufacturers' Mut. Ins. Co., 5 Ohio St. R. 450 ; M. & M. Ins. Co. s. Washingtqn Ins. Co., 1 Hand (Ohio), 181 ; Brown «. Kings Co. F. Ins. Co., 31 How. (N. Y.) 508; Citizens' Ins. Co. 1). McLaughlin, 3 P. F. Smith, 485 ; Glrard F. Ins. Co. v. Stephenson, 1 Wr. 298 ; Harper v. The New York Insurance Co., 22 N. Y. 441 ; Pindar v. Kings Co. Ins. Co., 36 N. Y. 648 ; Archer «. Merchants' & Manufacturers' Ins. Co., 43 Mo. 484. A policy of In- surance, like any other contract, should be construed and is con- strued so as to give it effect rather than tp make it void. The under- writer receives a premium ade- quate to the risk he undertakes, and hence nothing but the most stem legal necessity should con- strain a court of justice to give an insurance contract a construction which would nullify it, and ren- der it a mere deception, instead of the protection which the parties intended. Hence a printed clause prohibiting the use of " camphene, spirit gas, or burning fluid," is construed as having reference to the use of these articles in lighting the premises, and not as excluding their use for the purpose of carry- ing on the business insured. Thus an insurance upon the stock in trade used in the business of printers of books and book-bind- ers, covers all such articles as are necessarily and ordinarily used in such business. In issuing the policy the underwriters must be deemed to have intended to in- clude all such materials in the risk. And therefore the use of camphene for cleaning type, a use customary among printers, is not a violation of a policy of insurance on a building "privileged for a printing office, bindery, and book- store," notwithstanding the print- ed conditions describe bookseller's stocks as extra-hazardous, and subject camphene to special rates, and prohibit its use. Harper «. Albany Mut. Ins. Co., supra. In Brown «. Kings Co. F. Ins. Co., 31 How. (N. Y.) 508, the policy covered " stock of drugs, chemicals, ond other merchandise, hazardous and extra-hazardous." The evidence showed that it was usual for druggists to mix various kinds of ointment and to melt it in their stoves, as was done in 94 FIKB INSURAl>rCE. and gunpowder, the evidence in the particular case showing that those articles are usually kept this case, and then to put it in boxes for sale and use. The fire originated from this cause, and it was held that the insurers must be deemed to be acquainted with the business, and to have included this process of melting ointment in the risk. In Citizens' Ins. Co.«. M'Laugh- lin, supra. Woodward, C. J., thus delivered the opinion of the court : "Assuming that the flre origi- nated from the use of benzole in the patent leather manufactory, the material question was whether the use of that article was a viola- tion of the conditions of the policy. The policy granted the ' privilege of keeping not more than five bar- rels of benzole in a small shed en- tirely detached from all the other buildings, situated in the rear end of the lot, about one hundred feet from the main building, and no- where else on said premises.' But the shed containing the benzole was expressly excepted out of the policy. The custom of the work- men was to carry an open bucket of benzole into the factory as often as wanted to be used in produc- ing the composition called ' sweat meat,' an article that was used in the manufacture of patent leather, and on the morning of the flre one of them had carried in a bucket containing three or four gallons of benzole, which he set down in the middle of the room and turned to the door, when it took fire from some unknown cause, and com- municated the flames to the build- ing, which was wholly consumed. . . . You insured a patent leather manufactory; you knew, for you were bound to know, that benzole was ordinarily used in such factories ; you stipulated that five barrels of it might be kept on hand near to the factory : and the necessary presumption is that you meant it might be kept for use in that factory as the article is ordi- narily used in similar factories. If, therefore, it was kept in the place stipulated, and used accord- ing to the custom of the trade, it was one of the risks covered by the policy . " The j ury found the fact that the mode of using it was according to custom, and so re- covery was had. A policy of flre insurance con- tained this exception: "Neither will the company be responsible for loss or damage by explosion. POLICY OP INSURANCE. 95 in country stores. Consequently they are brought •within the description of the policy and covered by it, notwithstanding a printed clause prohibits their being kept. The printed clause in such a case is repugnant to the written clause, and the except for such loss or damage as there were two barrels of whiskey shall arise from explosion by g'as." near the still, and a considerable In the premises of the insured, quantity, perhaps thirty barrels, who carried on the business of stored in the cellar at the time of extracting oil from shoddy, an the fire, which the court treated inflammable and explosive vapor as a natural and necessary inci- evolved in the course of the pro- dent to the business of distilling, cess escaped and caught fire, set- Although the fire did not originate ting fire to other things ; it after- from this whiskey, nor from the wards exploded and caused a distillery business in any of its further fire, besides doing damage parts, this answer of the Court is by the explosion. It was held that assigned for error on the ground the word gas in the policy meant that there was no proof of a cus- ordinary illuminating coal gas. tom among distillers to retain in Channel, B. " The gas in ques- their distillery so large a quantity tion is not illuminating gas, either of the manufactured article. We oil gas or coal gas. These gases believe thatdistillers do not always are used of necessity. I say ne- have warehouses for storing their cessity with reference to the exi- liquors in, and where the business gencies of the ordinary business is only incidental to that of brew- of life ; and they are such as the ing, such a warehouse could parties must have had in their hardly be expected. Nor do we minds as essential to the carrying know that thirty or forty barrels of on of any factory or business." whiskey are an unusual quantity Stanley v. Western Ins. Co., 3 for a distiller to have on hand in Law (Exchq.) R. 71. his distillery. The court said it " It appeared in evidence," said was a natural incident of the busi- the Court, in People's Ins. Co. 'o. ness, and we are bound to believe Spencer, 3 P. F. Smith, 353, "that it until the contrary is shown." 96 riEE INSUEANCE. latter governs,^ But is no effect to be attributed in eases of this class to the printed clauses? Are they to be struck out of the instrument? Cer- tainly not, but they must be construed as refer- ring to the use of hazardous articles not within the privilege granted. And they probably would prohibit a change of business from the one desig- nated to another not designated, although the latter should be no more hazardous. And they would also preclude the introduction of any new mode of carrying on or of aiding in the carrying on a manufactory which would materially in- crease the risk. The insurer is entitled to be protected against any extraordinary or unusual mode of carrying on the business — one which he would have no just reason to expect, and which would materially increase the risk. In such a case the insured, in order to retain the protection of his policy, would have to make a communica- tion to the insurer, and obtain his assent to the change.*^ TThether the policy may he varied hy parol: 9. It is a rule of evidence that extrinsic proof ought not to be admitted to vary a written instru- ' Pindar v. Kings Co. Ins. Co., ton Ins. Co., supra; Harper o. »iipra. Albany Mut. Ins. Co., iupra. 2 M. & M. Ins. Co. V. Washing. POLICY OF INSURANCE. 97 ment ; but it may be admitted to show that there has been mistake, fraud, misrepresentation, and deceit. For example, it may be shown that a policy of insurance was not reduced to writing conformably to the real intention of the parties, and in such a case a court of equity will reform the contract.^ That is, insurance, like other con- tracts, may be reformed on account- of accident or mistake, and set aside for fraud ; so a latent ambiguity may be explained by extrinsic testi- mony, and likewise terms of art, commerce, or trade.^ ' Moliere v. Pa. F. Ins. Co., 5 of the policy on which this suit is Eawle, 342 ; North Am. Ins. Co. founded. It only goes to show «. Whipple, 3 Biss. M. R. 418. where the property was to he 2 Fishers. Deihert'3 Adm., 4P. found to which the policy was F. Smith, 460 ; Storer b. Elliott intended to apply. The building Fire Ins. Co., 45 Me. 175 ; Mot- in which the goods were may be teaux V. London Assurance, 1 found without the aid of parol Atk. 545 ; Graves & Barnewall v. testimony. But it is found to The Boston M. I. Co., 2 Cranch, contain other occupants beside the 419 ; Kemochan v. New York plaintiff, with different entrances. Bowery F. Ins. Co., 17 N. Y. and carrying on different kinds of 428. In Storer v. Elliott Fire Ins. business. Were the policies in- Co., supra, there were four poll- tended to apply to goods in the cies, and there was an ambiguity whole building ? The parol testi- as to the property to which they mony shows that the plaintiff oc- were applicable. Parol testimony cupied only a part of it, when the was admitted to remove the ambi- three first policies were issued. It guity. Ooodenow, 3. : "Theparol shows the part he occupied when testimony introduced does not the last policy was issued, which vary or contradict the language was ' on his stock of merchandise, 7 98 FIRE INSURANCE. In the ease of Spring Garden Insurance Company -». Seott,^ Thompson, C. J., said : "We agree with our leatned brother who tried the case at IS'isi Prius, that parol evidence was admissible to show what the company by its agent undertook and agreed was covered by the terms used in the policy, viz., ' stock of wooden and willow- ware.' If the testimony be true, the attention of the secretary was called to the fact at the time the insurance was being consummated contained in tlie chambers of a retained it in his possession for four-story brick and slated build- several months before a mistake ing occupied by him and others," 'was alleged. Under such circum- etc. We are of opinion that the stances the information given to parol testimony ofiTered was ad- the insurance company ought to missible, and that the three first be very elear to justify a court of policies did not, nor did either of equity in conforming the policy them, cover the merchandise in to the intention of one of the par- the chambers or any part of it j ties, which was not communicated and that, therefore, the plaintiff is to the other tiU the loss has hap- entitled to recover of the defend- pened. Under the circumstances ants for hia wliale lass as before of the case a court of equity can- stated." not relieve against the mistake In Graves & Barncwall o. The which has been committed." BosiouM. I. C, supra, MareAallf Noyes «. Canfleld, 27 Yt. 85- C. J., in assigning the reasons Hildebrand o. Fogle, 30 Ohio, 147 ; why the Court refused to vary Evants v. Strode, 11 Ohioy 480 ; the contract in that case, said : The Globe Ins. Co. «. Boyle, 30 " The policy was in the possession Ohio St. R. 119 ; Lycoming Mut. of the agent for the plaintiffs, and Ins. Co. v. Sailer, P. P. Smith, 108. ought to. have been understood by ' (S. 0. Pa.),, Legal Intell., Ibim before it was executed ; he March 11, 1870. POLICY OF INSURANCE. 99 by the execution of the policy, ' that the applica- tion was for insurance on wooden and willow- ware and fancy toys,' and he declared that the words used, viz., wooden and willow-ware, in- cluded ' everything,' and upon this understanding •the policy was accepted and the premium paid. The company, therefore, is as much bound by this as if it had been inserted Reformation of instruments is an equitable result, although per- formed in a common law action, the maxim being ' that what ought to be done shall be con- sidered as done.' This is undoubtedly a highly moral and honest principle, and whenever the proof offered tends to show that it ought to be applied, it will be."^ In Home Insurance Company v. Favorite,^ a certificate was issued to the defendant " under and subject to the conditions of policy InTo. 12,261." A loss occurred before any policy was made out. It was held that the reference in the certificate to the particular number of a policy, although no such policy was in existence, made the terras and ' See also Combs v. Hannibal Conn. 575 ; Plumb -o. Cattaraugus Savings and Ins,. Co., 43 Mo. 148 ; Mut. Ins. Co., 18 N. Y. 392 ; Row- Harwitz «. Equitable Ins. Co., 40 ley «. Empire Ins. Co., 36 N. Y. Mo. 557 ; Franklins. Atlanticlna. 550 ; Manhattan Ins. Co. «. Web- Co., 43 Mo. 456 ; Hough s. City star, 9 P. F. Smith, 337. F. Ins. Co., 39 Conn. 10 ; Peck v. « 46 Illinois, 363. New London Mut. Ins. Co., 32 100 FIRE ESrSUEAKCE. conditions of policies issued by the insurer in like cases, a part of the contract. And that such policies were admissible to explain the meaning of the contract. " There seems to be no doubt," said Mr. Justice "Walker, " that it was the uni- form custom of this, as well as other companies, ■ to give certificates to the insured, on his payment of the premium, and in them to refer to a policy for the terms, as though it had been issued, and to afterwards make out one in the form used in such cases, and it is equally clear that this com- pany were in this habit ; and it appears to have been their custom to issue certificates in the same form as that read in evidence, and if desired, to subsequently fill up and deliver a policy of the number referred to in the certificate, containing the terms and conditions usual in such cases. And it seems that appellees were aware of the custom ; they had been in the habit of insuring in this manner with this company for several years previously. Had this contract stated that the in- surance was on the terms and conditions usually contained in their policies insuring such property, no one would have doubted that evidence of their terms and conditions could have been heard to fix the meaning of the agreement. That would, in such a case, be a legitimate mode of ascertaining the intention of the parties to the agreement. To POLICY OF INSUBANCE. 101 some extent, at least, surrounding circumstances, usages, and customs govern in the interpretation of all agreements and written contracts. It is only by a knowledge of such things that the full force of the language employed can be appre- hended. "Vfhere a contract is entered into, the parties are supposed to have reference to the known usages and customs which enter into. and govern the business or subject matter to which it relates, unless they rebut such a presumption by the agreement itself. The parties in this case referred to a policy which both knew had no existence, and it is perfectly apparent that they both understood the agreement was to be governed by the same terms and conditions as such an in- strument would contain if in existence;' and they both must have known, by the uniform and settled custom of the company, what were the terms and conditions of such policies. There can be no doubt that such was their intention and understanding, and we must hold that this is the effect of the reference to a policy in the agree- ment. The giving of a particular number for the policy cannot matter, when we see that the parties knew that no such policy existed, and probably never would exist." Parol evidence of an agreement between a mort- gagor and mortgagee that the latter should keep 102 PIEE INSUEABTOB. the premises insured, and the former should pay the premiums and have the benefit of the in- surance, is not in conflict with the rule that parol evidence cannot be permitted to contradict, vary, or explain a written contra.ct. The contract of insurance will have full operation according to its tei'ms and import, although obtained at the expense of the mortgagor and to be held for his benefit. The evidence of such agreement is mate- rial, as the effect of it is to entitle the mortgagor to have the avails of the policy, in case of loss, applied upon his debt, and precludes the insurers, in paying the loss, from having recourse to the bond and mortgage by way of subrogation.^ Mistake in the execution of powers / parol proof inadmissible to exclude a warranty, unless. 10. But while courts of equity possess autho- rity to corrrect mistakes in policies of insurance, even to the extent of changing the most material clauses, it is done with great gaution, and only upon such proof as is entirely satisfactory.^ And ' Kemochan v. N. Y. Bowery nix Fire Ins. Co. «. Gurnee, 1 Fire Ins. Co., 17 N. T. 438. Paige, Ch. 278 ; Robinson v. Tour- 2 Oliver v. Mut. Com. Mar. Ins. ney, 3 Camp. 157 ; 1 M. & S. 317. Co., 3 Curtis, 277; Collett«. Mor- In Collett v. Morrison, the Vice rison, 13 Eng. L. & Eq. 171 ; Hunt Ohaneellor, after referring to the «. Rousmanier, 1 Peters, 1; Phoe- case of Motteaux v. The London POLICY or INSURANCE. 103 there is a material difference between the reforma- tion of a written contract and the correction of mistakes in the execution of powers. In the lat- ter case, courts interfere much more readily, and upon the ground of presumed intention.^ Hence ■ when a complete contract for a policy is made by a known agent, and nothing is said respecting any declaration of interest, the contract is to in- sure the property of his principal, and in order that this contract may take effect, power is im- Assurance Co., 1 Atk. 545, said: the policy whicli was made out " This case appears to me fully to and delivered to the insured, in- establish, that if there be an agree- stead of conforming to the memo- ment for a policy in a particular randum, covered only the mill- form, and the policy be drawn up house. The mill was afterwards ^by the oflSce in a different form, burned and the insurers insisted varying the right of the party as- that the policy was only on the sured, a court of equity will inter- mill-house, and they were not fere and deal with the case upon liable for the loss of the mill or .the footing of the agreement and machinery. The insured then not of the policy. " applied to them to correct the In the Phoenix Fire Ins. Co., policy agreeably to the written supra, the insured applied to the memorandum, which they refused clerk of the insurance company to do. Whereupon he filed his for an insurance on his grist-mill bill to correct the mistake, and in Haverstraw, and the clerk took the court ordered the correction down a memorandum of the in- to be made. surance required, which was sign- ' Oliver «. Mut. Com. Mar. Ins. ed by the insured and left with Co., supra, Robinson v. Touray, the insurers. The memorandum sitpra. See also Ashurst v. Mill, described the subject of insurance 7 Hare, 503; 1 Story Eq. Jur., as the mill-house and machinery ; Sec. 169-179. 104 PI RE INStJKANCB. pliedly reserved to the agent specially to declare the interest upon which the insurance is to attach, and to have such declaration inserted in the policy when drawn, or to have the policy drawn so as to insure him as agent, leaving the declaration of interest to be made afterwards in case of loss. .Either is within the known usage of agents and underwriters; and when a mistake is made in de- claring the interest, it is a mistake in executing a power, and equity requires it to be corrected and the policy reformed. But if the agent in executing the power to declare the interest should purposely declare it in the wrong person, equity will not relieve the principal. A court of equity in such a case could not treat an attempted fraud as an innocent mistake, and thus reform the con- tract, but must leave the principal to his remedy against his agent.^ And it is well settled that parol evidence is inadmissible to show that a warranty was in- serted in a policy by mistake. "Were it other- wise, the mistake of the assured alone would not be sufficient to let in such evidence. It is mutual mistakes only which make a contract reformable- •in equity.^ And even then mere mutual knowl- ' OliTer «. Mut. Com. Mar. Ins. 30 N. T. 136 ; Cooper v. The Far- Co., supra. mers' Mut. F. Ins. Co., 14 Wr. 2 Ripley ». The ^taalns. Co., 399 ; Jennings v. The Chenango POLICY OF INSITRAKCE. 105 edge by the assured aud the agents of the insurer of the falsity of a fact warranted, is entirely in- Mut. Ins. Co. , 2 Denio, 75 ; Lee v. the insured at the time the contract Howard F. Ins. Co., 3 Gray, 583 ; was made, cannot be given by the Kennedy v. The St. Lawrence insured, on the trial, to change Mut. Ins. Co., 10 Barb. 385; Glen- the contract, even when he had dale Woollen Co. v. Protection been led by representations on the Ins. Co., 31 Conn. 19 ; Sheldon v. other side, unintentionally into Hartford P. Ins. Co., 23 Conn, making a warranty which was 335 ; Holmes ». The Charlestown not true. On the other hand, Mut. Ins. Co., 10 Met. 311; Sus- -when the agent has been truly quehanna Ins. Co. v. Perrine, 7 informed as to the facts, and upon W. & S. 348. In Bidwell v. The that information makes out the ITorthwestern Ins. Co., 34 N. Y. application, and a policy is there- 303, it was held that in the case upon delivered to the insured, the of a marine policy of insurance insurer is estopped to show that it " upon the whole tackle," etc. of contains a false warranty. Row- a vessel which contains a war- ley v. The Empire Ins. Co., 36 ranty that "the property is free N. Y. 550; Benedict v. The from all liens," parol evidence is Ocean Ins. Co., 31 N. Y. 389; admissible that the property in- Plumb v. The Cattaraugus Mut. sured is the owner's equity of Ins. Co., 18 N. Y. 393; Pitney «. redemption in the vessel which Glens Falls Ins. Co., 61 Barb, was subject to certain mortgages 335. See comments of the court known to the insurer. See Harris in the latter case on Bidwell v. 11. The Columbian Ins. Co., 18 N. W. Insurance Co., supra, and Ohio, 116, and Mr. Justice the later case of Solmes «. The Strong's analysis of that case in Rtitgers F. Ins. Co., 40 N. Y. Cooper ■». The Farmers' Mut, Ins. 416. Co., supra. In North Am. F. Ins. Co. v. In Plumb V. Cuttaraugus Ins. Throop, 22 Mich. 146, Oooley, J., Co., 18 N. Y. 393, and in Brown in commenting on the rule which v. Same, id. 385, it is distinctly prevails upon the sale of property held that parol evidence of what that a contract of warranty does was said between the agent and not in general, unless such is the 106 FIKE INSURANCE. adequate to induce a reformation of the policy so as to make it conform with the truth. It is rather evidence of guilty collusion between the agents and the assured, from which the latter can derive no advantage.' "Where the words of the policy are clear and unambiguous, and the expression of the intent of the parties is full, the contract is to be construed accurately whether such construction is favor- able or unfavorable to the insured. In such case the ordinary and familiar rule that that in- terpretation is to be adopted which is most fayor- able to the claims of the assured under the policy plamintentoftheparties, extend to Kennedy «. St. Lawrence Mut. defects palpable to the senses, and Ins. Co., 10 Barb 289. See also ■within the observation of the par- Lee t. Howard F. Ins. Co., 3 ties when the contract was made Gray, 583. — and the fact that this rule is not In Edmonds' Appeal, 9 P. F. applicable to warranties contained Smith, 230, where it was alleged inpoliciesof insurance, says: "It that by mistake the scrivener would seem that if any distinc- who prepared the policy inserted tion was to be made it should, for " five" instead of " three" years very obvious reasons, not be one as the duration of the policy, the discriminating in the direction court refused to cancel the policy, which these cases appear to." a loss having occurred within the (Referring to Jennings v. The five years, but after the expiration Chenango Co. Mut. Ins. Co. et of "three" years. The proof of al., supra.) the mistake was not such as to ' State Mut. F. Ins. Co. «. Ar- strike all minds alike as being un- thur, 6 Casey, 315 ; Smith v. Ins. questionable and free from reason- Co., 12 Harris, 330 ; Jennings «. able doubt. Chenango Ins. Co., 2 Denio, 79 ; POLICY or INSURANCE. 107 is inapplicable.^ Hence the proof of an oral agreement between the parties, that the language and stipulations of the policy should, for the purposes of that transaction, have a construction different from their accustomed and legal signifi- cation, is inadmissible. Two contracts, the one in writing and the other in parol, made between the same parties at the same time, in regard to the same subject matter, and for the same pur- poses, but variant in their respective stipulations, cannot stand and be enforced together in the same suit in a court of law. In such a case the law wisely determines to rely upon the written instrument alone, as the true and only safe ex- positor of the intention and final understanding and agreement of the contracting parties.^ ' Dole V. New England Mutual field F. & M. Ins. Co. v. Allen, Mar. Ins. Co., 6 Allen, 373 ; Hood 43 N. Y. 889 ; Savage ». Howard V. Manhattan F. Ins. Co., 1 Kem. Ins. Co., 52 N. Y. 503 ; Hough v. 523; The Merchants' Ins. Co. v. People's Ins. Co., 36 Md. 398; Edmond et al., 17 Grattan, 138. Baltimore F. Ins. Co. v. Loney, Policies of insurance are con- 20 Md. 36 ; Glendale Man. Co. v. strued so as to give effect to the The Protection Ins. Co., 31 Conn, intent of the parties as indicated 19. by the language employed. They ^ Woodbury Savings Bank ii. are interpreted by the same rules Charter Oak Ins. Co., 39 Conn, that are applied in the interpreta- 374 ; Winnesheik Ins. Co. v. tion of other written instruments. Holzgrave, 53 111. 516 ; Marshall Elliott V. Lycoming Co. Mut. Ins. «. Gridley, 46 111. 250. Co., 16 P. F. Smith, 33 ; Spring- 108 FIRE INSURANCE. It is, therefore, in a court of law inadmissible when a policy purports to insure the property of "A." to let in parol testimony to show that "B." was the real party to the contract, and that the insurer agreed to insure a mortgage interest held by him, and undertook to do so by the policy ; in fact, contracted with him by the name of "A."^ But a court of equity proceeds on a different principle, and where there is, as there was in Woodbury Savings Bank v. Charter Oak In- surance Company,^ a mutual mistake as to the proper mode of filling out the papers on both sides, will interpose and correct it. In that case the application was made out in the wrong namCj and the policy was made to the wrong person and on the wrong interest. But there was no fraud or misrepresentation. The papers would have been made out right if they had known how ' Woodbury Savings Bank o. of Daniel Ross" may be shown by- Charter Oak Ins. Co., 29 Conn, parol to be an insurance for the 374. In this case the amount of benefit of the*widow, heirs-at-law, any loss was payable by the and next of kin of the deceased, terms of the policy to "B." But Clinton v. Hope Ins. Co., 51 Barb. see Hodges v. Tenn. M. & F. Ins. 647. See also Lee v. Adsit, 37 N. Co., 4 Selden, 486. If there is T. 336 ; Herkimer v. Rice, 27 N. any ambiguity as to the interest T. 163 ; Colbum a. Lansing, 26 intended to be insured, extraneous Barb. 37 ; Lancey o. Phoenix Ins. evidence is admissible to explain Co., 56 Me. 563. the intent of the parties. For ex- 2 31 Conn. 517. See also Sted- ample, an insurance on the "estate win v. Anderson, 21 Conn. 139. POLICY OP IN-SUEANCE. 109 to do it, and in such a case it is immaterial whether the mistake was one of fact -or of law. In Woodbury v. Charter Oak Insurance Com- pany the mortgagee applied for insurance to an agent for a policy on his mortgage interest, but the agent drew the application as for an insur- ance on the property itself, in the name of the mortgagor and as his property, the amount pay- able in case of loss to the mortgagee ; the agent so drew the application and had the policy so made out in the belief that it was the proper legal mode of effecting an insurance on the mort- gage interest. Held, that equity could correct the mistake, though one of law, and that the policy was not made void by any prohibited act on the part of the mortgagor, such as obtaining other insurance, he not being the real party to the contract. Where the condition of a policy is that it shall be void unless any previous insurance upon the property is mentioned in the policy at the time it issues ; and when at the time it issued, there was a previous insurance which was not expressed, nor in any way mentioned or referred to in the policy, parol testimony, according to the doctrine of the Massachusetts courts,^ is inadmissible to ' Barrett v. Union Mut. F. Ins. Howard, F. Ins. Co., 3 Gray, Co., 7 Cusli. 175. See also Lee v. 583. 110 FIEE INSURANCE. show that the existence of such prior insurance and its amount, and the understanding of the insured that it was to stand and remain in force upon the property, were made known to the in- surer, and assented to hy him, prior to the making of the policy, pending its negotiation, and down to the time of its execution and delivery. But the case of Barrett v. The Union Marine Insurance Company,^ a leading case in Massa- chusetts, was decided substantially on the ground that parol evidence contradictory of the policy is inadmissible. The question of waiver was not in the case, nor of estoppel. The tendency of the cases elsewhere is, to admit parol evi- dence to show waiver, by the insurer's agent, of a condition that other insurance shall be con- sented to by endorsement on the policy.^ In -^tna F. and T. Insurance Company v. Olmstead,^ Cooley, J., in delivering the opinion of the Court, said: "Without undertaking to say that the answer to the ninth interroga- tory, as above given, can be declared untrue, we think, if it is so, and the policy for that ' Supra. Co. «. Throop, 32 Mich. 146. See 2 See Lamatt v. Hudson River ante, p. 49, note 3, and p. 60, Ins. Co., 17 N. Y. 199 ; WhitweU note 1. «. The Putnam F. Ins. Co., 6 > 31 Mich. 346. Lansing, 166 ; North Am. F. Ins. POLICY OF INSUEAlSrCB. Ill reason, according to its terms, made void at its delivery, the agent, who had knowledge of all the facts, was chargeable also with knowledge of this invalidity ; that the insurers are also charge- able with the knowledge possessed by their agent, and that consequently it was a fraud on their part to receive the premium moneys and deliver the policy without intending it should have effect under such circumstances. Such a fraud the law will not permit to be consummated ; but on the contrary it will hold that when they delivered the policy it was with the intention that it should take effect, and that the insured should have the benefit from it for which he paid ; and if there was any error or ambiguity in the appli- cation which their agent prepared, they must be held, under the circumstances here appearing, to have waived it," , Where an agent to procure applications for in- surance, and to forward them to the company for acceptance, either by his direction or direct act makes out the application incorrectly, notwith- standing all the particulars were correctly stated to him by the applicant, equity will correct the mistake as having occurred between the appli- cant and the insurer himself. The agent in such case binds the insurer by his agreement or ex- 112 PIEE INSUEAN-CE.. planations given at the time he obtained the proposals from the insured.^ "When the policy requires that the interest of the insured, if not an absolute interest, must be represented in its true character, and the appli- cant for insurance describes the property as Ms, ' Malleable Iron Works v. Phoe- not affecting his own action. We nix Ins. Co., 35 Conn. 465. See think evidence of these facts was also Hough V. City Fire Ins. Co., competent. Its purpose was, not 29 Conn. 10 ; Sandford v. Handy, to vary or contradict the contract 23 Wend. 260 ; Nelson e. Cowing, of the parties, but to preclude the 6 Hill, 336 ; Devendorf ®. Beards- party who had framed it from re- ly, 33 Barb. 660 ; Woodbury Sav- lying upon incorrect recitals to ings Bank ». Charter Oak Ins. defeat it, when he himself had Co., 31 Conn. 517. Vide Tesson drafted those recitals, and was «. Atlantic Mut. Ins. Co., 40 Mo. morally responsible for their truth- 33 ; The North Am. P. Ins. Co. fulness. Plumb «. Cattaraugus V. Throop, 33 Mich. 146. The Mut. Ins. Co., 18 N. Y-. 394; opinion of the Court in the latter Rowley ». Enipire Ins. Co., 36 case, delivered by Gooley, J. , will N. T. 550 (overruling earlier N. T. repay an attentive perusal. The cases) ; Anson «. Winnesheik Ins. following is an extract : " In this Co., 23 Iowa, 84 ; New England case it is conceded that the oral F. and M. Ins. Co. v. Schettler, answer made to the inquiry about 38 111. 166 ; Patten b. Farmer's F. incumbrances, mentioned the Ins. Co., 40 N. H. 383 ; Columbia large mortgage, but it is disputed Ins. Co. v. Cooper, 50 Penn. St. that it specified the smaller one 331 ; Olmstead v. Mina, Live Stock also. The plaintiff claims that he Ins. Co., 21 Mich. 346. And we gave the agent full information on think the estoppel is precisely the the subject, and insists that if same when the agent of the in- there was any failure to mention surer drafts the papers, as it would it in the application, it was for be in the case of an individual in- reasons operating exclusively surer who was himself personally upon the 'mind of the agent, and present and acting." POLICY or INSURANCE. 113 when in point of fact the mere legal title is in another, a court of law will admit parol testimony to show that, during the negotiations with the agent of the insurance company, the applicant stated all the facts relating to the nature of his title, and that the agent after hearing such state- ment made out the application himself.^ " With- out intending," said the Court, "to call in ques- tion the rule of law that parol evidence is inad- missible to affect written instruments, we hold that this evidence was properly received. The defendants claimed that the plaintiff's denomina- tion of the property as ' his' was a misrepresenta- tion which rendered the insurance void, and to meet that claim it would undoubtedly have been proper for the plaintiff to show that he made such statement to the defendants themselves, and that the language of the application was their own. To allow the defendants under such circum- stances to avoid their contract, on account of a- mistake into which they themselves had led the plaintiff, would be to allow them to take advan- tage of their own wrong. So, too, the evidence was proper as conducing to prove an understand- ing and agreement between the parties to con- sider and treat the property as belonging to the ' Hough V. City Fire Ins. Co., 39 Conn. 10. 8 114 PIEB IKSUEAIsrCB. plaintiff. In the case of Peck v. New London Mutual Insurance Company/ part of the property insured and destroyed was owned by one of the plaintiffs, and part by the other, in severalty. It was all insured as if the plaintiffs were joint owners of the whole, and in their declaration they alleged they were so. Parol evidence was given that, at the time of procuring the policy, the plaintiffs made to the defendants' agent a full statement regarding their title, and that said agent filled up and issued the policy in language of his own selection, and this court held that the evidence ' was properly received for the pur- pose of showing that the parties agreed to treat the property insured as the joint property of the plaintiffs.' '« ' 23 Conn. 575. side wooden frames ; and in an ' See also Moliere ». Pa. F. Ins. action on the policy the insurers Co., 5 Eawle, 343. In this case set up in defence a misdescription the policy provided "that a mis- of the premises. Sergeant, 3.: "It description of the materials and is immaterial whose act it was ; it roofs of buildings, so that the same is sufficient if the evidence shows should be taken at a lower rate that it did not conform to the in- than if truly described, should tentions of the parties, whether by avoid the policy." The applicant the mistake or inadvertence of the for insurance minutely described person who drew it up. It may the situation and construction of be remarked, however, that by the his brick ice-house, surrounded conditions annexed to the policy, and covered by wood, to the the secretary is" designated as the secretary, who, in reducing the person to whom the description is description to writing, omitted to to be furnished. If he, acting in say anything concerning the out- this capacity, undertakes to reduce POLICY OF INSURANCE. 115 We may add, that whether the agent is au- thorized to receive the statements of the appli- cant for insurance and charge his principals with the consequences, is a question of fact to be in- ferred from the nature of his agency, the duties incident to it, and the manner in which his duties have been performed, with the express or impHed approbation of the principals ; an inference of fact for the jury.^ And it has been held that an agent whose business it is to receive and forward to the company applications for insurance, is the agent of the company to receive a disclosure of facts, although the company privately instruct him to regard himself in so doing as the agent of the applicant.^ the verbal particulars to writing, that the evidence was properly and file them as a memorandum received." or order, the insured has a right In Lee v. Howard F. Ins. Co., to expect he will insert all that is 3 Gray, 583, the decision did not material ; and if he omits to do so, rest on the ground of misrepre- I should deem it his act, and not sentation or concealment by the the act of the assured, and that assured in the description of the the company would, in equity, . property contained in his applica- be precluded from setting up this tion, but solely on the ground that omission as an objection to a re- the assured violated an express covery in case of loss, in the same stipulation in the policy, manner as where the policy is not ■ ' Hough v. City P. Ins. Co., 39 made conformably to the order. Conn. 10. The evidence to support such an ' Beebe v. Hartford Co. Mut. F. allegation ought to be clear and Ins. Co., 35 Conn. 51. See Corn- satisfactory. Butofthat the jury mercial Ins. Co. v. Ives, 56 111. were to judge. I am of opinion 403. CHAPTER V. 1. When insurance complete. 5. What is proof of agreement 2. Insurer cannot arbitrarily to insure. withhold approval of his agent's 6. tJffer and acceptance by mail, contract. 7. Countersign of agent ; effect 3. When insurance incomplete, on agreement to insure. 4. Insurance subsequent to loss. 8. Payment of the premium. When insurance complete. 1. A contract of fire insurance is complete when it appears that the terms of the contract , have been settled by the concurrent assent of the parties, and nothing remains to be done but to deliver the policy; the actual delivery of the policy is not essential to its completion.^ The ' " The conclusion is inevitaWe be paid ; this remained to be done that an actual concurrence of as- before the contract was complete, sent at any particular moment is In a recent case in the District- the ruling circumstance, the time Court of Philadelphia, the princi- of communicating it being com- pie of the rule stated in the text paratively unimportant." Gibson, was applied to a policy of life in- C. J., in Hamilton v. Lycoming surance. The opinion of the court Ins. Co., 5 Barr, 839 ; Keim ■». was delivered by Hare, President Home Mut. F. & M. Ins. Co. of Judge, as follows : " Concisely St. Louis, 42 Mo. 38 ; Marland «. stated, the argument of the plain- Royal Ins. Co., 31 P. F. Smith, tiff's counsel amounts to this, that 393. In this case the policy was if the minds of the parties meet in ■withheld until the premium should an agreement for insurance, the "WHEN" INStTRAK"CE COMPLETE. 117 insurer is considered as holding it for the benefit of the assured, and is bound to deliver it at his policy ■will be valid without an urging tUe payment of the pre- actual delivery. This position is mium as the condition precedent one to which the court fully ac- on the fulfilment of which the in- cede. A binding contract will not surance would be effectual. The be allowed to fail because the in- plaintiff, however, declined to pay strument which is the evidence of till fall, when he hoped to be in it is retained by the covenantor, funds from the sale of his corn. His keeping will, under these cir- When the policy arrived, Manship cumstances, be regarded as that sent it by mail to a Mr. Wharton, of the covenantee. But on the who resided in the same village as preliminary question, Is there the plaintiff, with instructions to such a contract ? it must always deliver it on the payment of the be a material inquiry, whether premium, but not before. This the party who is alleged to have letter reached its destination on bound himself did any act mani- the 6th of November, 1868, and festing an intention to put the the plaintiffs wife died on the instrument beyond his control, following day, leaving the pre- and render it the property of the mium still unpaid. The plaintiff other party. If he did not, the then sent a check for the amount obligation is prima facie incom- to Manship, which was returned, plete, and those who allege the An action of covenant having contrary must make out their case been brought and issue joined on by proof, a plea of non est factum, the plain- " In the present instance, a policy tiff was nonsuited at the trial on duly signed and sealed by the de- the ground that there was no evi- fendants was transmitted by them dence of the delivery, which is to Andrew Manship, their general essential to every deed, agent for the State of Delaware. "Itresultsfromthis view ofthe It was the result of an applica- evidence, that the policy never lion which the plaintiff had made ceased to be in the custody of the through Manship for an insurance defendants. Manship was the on the joint lives of himself and general agent of the company, his wife. Manship had, in the and while the instrument was in mean time, written to the plaintiff his hands it was in theirs ; and 118 FIRE IITSUEANCB. request. Trover will lie against him if he should withhold it ; or if no policy has been made out the insurer may be sued upon his parol contract to insure, or equity will compel him to execute a policy,^ when he sent the policy to Whar- design -which is not executed, ton it was with express instruc- Undoubtedly if there had been tions that it should not be given evidence showing an intention to Tip until the money was paid, trust the plaintiff, or take some The policy, however, contains a one else for the debt and release clause that ' this policy, when him, the case might have gone to signed by two officers of the com- the jury and been determined by pany, acknowledges, and is a them. It was on this ground, that valid receipt for the first premium the insurers had by charging the thereon,' and it is contended, that broker credited the insured, that inasmuch as the instrument in thecaseof Xenos «. Wickham, 13 evidence was so signed, it must C. B. K. S. 381 ; lb. 866, was de- be regarded as conclusive that the cided by the House of Lords. Un- premium was paid. This argu- fortunately for the plaintiff the ment, however, overlooks, that evidence in this instance is the while the policy as thus explained other way. He was cautioned by is unquestionably a receipt, it is a Manship that the defendants did receipt prepared in the expecta- not deal on credit, that the trans- tion of a payment which was action was for cash, and that the never made. It might as Well be policy would not be effectual until contended that a shopkeeper is the money was actually paid, bound by a receipted bill sent to Looking at all the facts in proof, the house of a customer who does we see no ground on which the not find it convenient to pay. nonsuit can be taken off." Mo- Even when such an instrument tion dismissed. See also Whita- is signed and delivered it may be ker v. Fanners' Union Ins. Co., explained. Without delivery it is 29 Barb. 312 ; Hallock v. Ins. Co., merely inchoate, and of no more 2 Dutch. 268. . real value in the scales of proof ' Hamilton «. Lycoming Ins. than an unuttered thought, or a Co., 5 Barr, 339; Hallock v. Ins. agekt's contract. 119 Insurer cannot arbitrarily wiihJiold approval of his agent's contract. 2. An insurer has no arbitrary right to with- hold " approval" of his agent's contract, although Co., 3 Dutcli. (N. J.) 368 ; S. C, 3 Dutch. 645 ; aoodall v. N. E. Mut. F. Ins. Co., 5 Fost. (N. H.) 169 ; Adams v. Lindsell, 1 Barn. & Aid. 681 ; Bragdon v. Appleton Mut. P. Ins. Co., 43 Me. 359; Baptist Church v. Brooklyn F. Ins. Co., 38 N. Y. 153; City of Davenport v. Peoria M. & F. Ins. Co., 17 Iowa, 376. In Hamilton s. Lycoming Ins. Co., tupra, said Gibson, C. J. : " The case, then, stands thus : The company offered to effect insurance for a certain premium, on performance by the plaintiff of two conditions. These were performed, and the company had notice of it. The company was subsequently requested to call by its agent at the plaintiff's house to see that the substitution was made and receive the written as- sent of the trustees, which it pro- mised to do but did not, and in the mean time the building was burned down. There was no su- pineness on the part of the plain- tiff—at least none which had not been induced by the agent — while the company, on the other band. was chargeable with positive ne. gligence. Now if I promise to reward a man if he will do me a particular service, and he does it, I am bound to reward him for it, though he had not engaged to do it. The nature of a conditional promise resting on an executory consideration, was explained in Clark V. Eussell, 3 "Watts, 317 ; and it may be seen from it, that the plaintiff, having actually per- formed what he had been request- ed to do, was entitled to have the policy. The terms of the contract were matured when the company had notice that its conditions were performed, and from that moment the risk was incurred. It would be unconscionable in it to insist upon its o'jTO omission to execute the policy, on the ground that the resolution of the trustees had not been handed to its agent, espe- cially as he had prevented the plaintiff from tendering it by pro- mising to call and get it. A parol agreement for a policy, therefore, was complete." 120 FIRE INSUEANCB. such inght is reserved; he is bound to approve unless the agent has been imposed on, or the contract made by him would operate as a fraud on the rights of the company.^ "Where a policy was filled up and delivered by an agent fully authorized to make insurance, and the assured then signed an application containing this memo- randum : "The insurance on this application is to take effect when approved by A., general agent," etc. ; and the general agent did, not ap- prove it, but sent back the application and directed the local agent to return the premium note and cancel the policy — ^but before either was done a loss occurred — it was held that the in- surers were liable. The policy issued was perfect in form and substance ; the premium note was in the ustial form, and for the proper sum, and the delivery of the policy and the receipt of the note were significant acts. The memorandum at most was the reservation of a right, not however to be arbitrarily exercised by the general agent, to dis- approve the insurance and annul the contract on notice to the insured and on return of the pre- mium note. Until this was done the insurance was binding and valid.^ ■ Palm «. Medina Ins. Co., 30 « Ins. Co. «. Webster, 6 Wal- Ohio, 539 ; Perkins %. Washington lace, 139 ; Lightboy «. North Am. Ins. Co. 4 Cow. 645. Ins. Co., 33 Wend. 18; 4 Cowen WHEISr INSUEAlSrCE IS INCOMPLETE. 121 When insurance is incomplete. 3. On the other hand, when the agent is only- authorized " to take applications for insurance," and "receive the cash percentage to be paid thereon," and in the certificate which he gives to the applicant for insurance it is stated that such applicant has applied for insurance and paid a cash premium, and also that "if not approved by the directors, money to be refunded," it has been held that the application and payment of the pre- mium amount only to a proposal for insurance. The agent in such a case has no authority to ac- cept a proposition or make a contract of insurance for his principal.^ And the proposal for insur- ance which the agent forwards to the company cannot be converted into a contract by delay on the part of the company in rejecting or answer- ing it. A proposal not answered remains a pro- posal for a reasonable time, and is then regarded as withdrawn.^ A proposition only becomes a 645; uEtna Ins. Co. v. Maguire, Bidwellfl. St. Louis Floating Dock 51 lU. 343. Equity wiU afford & Ins. Co., 40 Mo. 43. In the latter relief when agent refuses to de- case the policy was issued on the liver policy. Chase v. Washing- condition that the insured should ton Mut. Ins. Co., 13 Barb. 595. execute his negotiable note to the ' Ins. Co. V. Johnson, 11 Har- company with a solvent endorser ; ris, 73. See also Bently «. Co- the condition was never complied lumbia Ins. Co., 17 N. Y. 421. with, and the policy therefore 2 Ins. Co. V. Johnson, siipra ; never had any . binding effect. 122 FIEB INSUEANCE. binding contract when the party to whom it is made signifies his acceptance of it to the pro- poser.^ Although upon the written application of A. for insurance a policy is made oat, and he is re- quested by the insurer to take it, and at the same time sign the deposit note and pay the premium, the amount and rate of which had been agreed upon between them, yet if A. refuses to accept the policy or sign the note and pay the premium, no contract is completed between the parties, and A. is not liable to the insurer for the amount of the premium, nor for the deposit note which he had failed to execute ; and in case of the destruc- tion of the property proposed to be insured no liability would attach to the insurer.^ JS^or does any liability attach to the insurer if anything remains to be done by the applicant for insurance as a condition of the contract;* while, on the ' Tayloe v. The Merchants' F. and the signature of the deposit Ins. Co., 9 How. 370 ; Walling- notes. See also Thayer v. Middle- ford V. Home Mut. F. &Mar. Ins. sex Mut. F. Ins. Co., 10 Pick. 370. Co., 30 Mo.'46. See also Winne- ' Sanford v. The Trust F. Ins. sheik Ins. Co. v. Holzgrafe, 53 Co., 11 Paige, Ch. R. 547; Wal- Hl. 516. lingford «. Home Mut. F. & M. ' Real Estate M. F. Ins. Co. o. Ins. Co., 30 Mo. 46. Infra sec. 1 Roessle, 1 Gray, 336. By the 12th and notes. Marland o. Royal article of the insurer's by-laws the Ins. Co., 21 P. F. Smith's R. 393; policies were not to be delivered Bradley v. Potomac Ins. Co., 33 until the payment of the premiums Md. 108. "VTHEN INSUEANCE IS INCOMPLEPTE. 123 other hand, if the preliminary condition has been complied with and notice given to the insurer, he is liable from the time of such notification.'^ An agent having power to issue policies of in- surance made out a policy to A. in October, and reported the same to his principals, but he did not receive the premium or deliver the policy until December. The applicant for insurance had done nothing to complete the contract, and could have derived no benefit from the policy had a fire occurred between October and December. At the latter date he objected to the policy, and refused to take it in the form in which it then was. The agent, having authority under his general powers, enlarged the policy from its first draft, by changing or modifying the description of the insured property so as to embrace the case of a building unfinished, but then in the process of construction. The policy in this form was accepted by the insured, and subsequently the property was burnt. The insurers were held liable under the enlarged policy, and the contract was treated as having been consummated at the time of such enlargement and its acceptance by • Hamilton v. Lycoming Mut. The Merchant's F. Ins. Co., 9 Ins. Co., 5 Barr, 339; Tayloe v. How. 370. 124 riEE INSUEAIirCE. the insured/ And the insurers are also liable when the holder of a policy upon goods, who is about removing them to another store, applies to them to have the policy transferred to cover the goods in the new building, which is accordingly done, and the goods are destroyed by fire before they are removed.^ "The only inference fairly deducible from the evidence is," said the Court in the case of Kunzze v. Am. Ex. Fire Ins. Co., " that all parties contemplated a transfer of the risk on the goods after they were removed, and testimony does nor warrant the conclusion that the policy was to be inoperative from the time of the application or the making of the memo- randum until the goods were removed to the building at Stapleton." Insurance subsequent to loss. 4. Cases may arise in which both the contract and the policy naay be subsequent to the destruc- ' Gloucester Man. Co. 11. How- the circumstances, at the same ard Ins. Co., 5 Gray, 497. time, cover loss upon the goods ' Kunzze v. Am. Ex. Fire Ins. at both places, and the insurers Co., 41 N. Y. 413. See the same -would certainly have been liable case, 2 Robt. (N. Y.) 443. We if the fire had occurred after re- cannot help thinking there is moval. The moral liability of the force in the dissenting view of insurer in this case was more Woodruff, J., who was of opinion apparent perhaps than his legal, that the policy could not, under i:srSURAN-CE SUBSEQUENT TO LOSS. 125 tion of the property, as when the master of a vessel fraudulently withholds information of the loss of his vessel from the owner, who effects an insurance on her. Yet in such a case the insurer is held to be bound.' An agreement to insure was made on the 20th day of March. A policy in perfect accordance with such agreement was executed and delivered on the morning of the next day. In the interim the premises were destroyed by fire, both parties being ignorant of the fact at the time the policy was delivered. The charter of the insurance company provided that " all policies of insurance made by the corporation shall be subscribed by the president, or, in case of his death or absence, by the vice-president, and countersigned and sealed by the secretary of the company ; and all losses arising under any policy so subscribed and sealed, may be adjusted and settled by the board of directors." It was contended on behalf of the insurers, that under this clause of the charter no agreement for insurance could be binding on the ■company unless it was in writing, subscribed by the president, and countersigned and sealed by the secretary ; and that since the agreement in question was a parol agreement until after the ' Gen. Int. Ins. Co. v. Ruggles, 12 Wheat. 408. 126 riKB INSUEAHrCE. loss, and as the insured had no insurable interest at the time the policy was actually signed and delivered, no recovery could be had thereon. But it was held that the insurance company, a corpo- rattion, had the power, by virtue of its existence, to bind itself expressly, in writing or by parol, through its authorized agents in any matter within scope of the object, purpose, or business for which it was created, unless by the act of its incorporation it was expressly limited therein; that the limitation which requires " all policies of insurance made by the corporation" 'to be signed by the president and countersigned and sealed by the secretary, extends only to ^^ policies of insurance," and therefore any other contract may be made in writing or by parol through its agents as with other corporations ; and that the contract or agreement to execute a policy is not within the limitation, and hence such a contract may be made in the ordinary way, through its agents, and will bind. the corporation.^ In Kohne v. Insurance Company of l!^ orth America,^ the agent of the insured applied to the president of the insurance company to effect an insurance* on goods on board a ship, and settled ■ City of Davenport «. Peoria Metropolitan Ins. Co., 56 Me. M. and F. Ins. Co., 17 Iowa, 276. 371. See to the same effect Walker v. « 1 Wash. C. C. R. 93. INSURANCE SUBSEQUENT TO LOSS. 127 •with him the terms of the insurance, but left the office before the policy was filled up. It was soon after filled up and executed, and about the same time the company received intelligence of the capture of the vessel, which was not known to either party when the agreement was made and the policy executed. On a subsequent day the agent called to pay the premium and receive the policy, but the company refused to deliver it, objecting that the agreement was inchoate, and having heard of the loss before the delivery of the policy the company had a right to retract. But Judge Washington held that since there was no unfairness nor knowledge of the loss when the terms of insurance were settled, the objection was entitled to no weight ; that the contract was perfect and binding.^ In Lightboy v. North American Insurance Company,^ the insured through his agent made a contract for insurance of certain premises in Utica, with the insurer's agent in Troy, late in the evening of March 30th, and paid the premium and took a receipt. About two o'clock in the morning of the next day the buildings were con- sumed by fire. The policy was not madS or de- ■ See also Bragdon i). Appleton « 23 Wend. 18. Mut. F. Ins. Co., 43 Me. 359. 128 PIEB IKSUEAIfOE. liveVed till the 21st day of April following, and was delivered by the agent after the insured had called upon the insurers for payment of the loss, which was refused, the insurers denying the au- thority of their agent to make the contract of insurance, and notifying the insured that the agent's authority as their agent had been revoked. The Court, speaking through Bronson, J., held that the policy took effect by relation from the day of its date, which was on the day the pre- mium was paid and the contract concluded ; that it was the manifest intent of the parties that the contract should operate from the day of its date, so as to give the plaintiff the same legal remedy which he would have had if the policy had in fact been delivered on that day ; and the law would give effect to that intention. The plaintiff had made a valid contract with the defendants, and was entitled to the usual evidence of that con- tract — a policy of insurance. He could have maintained an action on the case for a refusal to deliver a policy, in which he would have recovered damages to the full amount of his loss. But if his remedy at law was questionable, he had a perfect equitable right to the delivery of the usual policy, which he might have enforced in the pro- per forum.^ ' See also Hallock s. Com. Ins. Co., 3 Dutch. (N. J.) 368. INSURANCE SUBSEQUENT TO LOSS. 129 In Perkins v. The Washington Insurance Com- pany,^ the insured applied to the agent of the insurer, at Savannah, on the fifth day of January, to insure his goods for five thousand dollars. The agent agreed to take the risk for a premium of two and a half per cent. The insured paid the premium and also the fee for the survey and policy, and was given a receipt therefor by the agent. On the morning of the eleventh day of January an extensive fire broke out in Savannah and consumed the insured's goods. He gave notice to the agent of the loss and offered the usual preliminary proofs, and demanded a policy of insurance; but the agent stated that he had not forwarded the premium to the company, a corporation in New York, and had not I'eceived a policy, and intimated that the company would . not feel bound by what had been done. In May, the proper notice of loss, with the usual proofs, were given to the company, but they refused to execute a policy although the insured tendered the amount of the premium. He thereupon com- menced proceedings in equity to recover for his loss, and set forth in substance the facts we have . recited. The insurers admitted the facts as stated, but denied the agent's authority to con- ' 4 Cowen, 645. 130 PIRE IKSUKANCE. tract for insurance, but averred that he only had authority to make surveys, receive probable pre- miums, and transmit them to the insurers to pre- vent unnecessary delays. The Court held that the insurers were bound by the acts of their agent, and decreed that they should pay the amount agreed to be insured. Agreement to insure. 5. It will thus appear that a mere agreement to insure is binding, if it appears that both par- ties concurred in it, and nothing remains to be done but to pay the premium and receive the policy.^ And an agreement by the agent of the insurer to insure will be specifically enforced against the insurer at law or in equity whether the policy has been executed or not.^ Actions I -HamiUon v. Lycoming Ins. policy after such payment cannot Co. , 5 Barr, 339 ; City of Daven- be taken advantage of by the com- port v. The Peoria Mar. & F. Ins. pany in a court of equity. Ide v. Co., 17 Iowa, 278 ; Kohne «. Ins. Phcenix Ins. Co., 3 Bisaell, 333. Co. of North Am., 1 Wash. C. C. 2 Ibid. ; Andrews v. Essex P. & 93 ; Bragdon v. Appleton Mut. P. Mar. Ins. Co., 3 Mason, 6 ; M'Cul- Ins. Co., 42 Me. 259. A receipt of lough v. Eagle Ins. Co., 1 Pick, the premium by the Authorized 278 ; Palm v. Medina Ins. Co., 20 local agent of the company is a re- Ohio, 529 ; Tayloe v. Merchants' ceiptby the company, although the Fire Ins. Co., 9 How. 390. In agent never remitted the money to Ellis v. Albany Fire Ins. Co., 50 his principals, but converted it to N. Y. 402, it was held that an his own use, and a failure to issue a agent of an insurance company, AGREEMENT TO INSURE. 131 on agreements to insure are not uncommon.^ And where the insured would have a good cause of action at law upon a policy, had a policy been issued in pursuance of an oral contract to insure, equity will decree him what he would be entitled to recover had a policy issued, and that which was agreed to be done had been actually done.^ In Audubon v. The Excelsior Insurance Com- pany,^ where an application for insurance upon authorized to negotiate and con- Columbus Ins. Co., 18 Ohio, 659. elude the terms of a contract and It was said, in Perkins ■». Wash- to issue a policy, was empowered ington Ins. Co., 4 Cowen, 645, thereby to make a valid prelimi- that the only difference between a nary contract for the issue of such receipt for a premium of insurance policy, and when such prelimi- signed by a president or secre- nary contract is made and the tary of an insurance company and premium therefor paid by the as- a policy is, that the former must sured, the company is bound be- be enforced in chancery and the fore the policy is actually filled latter at law. See also Carpenter up, countersigned, and delivered, v. Mut. Ins. Co., 4 Sandf. Ch. R. See also Sanborn v. Fireman's 408. Ins. Co., 16 Gray, 448 ; Post v. ' 37 N. Y. 316. Denio, Ch. J. : ^tna Ins. Co., 43 Barb. 361. "I do not say that, in a case of ' Hamilton v. Lycoming Ins. another character, where time Co., supra; Kelly v. Common- would be less material, and where wealth Ins. Co., 10 Bosw. 83; delay would not involve any Audubon v. Excelsior Ins. Co., hazard, a contract would be con- 37 N. T. 316 ; Baxter v. Massasoit sidered made after terms had been Ins. Co., 13 Allen, 330 ; Shearman settled, and the parties were wait- V. The Niagara Falls Ins. Co., 46 ing for a written contract to be N. T. 530. drawn up. I put this case upon 2 Union Mut. Ins. Co. v. Com. the peculiar nature of the contract Ins. Co., 3 Curtis, 534; 8uydam«. of insurance, the plain intention 132 riEE IKSUEANCE. certain engravings, like others which had been recently insured for the applicant by the same underwriter, was made on Saturday ; and where the parties agreed verbally upon all the terms of such insurance, except the rate of premium; and where, too, the previous insurance was mentioned in the conversation between the applicant and the secretary of the underw:riter, who promised to make out a policy and send it to the assured on the following Monday, it was held that this was an agreement to insure presently, at the former rate of premium, and to furnish the written evi- dence of such agreement at the time specified. The property having been destroyed by fire on the intervening Sunday, a recovery was had against the underwriter for the loss. If an independent oral contract of insurance, which takes efiect in presenti, is accompanied by an agreement to substitute therefor in the future a written policy, which the insurer is to deliver of the insured, and the probable ready to pay it, and the natural understanding of the parties. Pro- course of business would be to bably there would, in contracts pay it when the policy should be upon other subjects, be a locus delivered. In the mean time it penitenticB until the instrument was a debt against the owners, should be actually signed. It is for which- credit was given until true that in this case the con- the delivery of the policy." See sideration was not paid, but the also Pratt v. The New York Cen- owners of the property were tral Ins. Co., 64 Barb. 589. AGEEEMElirT TO mSURE. 133 and the insured is to accept, the oral contract remains in force until the delivery or tender of such policy. The usual condition of the written policy requiring prepayment of the premium forms no part of the oral contract, unless ex- pressly adopted hy the parties. And a mere de- mand of the, premium without insisting upon it or tendering a valid policy does not terminate the oral insurance! If or, it seems, is it terminated, if, after a loss, and while the insurers were igno- rant of it, the insured paid them the premium, and received from them a written policy which was invalid by reason of not being executed in the mannef required in the body of it.^ There is in such a case a continuing obligation of the oral contract until a valid and binding policy is either tendered or delivered.^ What is 'proof of agreement to insure. A parol agreement to insure, and a parol contract to renew a policy, are both valid.^ An agreement to insure may be evidenced by the correspondence of the parties. But a mere offer ' Kelly V. The Com. Ins. Co., Ins. Co., 18 Barb. 69 ; First Bap- 10 Bosw. 83. tisl Society ij. Brooklyn Ins. Co., 2 Ibid. See also Com. Ins. Co. 19 N. Y. ^05, and cases there V. Hallock, 3 Dutch. (N. J.) 645. cited ; Post «. ^tna Ins. Co., 43 » Baptist Church «. Brooklyn Barb. 351. 134 riRE INSUEA^OE. loj the one witTiout an acceptance by the other imposes no obligation. And any qualification of the terms or departure from them invalidates the offer, unless the same be agreed to by the person who made the offer. Until the terms of the agreement have received the assent of both par- ties, the negotiation is open, and imposes no obli- gation upon either. In other words, the minds of the parties must meet.^ And the coiTe- spondence between the parties must be closely examined, in order to ascertain whether the evi- dence of the assent of both parties to the terms of the agreement be clear and unequivocal.^ Offer and acceptance hy mail. 6. "When an offer is made by letter, and is ac- cepted by letter, the contract is complete from the time the letter of acceptance is put into the 'mail. The offer cannot be withdrawn, unless the withdrawal reaches the party to whom it is addressed before his letter of reply announcing the acceptance has been mailed.^ The unqualified ' Eliason «. Hurshaw, 4 Wheat. * Neville v. Mer. & Man. Ins. 338; Belleville Mut. Ids. Co. ®. Co., supra. Van Winkle, 1 Beasley, 333 ; s Adams v. Lindsell, 1 Barr. & Ocean Ins. Co. «. Carrington, 3 Aid. 681 ; Tayloe v. The Mer- Conn. 357; Neville v. Mer. & chants' F. Ins. Co., 9 How. 390; Man. Ins. Co., 19 Ohio, 453. Mactier ». Frith, 6 Wend. 104 ; OTFER AND ACCEPTANCE BY MAIL. 135 acceptance by the one party of the terms pro- posed "by the other, transmitted by due course of mail, is regarded as closing the bargain from the time of the transmission of the acceptance ;^ Hallock B. Ins. Co.,3 Dutch. 268. go on ad infinitum. That the S. C. 3 Dutch. 645. defendant must be considered, in ' Tayloe v. Merchants' F. Ins. law, as making, during every in- Cc, s-upra; LungstrassB. German stant their letter was travelling, Ins. Co., 48 Mo. 301. the same offer to tlie plaintiffs, In Adams o. Lindsell, supra, and that the contract was com- the defendants had offered to sell pleted by the acceptance of it ; the plaintiffs a parcel of wool on and that, as the delay in notifying terms expressed in their letter, it arose from the mistake of the "receiving an answer in the defendants themselves, it was to course of post." The letter being be taken against iA«OT, that the misdirected, did not go by course answer had not been received by of post ; but the plaintiffs wrote, course of post, as soon as it was received, that In Hallock v. Ins. Co., supra, they would take the wool on the the insurers insisted that the in- terms proposed. The defendants, sured was ignorant of their ac- however, not having the answer ceptance of the risk, of their when they expected it, sold the making out and mailing the policy wool to another. The court said to their agent until after they had that if a bargain could not be countermanded its delivery, and clo^d by letter before the answer that the aggregatio mentium could was received, no contract could not take place until after the ac- be completed through the medium ceptance of the proposition by the of the post-offlce. That if the de- insurers came to the insured's fendants were not bound by their knowledge, and that before that, offer when it was accepted, then the insurers had changed their the plaintiffs ought not to be own minds, so that in fact it never bound till after they had received did take place, and that' conse- a notification that the defendants quently there was no legal de- had received their answer and as- livery of this policy. In reply to sented to it, and that so it might this it was said by the Court, 136 PIEE INSUEANCE. and this although the letter never reaches its destination. through Vredeniurgh, J., as fol- trie current, is there no contract ? lows: "This involves the same In the progress of the negotiation, general question, does a contract at what precise point of time does arise when an overt act comes to' mind meet mind, does the con- the knowledge of the proposer ? tract spring into life ? Upon this This question may arise upon subject, with respect to negotia- every mode of negotiating a con- tions conducted by written com- traot, whether the parties be in munications, there has been some each other's presence or not. variety of decision ; but it appears First comes the mental resolve to to me that the weight of authority, accept the proposition: but the as well as reason and necessity, law can only recognize an overt admit of but one solution. The act. Whether that act be a word meeting of two minds, the aggre- spok'en, a telegraphic sign, or a gatio mentium necessary to the letter mailed, some interval of constitution of every contract, time, more or less appreciable, must take place eo instanti with must intervene between the doing doing of any overt act intended of the act and its coming to the to signify to the other party the knowledge of the party to whom acceptance of the proposition, it is addressed., In the mean time without regard to when that act what is the condition of affairs ? comes to the knowledge of the Is it a contract or no contract ? other party ; everything else miist If the bidder does not see the be question of proof or of the auctioneer's hammer fall ; if the binding fofce of the contract by article written- for and sent never matters subsequent. The overt arrives ; if the verbal answer act may be as various as .the form when the parties are in each and nature of contracts. It may other's presence, is in a foreign be by the fall of the hammer, by tongue, or by a sudden noise or words spoken, by letter, by tele- distraction is not heard ; if the graph, by remitting the article telegraphic circuit is broken ; if sent for, by mutual signing, or by the mail miscarries ; if the word delivery of the paper, and the de- spoken or the letter sent is over- livery may be by any act intended taken and-countermanded by elec- to signify that the instrument shall OFFER A5fD AOCBPTAJSTOE BY MAIL. 137 And when after the maturity of the premium note, the maker, not knowing the actual amount due the company, proposes to pay, and asks for a statement of the amount ; and the company ac- cordingly furnishes such statement, and directs him to remit the sum due, which he does by the first mail, this is a waiver of the forfeiture arising from the non-payment of the note at maturity; and the insurer is bound to pay any loss occurs ring after mailing his acceptance of the as- sured's proposal.^ 6a. When the agent is authorized "to bind the company during the correspondence," this means during the negotiations, until the com- pany decide whether they will or will not take the risk, and inform the applicant for insurance of their decision. Delays of agents, negligence in the home office, irregularity* in the mail, are all included in this time.^ have a present vitality. Whatever acceptance after they have issued the form, the act done is the irre- from his lips on their way to the vocable evidence of the aggregatio hearer." mentium; at that instant the bar- ' Sims v. State Iijs. Co., 47 Mo. gain is struck. The acceptor can 54. no more overtake and counter- ' Fish v. Cottenet, 44 N. Y. mand by telegraph his letter 538. mailed, than he can his words of 138 FIRE INSURANCE. Countersign of agent; effect on agreement to insure. 7. Where the policy provides that "this po- liey," or" this renewal," shall not be valid unless countersigned by the agent, the countersign of the agent is necessary to the validity of such policy or renewal ;^ but the countersign of the agent, although expressly required, may be dis- pensed with if the intention to execute is suffi- ciently plain.^ Moreover this provision is not a limitation upon the power of the agent to agree to insure or renew. Upon such an agreement, which has not assumed the form of a policy, and thus requires the countersign of the agent, the 'Post v. jEtna Ins. Co., 43 ized agent of tie company giving Barb. 351.. It has yet been held consent to remove the building by the Supreme Court of Illinois and goods insured for an enhanced that although the charter of an premium is binding on the corn- insurance company requires their pany. "This," curtly said the contract to be executed in a par- Court, "is necessary to protect ticular mode, yet if they adopt a our people from the swindling different mode, and receive the operations of such companies." benefit of the contract, they will N. E. F. and M. Ins. Co. ■». be bound by it. Thus, notwith- Schettler, 38 111. 166, 171. See standing the charter requires that also Horwitz v. Equitable Ins. all agreements in relation to in- Co., 40 Mo. 557. surance should be signed by the 2 Myers ». Keystone Mut. Life president and secretary of the Ins. Co.,-3 Casey, 268 ; Mtna. Ins. company, it has been held that an Co. v. Maguire, 51 111. 342. agreement signed by an author- PAYMENT OF THE PREMIUM. 139 insurer is liable.^ And where the countersign is omitted by oversight or mistake, the insurer may be compelled to execute a valid policy even after a loss.^ The stipulation of the policy being that it shall not be valid until countersigned by the agent, a policy signed by "B., for the agent," is void, and the premium note without considera- tion.^ Payment of the premium. 8. As a general rule an agreement to insure is complete notwithstanding the premium has not been paid; but this rule is varied whenever the by-laws and regulations of an insurance company •make it a condition of an effective insurance that the premium shall be first paid, or the policy be delivered, or a written acceptance be entered on the books ; and especially is it varied when the insured is notified by the proper officer of the company that the insurance would not be con- sidered complete until actual payment of the 'Post «. JStna Ins. Co., 43 roe, 400. If the insurance is pro- Barb. 351 i City of Davenport v. hibited unless^ certain conditions Peoria M. & F. Ins. Co. , 17,Iowa, precedent be performed, and they 276: Kelly v. Com. Ins. Co., 10 are not performed, the insurance Bos-w. 83 ; Walker v. Metropolitan is invalid, and the premium note Ins. Co., 56 Maine, 371. is also invalid ai initio. Haver- 2 8 Upper Canada (Q. B.) 363. hill Ins. Co. «. Prescott,43 N. H. ' Lynn v. Burgoyne, 18 B. Men- 547. 140 PIEE IIS'STJRAKCE. premium.* - And it does not affect the result in such a case that a policy has been made out and is ready for delivery.^ ' Flint ■». Ohio Ins. Co., 8 Ohio, ter v. Massasoit Ins. Co., 13 Allen," 501 ; Kelly v. The Com. Ins. Co., 320. 10 Bosw. 82 ; Audubon «. Excel- ^ Ibid. Vide ante, p. 116, note, sior Ins. Co., 27 N. S. 316 ; Bas- CHAPTER YI. 1. Payment of premium by 8. Prepayment of premium. _ note. 9. Mode of payment. 3. Liability of m^ker of pre- 10. Prepayinent of premium mium note. may be waived. 3. Policy and premium note in- 11. Instances of 'waiver of pre- dependent contracts. payment. 4. When liability on premium 12. Waiver by operation of note ceases. law. 5. Assessments on premium 13. Whetber receipt for pre- note. mium conclusive. 6. Eflfect of alienation upon 14. Days of grace, premium note. 15. Return of premium. 7. Cash premium. Payment of premium hy note. 1. It is usual with mutual insurance companies under their charter and by-laws to, take the notes of their members for the amount, either in whole or part, of the premiums for insurance. These notes are called premium or deposit notes, and even where the charter of a company is silent as to the power of the corporation to give credit for' premiums and take notes in payment, the courts hold that such a power, necessarily results from the power to make insurances, and to enable the company to conduct its business advantageously.^ ' Mclntire v. Preston, 5 Gilm. 10 Wend. 341 ; N. Y. Firemen's (111.) 48 ; Wilmarth v. Crawford, Ins. Co. v. Ely, 3 Cowen, 678. 142 I'IRB INSUEAlfOE. Liability of maker of premium note. 2. These premium notes, although absolute on their face, may be only liable in the hands of the company under the restrictions of their charter and by-laws for the payment of such assessments as are regularly made thereon ;^ but they may be A company authorized to make or sooner if required to meet as- insurance "for a specific rate of sessments by the company. Geo. premium to be paid in cash, in the O. Jarvis." The sixth section of same manner as insurance com- the charter authorized the com- panies other than mutual insur- pany to take notes or obligations ance companies are accustomed to of their members for the amount, do," may accept a "note for the either in part or in whole, of the premium and recover upon it. premiums of insurance in propor- It is not prohibited by such a tion to the amount insured. The clause from extending the time of ninth section provided that, if it payment of premiums in cash, should so happen that there should Gary v. Nagle, 3 Bissell's R. be' just claims on the corporation 244. for losses sustained, to a greater ■ Fell 'i. McHenry, 6 Wr. 41 ; amount than they have funds on Craig «. McHenry, 11 Casey, 136 ; hand to discharge, the directors in Ins. Co. ». Jarvis, 33 Com. 133. such case shall proceed to assess In this latter case the insured such deficiency in a ratable pro- gave the following note: "Mid- portion on the members of the dletown, October 7th, 1848. I association, or their lawful rep- promise to pay the Mutual Benefit resentatives, according to the Life Insurance Company, or to amount of each member's insur- the order of their Treasurer, three ance, " provided such assessment hundred and sixty dollars and shall not exceed the amount of the fifty cents, for value received, note or obligation given by each without defalcation or discount, member." Sinman, J., in de- with interest at six per cent., pay- livering the opinion of the Court • able in twelve months after date, said : " The difficulty Under which LIABILITY Olif PREMIUM KOTE. 143 negotiated by the company, and a honajide holder may recover their full amount.^ And even in the hands of the company it is no defence to an action on a premium note that the company became in- solvent before the execution of the policy.^ In such a case the legal obligation to pay is not "weakened by inability to pay.^ There being no cancellation of the policy at the time of the in- solvency of the company, they are as liable on it after as they were before their insolvency. Hence there is no failure of consideration because the plaintiff's counsel labor arises would operate as a fraud upon from their looking at the absolute the maker." terms in which the note itself is ' Mclntire v. Preston, 5 Gilm. expressed. But if we take it in (111.) 48 ; Bells. Shibley, 33 Barb, connection with the charter, and 610. Renewed notes stand upon consider, that it was not an ordi- the same footing as the notes given nary note, and was never delivered at the organization of a company, as such, but was delivered as a and are sustained by the same premium note, under the charter consideration. Hone v. Allen, and regulations of the company, 1 Sandf. 171. we at once attach to it all the con- ^ Sterling v. Mercantile Mutual ditions which are expressed in the Ins. Co., 8 Casey, 75; Graffs, charter and regulations. By these Simmons, 58 111. 440 ; Illinois conditions, it appears that it was Central Ins . Co. v. Wolf, 87 111. never an absolute promise to pay, 354. but was a mere security for losses, ' Sterling v. Mercantile M. Ins. and merely subject to assessments Co., supra; Hohe v. Boyd, 1 for losses, and for nothing else ; Sandf. 481 ; Hone v. Allen, 1 asa conditional security for- losses, Sandf 171 ; Brouwer «. Appleby, there was a consideration for it, 1 Sandf. 158. and to collect it for other purposes 144 FIRE INSURANCE. the party becomes bankrupt.^ But if the policy for which the premium note is given is void for any cause, the premium note is also, as between the original parties, invalid.^ And on the other hand, if the insured be discharged from the legal obligation to pay his premium note, under the bankrupt or insolvent laws, the insurer is equally discharged from his obligation to indemnify against loss by fire.^ Under the laws of iN'ew York no action can be sustained upon a pre- mium note given to a mutual insurance com- pany, except it be to pay for losses or expenses ' Hone V. Boyd, supra; AUi- Diraismes ■». The Merchants' ance Mut. Ins. Co. ®. Swift, 10 Mut. Ins. Co., 1 Comst. 371; Cush. 433. See generally upon Brouwer v. Hill, 1 Sandf. 639; the subject of insolvent mut\ial Aspinwall v. Meyer, 3 Sandf. 180. insurance companies, organiza- See also Cary b. Nagle, SBissell's tion, pretoium and security notes, R. 344 ; Lister v. Webb, 5 Allen, and renewal security notes, the 569. following cases : Brown v. Ap- 2 Frost «. Saratoga Co. Mutual , pleby, 1 Sandf. 158 ; Hone «. Allen, Ins. Co., 5 Denio, 154; Lynn «. 1 Sandf. 1,71, note ; Hone 0. Fol- Burgoyne, 13 B. Monroe, 400. ger, 1 Sandf. 177 ; Hone v. Ballin, • Where the policy becomes void 1 Sandf. 181; The Merchants' by the election of the insurer Mut. Ins. Co. V. Leeds, 1 Sandf. upon- the ground of other insur- 183. In the latter case, it was ance without notice, the premium held that the security note was note also becomes void with re- liable to reduction to the amount spect to all losses thereafter, of premiums with which the Tuckerman v. Bigler, 46 Barb, maker was debited on the books 375. of the company at the time of its ' Reynolds v. Mut. F. Ins. Co., failure, on payment of the same. 34 Md. 380. POLICY AND PREMIUM NOTE. 145 actually accrued while such note was in force, and after assessment. Assessment, or appor- tionment, is a condition precedent, and must be averred and proved on the trial.^ But a note, not conditional in its terms, but payable absolutely on its face, although in fact given for a pre- mium, may be discounted by the company in the usual and ordinary course of business, and the holder is entitled to recover the amount thereof.^ Policy and premium note independent contracts. 3. A policy issued by a mutual insurance com- pany and a premium note given at the same time for the payment of assessments are independent contracts, and hence, under the rule that where the contracts of the respective parties are not dependent, the omission of one to perform punc- tually does not authorize the other to rescind or annihilate his own contract, a vote by such a company that, if the assessments upon its pre- mium notes should not be punctually paid, the insurances previously made should be suspended, is of no validity unless assented to by the insured. It does not impair the force of the policy, and is nothing more than a vain effort made by one ' Devendorf v. Beardsley, 23 33 N. Y. 579 ; Nelson v. Eaton, Barb. 656. 36 N. Y. 410 ; Lawrence v. Nel- 2 Fanners' Bank v. Maxwell, son, 31 N. Y. 158 ; ante, p. 22. 10 146 I'lEE INSUKANCE. party to relieve himself from his contract without the consent of the other. On the other hand, such a vote does not absolve the insured from liability upon his premium note, unless perhaps he had notified the insurers when first apprised of their action, that he consented that the policy should terminate upon the conditions named in their vote.^ When liability on premium note ceases. 4. Where upon a sale of the insured property, the insured is entitled to surrender his policy and receive his deposit note on paying his proportion of all losses and expenses that have accrued prior to such surrender; and where the parties have come to an agreement, and the policy and the note have been surrendered, the insured ceases to be a member of the company, and all right to make assessments or calls upon him, or upon the note, is at an end. The settlement and surrender of securities are acts authorized by law ; and, like other lawful acts, they are binding upon both parties, unless they can be impeached on the ground of fraud or mistake.^ And if the insur- ' New England Mut. P. Ins. « Hyde «. Lynde, 4 Comst. 387. Co. ■». Butler, 34 Me. 451. See Where the act of incorporation also St. Louis Mut. F. Ins. Co. ■». provides that when any property Bocckler, 19 Mo. 135 ; Atlantic insured by the company shall in Ins. Co. V. Goodall, 35 N. H. 338. any way be alienated, the policy ASSESSMENTS ON" PREMIUM NOTES. 147 ance company become insolvent, and their affairs pass into the hands of a receiver, he is as much bound by a settlement which the company was authorized to make as was the company itself.* Assessments on premium notes. 5. "WTiere the charter of an insurance company makes every member responsible for his propor- tion of losses happening to the company, every such member is liable to the company for his proportion of the losses happening while he con- tinues a member, and assessments may be made on his premium note on account of such losses even after he ceases to be a member. He is only entitled to have his note surrendered when his proportion of those losses are paid.^ And if the thereupon shall be Toid, and be bute their proportion of said losses, surrendered to the directors of said York Co. M. F. Ins. Co. v. Tur- Gompany to be cancelled, and, ner, 53 Me. 335. upon such surrender, the assured ' Hyde ■». Lynde, 4 Comst. 387 ; shall be entitled to receive his Wadsworth v. Davis, 13 Ohio St. note, upon the payment of his R. 138. proportion of all expenses and ' St. Louis Mut. T. & M. Ins. losses that have accrued prior to Co. v. Bocckler, 19 Mo. 185. Un- such surrender, the directors have less under some such provision as no right to assess the insured for stated in the text, the cancelling losses occurring after the cancel- of the policy discharges the pre- lation of his policy, nor for an- riiium note, except so far as it is ticipated losses arising from sup- liable for losses already accrued, posed failure of others to contri- ante, p. 36. See also Marblehead 148 PIRE INSURANCE. charter provides that, upon a failure to pay any assessment upon a note,*the whole amount of the note may be recovered in an action upon it, such provision is valid and binding upon the parties ; and this notwithstanding another provision that the note is to be returned to the insured on de- mand, after thirty days from the expiration of his policy.^ The recovery for the whole amount of the note is in the nature of a penalty, and interest is not recoverable upon a penalty.^ If a premium note stipulates to pay such por- tion of it and at such times as the directors of . the company may agreeably to their act of incor- poration require, the maker, being a member of the company, is affected by a knowledge of the charter and by-laws ; and as the latter require every assessment to be paid within thirty days after notice, he is bound thereby ; and will not be permitted to contradict his express confract by showing that the agent of the company assured him that a certain sura would be all that it would cost him, and that he would probably obtain a Mut. F. Ins. Co., 3 Gray, 210. Ins. Co. v. Bocckler, supra. See The note in St. Louis Mut. F. & also Marbleliead Mut. F. Ins. Co. M. Ins. Co. V. Bocckler, supra, v. Underwood, 3 Gray, 210. bound the maker to pay the money ' Bangs®. Mcintosh, 23 Barb, on calls made in pursuance of the 591 ; Bangs v. Bailey, 37 Barb, charter. , 630. ' The St. Louis Mut. F. & M. ASSESSMENTS ON" PREMIUM NOTES. 149 dividend out of the surplus funds of the company at the termination of his policy.^ In an action for assessments on such a note the declaration must allege the assessments to have been made in conformity with the charter and by-laws.^ "Where a premium note is made payable " in such portions and at such times as the directors may agreeably to their by-laws require," and where the by-laws declare such note to be a part of the absolute funds of the company, col- lectible at the discretion of the directors, and applicable to the payment of any debts and lia- bilities of the company, the company may collect such note without any assessment, and apply the same to the payment of losses and expenses which accrued before the maker became a mem- ber of the corporation,' ' Fanners' M. F. Ins. Co. v. If, on tte other hand, the insured Marshal, 29 Vt. 23 ; Williams v. was induced to enter into the con- Babcock, 25 Barb. 109 ; Huntley tract by the fraudulent representa- V. Merrill, 32 Barb. 626 ; Hackney tions of the agent of the company, V. Allegheny M. Ins. Co., 4 Barr, the premium note would be void 185. There was no fraud in the and incapable of enforcement, representations of the agent in Devondorf «. Beardsley, 33 Barb. Farmers' M. F. Ins. Co. ». Mar- 656. • shal, and the only remedy of the ^ Atlantic M. F. Ins. Co. v. maker of the note was to convince Young, 38 N. H. 451. a court of equity that he was in- ^ Long Pond Mut. F. Ins. Co. duced to sign a contract which o. Houghton, 6 Gray^ 77. he never understandingly made. 150 riRE INSURAHrOE. And if the charter of the company binds it to pay losses to the full extent of their ability, it must make assessments to an amount equal to the loss. It cannot apportion its effects ; if the loss exceeds the assets of the company, it must pay pro rata} Effect of alienation upon premium note. 6. We have seen elsewhere,^ that ordinarily alienation of the insured property avoids the contract of insurance, and unless the contrary is provided for by the terms of the contract, makes void the premium note. The policy being dis- charged by the alienation, the premium note thereafter is without consideration, and becomes void also.^ On the other hand, a policy of in- surance issued by a mutual insurance company is not void, because it is by its terms to extend beyond the time limited by the charter of the company for its corporate existence. The policy in such a case is valid for the unexpired term of the charter. Where there is no question of fraud, the pi-esumption is that the assured knew the I Rhinehart «. The Allegheny Mo. State Mut. Ins. Co., 13 Iowa, Co. Mut. Ins. Co., 1 Barr, 359. 136 ; Neely «. The Onondaga Co. « Ante, p. 38. Mut. Ins. Co., 7 Hill, 49 ; Atlantic » Mound CityF. &. M. Ins. Co. Ins. Co. ». Goodall, 35 N. H. 838; «. Curran, 43 Mo. 374 ; Keenan ». Huntley «. BucUer, 30 Barb. 580. ALIBKATION UPON" PREMIUM NOTE. 151 terms of the charter, and contracted with refer- ence thereto/ The directors of an insurance company, as of other moneyed corporations, when the legislature has parted with control over the charter, have in general no power to procure or validate by con- sent changes in the charter which require the assent of the corporation; and, ordinarily, in such case the stockholder, not having given his personal assent to such changes, is released from his liability as subscriber to the capital stock. But he cannot stand by consenting to the progress of the corporation under the changes, receiving all the benefits that may flow from them, and, then, when his interest is affected, set up the invalidity of the changes from the absence ' Huntley d. Bucher, 30 Barb, terms, was assigned to the pur- 580 ; Huntley -d. Merrill, 32 Barb, chaser, it was held that the com- 626. In Burger v. Farmers' Mut. pany being a mutual insurance Ins. Co., 21 P. F. Smith, 422, company, all persons insured be- where the company was incorpo- came members ; that the assignor, rated under an act of assembly, a the party originally insured, was section of which provided, that bound to know the terms of the " when any property insured with charter, which, upon an aliena- this company shall be aliened by tion of the property, requires the sale or otherwise, the policy shall policy to be cancelled ; that the therefrom be void, and shall be want of actual notice of the char- surrendered to the directors to be ter was of no consequence ; and cancelled ;" and when the insured that -the assignee could not re- property was sold, and the policy cover, having no better right than of insurance assignable by its the assignor. 152 riRE INSURANCE. of his direct assent.^ Hence, in a suit by a mutual insurance company after a change in its charter, against a stockholder, on a premium note given prior to the change, his assent to the change will be inferred from any acts or omissions inconsistent with any other hypothesis. At any rate he cannot in a collateral proceeding contest its legality.^ Cash premium. 7. The insured is made a member of a mutual insurance company as well by the payment of a cash premium as by a'preraium note. The theory of a mutual insurance company is, that the pre- miums paid by each member for the insurance of his property constitute a common fund, devoted to the payment of any losses that may occur. And under this system the cash premium may as well represent the insured in the common fund as the premium note ; the just difference in the rates of premium between cash and notes being deter- mined with sufficient certainty, for all practical purposes.^ ' O-wen V. Pendry, 13 Ohio St. How. (TJ. 8.) 35 ; Ohio Mut. Ins. R. 79. Oo. ■». Marietta Woollen Factory, 2 Hope Mut. F. Ins. Co. v. 3 Ohio State Rep. 348. In Ohio Beckman, 47 Mo. 93. Mut. Ina. Co. ■». Marietta Woollen ■ Union Ins. Co. •». Hoge, 31 Factory, »%pra, it was held that PREPAYMENT OF PREMITTM. 153 Prepayment of premium. 8. As we have already seen,' an agreement to insure may be complete, notwithstanding the premium has not been paid; but underwriters most commonl}'^ make it a condition of the con- tract that no insurance will be considered as made or binding until the premium be actually paid.^ And where the applicant for insurance is notified that the payment of the premium is a condition precedent to the taking effect of the insurance, no contract subsists while it remains unpaid, notwithstanding the policy may have been made out; it not having been delivered.^ the fund arising from cash pre- tract cannot be rescinded without miums was subject to the same the consent of the party insured, application as the premium notes, Hallock ». Ins. Co., 2 Dutcher's and could not be diverted to the R. 268. payment of losses accruing before ' Flint v. Ohio Ins. Co., 8 Ohio,, such premiums were receired. 501. In this case, OrimJce, J., See also Mygatt v. N. T. Prot. said there was the greatest ini- Ins. Co., 21 N. Y. 52, where the aginable diflference between in- subject of mutual insurance is -surance companies limiting and Tcry fully examined in the learned qualifying their general responsi- opinion of Selden, 5. bility by special rules posted up ' Ante, p. 130, et »eq. in their oflBces, and common car- 2 The acceptance of a proposal riers undertaking to do the same to insure for the premium offered thing in the same way. The lat- is the completion of the negotia- ter may qualify their general lia- tion, and after the policy has been bility by limitations not incon- forwarded to the agent of the sistent with their common law company for delivery, the con- obligation ; but the law does not 154 riBE INSURANCE. Nor are the insurers liable on a policy which has been executed but not delivered, in consequence of an oral promise of their treasurer to the appli- cant for insurance that if anything should happen he would see the premium paid, or that he would take it upon himself to keep the policies good ; the by-laws of the insurers providing that " each person, before the policy shall be binding on the company (mutual), shall pay to the treasurer or agent such premium and make such deposit as the directors shall determine," Here there was no payment, and whatever the treasurer under- took to do was not in his capacity of agent, but in his private capacity, and his private agree- ment to advance money for the applicant did not bind his principal.^ • Mode of payment. 9. Where the mode of paying the premium has not been prescribed by the insurer, whether in give them a general permission to be found in the English books exempt themselves from responsi- during the last fifty years in which bility. " Admitting, therefore, as the premium has not been paid by a general rule, that the agreement the insured, and yet the contract to insure is complete, although the Considered complete, either in law premium has not been paid, yet or in equity. The actual state of that rule has been varied by the the law in England absolutely notice in this case, and by the forbids that this should be the particular terms upon which the case." underwriters agreed to insure. ' Buffum ». Fayette Mut. Ins. But I apprehend that no case can Co., 3 Allen, 360. PREPAYMENT MAT BE "WAIVED. 155 specie, bills of a particular bank, or otherwise, his agent may exercise a discretion in the matter and prescribe the mode of payment. And if he directs that it may be paid by check to his order, and a check is accordingly sent by mail, the company would be responsible for any loss occur- ring during the transmission of it, provided it should appear that the insured had sufficient funds in the bank upon which it was drawn from the date of the check till it was received by the agent, and would have been paid on presentation.^ Prepayment of premium may he waived. 10. The general tendency of the cases is, that the officers and agents of insurance companies, whether they be- mutual or joint stock companies, may waive the usual condition that the premium must be paid before the policy shall be effectual, as well as any other condition in the contract intended for their benefit, and if the insured is allowed to act upon the confidence of such waiver the insurer is estopped to deny the fulfilment of the condition.^ But the decisions in Massachusetts, • Tayloe a. Merchants' F. Ins, Ins. Co., 1 P. F. Smith, 403 ; Ly- Co., 9 How. 390. coming Co. M. Ins. Co. ■». Schol- ' Ins. Co. p. Stockbower, 3 Ca- lenberger, 8 Wr. 359 ; Bersche v. sey, 199 ; Buckley v. Garrett, 11 Globe Mut. Ins. Co., 31 Mo. 546 ; Wr. 304; Mitchell ii. Lycoming Kathburn «. City Fire Ins. Co., 156 piEE insurance:. while admitting the correctness of this doctrine, where the policies have been issued by companies 31 Conn. 194 ; Keenan v. Dubuque Mut. F. Ins. Co., 13 Iowa, 375 ; North Berwick Co. v. N. E. Fire & M. Ins. Co., 53 Me. 336 ; Peoria Mar. & F. Ins. Co. v. Hall, 13 Mich. 203 ; Tuttle v. Robinson, 33 N. H. 104 ; Bragdon v. Appleton Mut. F."lns. Co., 42 Me. 359 ; New York Central Ins. Co. ■»: National Protection Ins. Co., 30 Barb. 468 ; Sheldon v. Atlantic F. & M. Ins. Co., 26 N. T. 460 ; Baptist Church of Brooklyn v. Brooklyn Fire Ins. Co., 18 Barb. 69 ; S. C, 19 N. T. 305 ; Goit v. National Protection Ins. Co., 35 Barb. 189 ; Hallock®. Com. Ins. Co., 3 Dutch. (N. J.) 268 ; Heaton v. Manhattan F. Ins. Co., 7 R. I. 503 ; Post v. Mtna, Ins. Co., 43 Barb. 351 ; Boehen v. Williamsburgh City Ins. Co., 35 N. Y. 131 ; * Wood v. Pough- keepsie Mut. Ins. Co., 33 N. Y. 619. In Ins. Co. V. Stockbower there was over-insurance, which by the condition of the contract rendered the policy void. But the company were notified of the additional in- surance and subsequently levied' assessments on the policy. Held that this was a waiver of the for- feiture. In Lycoming Co. Mut. Ins. Co. V. Schollenberger, there was al- leged breach of condition as to the time of furnishing a statemen^^ of loss, and also as to payment of assessments. Held that there was waiver of the conditions by an authorized agent of the company. In Buckley ®. Garrett, where there was a forfeiture of the policy by alienation of the insured pro- perty by one partner to the other, it was held, that if the company knew of such alienation and con- tinued to receive the premiums thereafter, they were estopped to take advantage of the violated condition. In Bersche v. Globe Mut. Ins. Co., it was held that a condition in a policy that misrepresentation or concealment shall make the insurance void, may be waived. See also Franklin v. The Atlantic F. Ins. Co., 43 Mo. 456 ; Horwitz V. The Equitable Ins. Co., 40 Mo. 557 ; Rowley v. The Empire Ins. Co., 36 N. Y. 550 ; Allen v. Ver- mont M. F. Ins. Co., 13 Vt. 366. In Keenan v. The Dubuque Mut. P. Ins. Co., it was held that the assessment and collection of a premium note, by a mutual insur- PREPAYMENT MAT BE WAIVED. 157 organized with a capital stock divided into shares and superintended by a general agent or officer, ance company after it. has been advised of a yiolation of tlie con- ditions of a policy operates as a waiver of any forfeiture as a con- sequence of such violation. In North Berwick Co. v. N. E. F. & M. Ins. Co., it was held that the renewal of a policy, after the existence of facts which would authorize the insurer to insist upon a forfeiture, would be deemed a waiver. In Peoria Marine & P. Ins. Co. 11. Hall, it was held that where a fire policy provided that the keep-, ing of gunpowder " without writ- ten permission in the policy," should render the policy void, if the agent taking insurance on a stock of goods knew that gun- powder was kept and to be kept, the keeping it would not render the policy void, whether permis- sion to keep it was indoreed or intended or neglected to be in- dorsed or not. Notice to the agent was notice to the principal, and by taking the premium and issuing the policy, the insurer must be regarded as having waived the condition which prohibited gunpowder being kept. In Tuttle v. Robinson the in- surance company, having made assessments upon the premium note for losses occurring subse- quently to the death of the in- sured, were held to be estopped to deny the validity of the insurance after that event. They recognized the contract as subsisting, by making assessments for losses, for which, if the policy were vacated, the personal representative was in no way liable, as only members of the company were liable for their portion of losses. The com- pany having made such assess- ments, and the administrator ■ having paid them, whether there was or was not any application for a previous assent by the adminis-, trator to the continuance of the insurance, there would seem to be no doubt that the buildings con- tinued to be insured during the term of the policy, and that the administrator was entitled to be allowed whatever he paid as as- sessments for losses happening after the death of the intestate, on the ground that it was his duty to preserve the property while in his care. See also Burbank v. Rock- 158 PIBE INSURANCE. deny the authority of the officers of a mutual insurance company to waive the Jyy-laws and ingham Ins. Co., 4 Fost. (N. H.) 550. In Bragdon t. Appleton Mut. F. Ins. Co. it was held that the right' of the company under their by-laws to receive the cash pre- mium before the delivery of a policy was waived, by the fact that the policy was left by the president with the agent of the company, who had informed the applicant for insurance that it would be so left (no time being fixed for the latter to take it), and who had also informed him that it made no difference whether he paid the premium at the time or when he took the policies. Under these circumstances there was a , valid contract, and the actual de- livery of the policy was not ne- cessary to complete it. In New York Central Ins. Co. v. National Protection Ins. Co. it was a condition of the policy that no insurance should' be binding until the actual payment of the premium. The money was in bank where the agent was in the habit of making his deposits, de- posited to the credit of the insured. The cashier told the agent of the insurers, at the time the arrange- ment for the insurance was made, that he could have the money. The agent directed him to let it lie, saying that when he wanted the money he would draw for it. It was not in fact drawn by him until after the flre. The cashier was in the habit of receiving and paying- out the premiums for the insured (the New York Central Ins. Co.), and acted in their be- half. The agent chose to waive a strict compliance with the condi- tion of the policy and trust to the cashier paying his check, know- ing that the cashier had money on deposit belonging to the insured which he was authorized to apply to such purpose. By such waiver his principals were bound. In Sheldon v. Atlantic F. & M. Ins. Co. the general agent of the insurer sent a policy by mail to an applicant for insurance, with the statement that the premium charged was higher than usual, and saying, "Should you decline the policy, please return it by mail ; if you retain it, please send me the premium." It was held that this was a waiver of prepay- ment, and that the policy became effectual upon the insured retain- PEEPATMETS"T MAT BE WAIVED. 159 provisions adopted by its members for their ing and thereby accepting it, or at any rate it was a question for the jury. In Trustees of Baptist Church «. Brooklyn F. Ins. Co. it was declared in the body of the policy that the insurance might be con- tinued for such further term as should be agreed on, "provided the premium therefor was paid and indorsed on the policy, or a receipt given for the same ;" and it was also set forth in the condi- tions that no insurance, whether original or continued, should be considered as binding until the actual payment of the premium. It was held that in any subse- quent agreement for a renewal or continuation of the risk, it was competent for the parties to con- tract 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. In Goit V. National Protection Ins. Co. it was held to be the privilege of the insurers, if they elected so to do, to waive the con- dition making the actual payment of the premium a condition prece- dent to the binding efiBcacy of any insurance, as it was a provision inserted for their benefit and in which they alone were interested. This waiver may be established by evidence of an express waiver, or by circumstances from which such waiver may be inferred ; and it may be by the managers of the company, or by a duly authorized agent ; and as it was done by the latter in this case, it was obliga- tory upon the company. In Hallock ■». Ins. Co. the case showed that the plaintiff, when he made his application, offered the agent of the insurers the premium, who said he would consider it as paid, but would leave it with the plaintiff, who was his banker, till the policy arrived, when he would call and get it. It was held that the money was, in legal effect, paid to the agent, and by him placed in deposit. It was, in contemplation of law, an actual payment to the company, as much so as if the agent had transmitted the money, as well as the applica- tion, to the company. But if Bot an actual payment, the insurers were estopped from saying that it was not. They were bound by the act of their agent. In Heaton v. Manhattan F. Ins. Co., Ames, C. J., said it was not a disputable proposition, that an insurance company may waive a condition in its usual foiin of po- 160 FIRE INSUBANCB. mutual protection.^ They agree, however, that the officers of a mutual company may bind the licy, that in order that the policy should be binding the premium must be actually paid, as well as any other condition in the con- tract intended for its benefit. In Post V. ^tna Ins. Co. the action, it was held, could not be maintained unless the delay in serving the proofs of loss had been reasonably excused or waived by the insurer. Such service, under the terms of the policy, was a con- dition precedent to the insurer's . liability ; but it was held that it might be partially or wholly waived by the party entitled to insist upon the performance of it, and that such waiver may be ex- pressf or it may be inferred from circumstances. ' Baxter v. Chelsea Mutual Ins. Co., 1 Allen, 394; Mulrey v. Shawmut Mut. Fire Ins. Co., 4 Allen, 116 ; Hale v. Mechanics' Mut. F. Ins. Co., 6 Gray, 169 ; Brewer v. Chelsea Mut. F. Ins. Co., 14 Gray, 303. See also Priest ■B. Citizens' Mut. Ins. Co., 3 Allen, 603. In Brewer v. Chelsea Mut. F. Ins. Co. one of the by-laws of the corporation provided that before, the policy should be delivered the assured should pay such premium and give such deposit note as the president and directors should determine. It was admitted that the assured had not complied with this by-law, but he sought to avoid the effect of such non-compliance on the ground that it had been waived by the ofiScers of the com- pany. It was held that such waiver could not be made by the officers of the company ; but to be effectual it must be made by the corporation itself. In Hale i>. Mechanics' Mut. F. Ins. Co. an article of the by-laws provided that any insurance sub- sequently obtained without the consent in writing of the presi- dent should avoid the policy ; and another article that the by-laws should in no case be altered ex- cept by a vote of two-thirds of the stockholders or directors. Subse- quent insurance was obtained, but with the verbal consent of the president of the company. Held that there was no authority on the part of the president to waive the provisions of the by-laws or give such verbal assent. His power to assent to subsequent insurance A « K PREPATMEIirT MAT BE WAIVED. 161 company "by waiving the formalities of prelimi- nary proof of loss such as are required by the was expressly confined to giving such assent in wnting. In Mulrey d. Shawmut Fire Ins. Co. there was a provision in the policy that no insurance should take effect until the cash premium had been actually paid at the office of the company, and that every insurance agent, or other person forwarding applications or receiv- ing premiums was the agent of the applicant, and not of the com- pany. In this case the agent re- ceived the premium, but he did not offer to pay it over to the company until after the loss oc- curred, which was within ten days after the date of the policy. He was in the habit of settling a monthly account with the office, when the premiums he had re- ceived were paid over. It was held that the policy did not be- come eflFectual, for the reason that the cash premium had never been actually paid at the office of the company. Dewey, J.: " This was a mutual insurance company, and the plaintiff, as a member, would have his interest protected by such a rule equally with all other mem- bers. The company deemed it a proper precaution against the 11 frauds of agents forwarding appli- cations and receiving premiums, to make the applicant for insur- ance responsible for the actual payment of the cash premium at the office of the company. This being a condition precedent to the taking effect of the policy, this objection to the right of the plaintiff to maintain the present action is a fatal one. There was no waiver of this provision in the policy." In Baxter v. Chelsea Mut. Fire Ins. Co. it was held that the presi- dent of a mutual insurance com- pany, whose by-laws provide that no policy shall be delivered until after payment of the premium, and whose directors have voted that if premiums are not paid within sixty days from the dates of the policies, they shall be con- sidered as cancelled, has no au- thority to waive these provisions ; and the company is not bound by assurances given by him to a mortgagee that a policy has been procured by the owner of the mortgaged property, and made payable to the mortgagee in case of loss, when in fact such policy has not been delivered in conse- 162 PIKE INSTJRANCB. by-laws, because such formalities do not touch the substance or essence of the contract, or affect its vialidity, but relate only to the mode or form in which the liability of the company shall be ascertained and proved. Besides, the prelimi- nary proofs are necessarily submitted to the offi- cers, who must pass on their sufficiency, and hence it is within the scope of their authority to say whether the proof is sufficient.^ Instances of waiver of prepayment. 11. An insurance company acts and speaks by its officers, and what the officers say and do when in discharge of their duty as officers, and in rela- tion to the particular duty assigned to them, is quence of a failure to pay the before policies can be made. The premium. OTiapman, J. : "It is answer to this suggestion is, that contended that the defendants are mu];ual insurance is essentially estopped to deny the truth of this different from stock insurance, representation. But the obvious Much of the litigation that has answer to this is, that the presi- grown out of this species of insur- dent could no more bind the com- ance has been owing to inatte'n- pany by his representations be- tion to this difference. Its origi- yond the scope of his authority, nal design was to provide cheap than by his agreements. It is insurance \y§ means pf local asso- urged that such a decision will ciatious, the members of which tend to embarrass the business of should insure each other," etc. insurance, because such insurance ' Brewer v. Chelsea Mut. Ins. is necessarily effected by agree- Co., 14 Gray, 303. 'meats which are to take effect INSTANCES OP WAIVER OP PREPAYMENT. 163 evidence against the company.' Hence the gene- ral agent of an insurance company may make a valid insurance without exacting prepayment of the premium, although the printed terms of the contract set forth that the pol,icy will not be con- ' Baptist Church v. Brooklyn Fire Ins. Co., 18 Barb. 69 ; S. 0., 19 N. T. 305 ; Sheldon v. The At- lantic Ins. Co., 26 N. T. 460. In Baptist Church o. Brookljrn Fire Ins. Co., 19 N. T. 305, it was said by Oomstock, J., that corporations always and of ne- cessity act by agents; "and, in granting their charters, it is a practice eminently convenient and proper, and, moreover, a very usual one, to specify the mode in which, and the agent or agents by whom, their contracts may be executed so as to bind the arti- ficial body. Such a specification forecloses aU question and doubt, and relieves the parties with whom contracts are thus executed from the burden of proving that the agents with whom they deal have acted by due authority. (Buckley V. The Derby Fishing Co. , 3 Conn. 252 ; Safi'ord v. Wykoff, 4 Hill, 446, 447, per Walworth, Chancel- lor ; Barnes v. Ontario Bank, 19 N. Y. 152.) Such specifications do not subtract anything from the general powers which corporate bodies take under their charters. Within those powers they may contract in other modes; and all the authority which they pos- sess they may delegate to other agents A provision in a policy already executed and delivered so as to bind the company, declaratory of a condition that premiums must be paid in advance, manifestly has no eflect except to impart conve- nient information to persons who may wish to be insured. As such a provision in the policy could have no effect upon the delivered and perfect 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 con- tract 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. ' ' 164 FIEE ESrSTJKANCE. sidered binding until the premium is paid.^ And this waiver of the agent may be proved by parol.* "Where the agent agreed to give credit until he made his returns to the company, and after the loss he accepted payment of the premium, this was held binding on the company.^ Where, too, the duly authorized agent of a company agreed to become personally responsible to his principal for the premium, and to give time to the insured as his personal debtor, this, as between the in- sured and the insurance company, constitutes a payment of the premium/ On the other hand, • Boehen «. Williamsburg Ins. Court for the Correction of Errors Co., 35 N. T. 131. held that the company was liable. 2 Goit V. National Policy Ins. Ante, p. 139. See also Chase v. Co., 25 Barb. 189. Hamilton Mut. Ins. Co., 22 Barb. ' 25 Barb. 189; see also Per- 527; General Ins. Co. v. United kins V. Washington Ins. Co., 4 States Ins. Co., 10 Md. 517; Cowen, 643. In the latter case Foundry v. Dart, 26 Conn. 376. the premium was to be received * Bouton®. American Mut. Life at the office in New York before Ins. Co., 25 Conn. 542. See also the company was bound to issue Sheldon v. Mutual Life Ins. Co., a policy. The agent in Savannah 25 Conn. 207. received the premium and gave a In Lungstrass v. German Ins. receipt. Six days after, the goods Co., 48 Mo. 201, the agent applied were destroyed by Are. The for insurance upon his own goods, agent had not transmitted the The company sent him a policy, money. After the loss the money but dissatisfied with the premium was tendered at the office in New charged, he sent back the policy York and the company refused to for a deduction. It was reduced receive it or issue a policy. A and returned, and on the day it bill was filed in chancery, and the was received, the agent made an WAIVER BY OPERATION OF LAW. 165 where there is an agreement to insure, but no agreement to give credit for the premium, and no implied credit except for the time necessary to prepare the policy, a neglect to pay the premium, after request to complete the insurance, is an aban- donment of the agreement, and of all right to claim payment for a subsequent loss, either at law or in equity.^ Waiver hy operation of law. 12. The delivery of a policy without requiring payment, raises the presumption that a short credit was intended.^ And so, too, if the agent by his acts leads the insured to defer payment of the premium until it is called for, and a loss occurs before it has thus been called for, the company is bound.^ Where a policy of insurance entry in his account with the Seld, that the entry in his ac- company, thus recognizing the count, which was settled monthly, change of date and accepting the was a sufficient payment of the policy as changed. On the fol- premium, and that such entry was lowing day his goods were burned, a significant acceptance of the' He telegraphed the fact to the policy, and express notice was company, and claimed the benefit unnecessary. of his policy. The company con- ' Sanford «. The Trust F. Ins. tested his claim on two grounds: Co., 11 Paige, Ch. E. 547. first, that the premium had not ^ Boehen «. Williamsburg Ins. been remitted ; secondly, that the Co., 35 N. Y. 131. policy was invalid because no ' Baptist Church v. Brooklyn notice of its acceptance was sent Ins. Co., 18 Barb. 69 ; 8. C, 19 to the company. N. Y. 305 ; Hallock v. Ins. Co. , .166 riEE INSUBANCE. is void on account of a false warranty on the part of the insured, the premium note is likewise void for want of consideration. Yet if the insurers, with knowledge of such false warranty, go on and collect assessments upon such premium note, they are estopped from setting up the warranty, and are liable for the loss.^ So, too, where a policy provides that unless assessments on pre- mium notes are paid within thirty days after demand, the policy shall be null and void until they are paid, it has been held that the tender and receipt of such assessments by the agent of the company, on the evening of the day of the fire, and by him reported to the company, who retained them without objection, although aware of the broken condition, is a waiver of it. For- feitures are odious in law, and are never adminis- tered in equity.^ 2 Dutch. 368. When insurances ' Frost v. Saratoga Mut. Ins. are authorized " for a specific rate Co., 5 Denio, 154 ; Viall a. Genes- of premium to be paid in cash," see Mut. Ins. Co., 19 Barb. 540 ; the company can talie a note for Tuckeman «. Bigler, 45 Barb, such premiums. They are not 375 ; Wilson «. Trumbull Co. Mut. prohibited from extending the F. Ins. Co., 7 Harris, 373. time of payment of premiums in ^ Lycoming Co. Mut. Ins. Co. cash. The premium is to be paid v. SchoUenberger, 8 Wright, 359 ; in cash, but the time of payment Buckley v. Garrett, 11 Wr. 303. is extended. Carey v. Nagle A.m. Law Reg. (N. S.) toI. 9, p. 363. EECEIPT FOE PEEMIUM CONCIiUSlVB. 167 WhetJier receipt for premium, conclusive. 13. It has been decided that if the policy is actually delivered, and it acknowledges payment of the premium, the insurer is bouiyi, although in point of fact the premium was not paid till after the loss occurred,^ and that in such case the insurer is estopped from alleging that the policy was void because the acknowledgment was un- true.^ But, on the other hand, it is held that the acknowledgment in the policy that the premium has been received is not conclusive upon the com- pany, and that it may be inquired into and con- tradicted.^ The legal presumption, however, is that a short credit was intended. If, in such a > New Tork Central Ins. Co. ». Nashville, 10 La. 737. When the National Protection Ins. Co., 20 company and the agent mutually Barb. 468. credit each other, and at the end 2 Golt v. National Protection of every month strike a- balance Ins. Co., 35 Barb. 189; Dalzell of their accounts, payment by the r. Mair, 1 Camp. 533 ; Bamum v. insured to the agent, or a credit Childs, 1 Sandf. S. C. 58. The by the latter to the former, is in Supreme Court of Illinois holds eflFect a payment of the premium, that the insurer cannot controvert And in any event, the acknowl- the acknowledgment of the policy edgment of payment in the policy that the premium has been re- is binding in the hands of third ceived. Prov. Life Ins. Co. «. persons and innocent holders of Fennell, 49 111. 180. the policy. Marsh o. Northwest- 3 Sheldon v. The Atlantic P. & ern Ins. Co., 3 Bissell, 351 ; Baker M. Ins. Co., 36 N. T. 460 ; The v. The Union Mut. Life Ins. Co., Ins. Co. of Pa. ■». Smith, 3 Whart. 43 N. Y. 283. 520 ; Mitchell v. Mut. Ins. Co. of 168 riRE INSURATSrCB. case it should appear that the insurance company had been credited with the premium in account by their agent, or if it had, in fact, been paid to him, it would be a suflficient payment to them. But where the policy of a mutual company pro- yided that no insurance should take effect until the cash premium had been actually paid at the office of the company, and that the agent for- warding applications or receiving premiums was the agent of the applicant and not of the com- pany, it was held by the Supreme Court of Massa- chusetts that payment to the agent and delivery of the policy by him was not binding on . the company ; and this, too, notwithstanding the com- pany were in the habit of settling a monthly account with the agent, and he after the loss, but in the usual course of business, tendered them the premium.' Days of grace. 14. "Where there is a proviso or condition giv- ing a certain number of days of grace for the payment of the premium, these alone do not keep alive the policy. An express stipulation is ne- ' Mulrey v. Shawmut Mut. F. that the insurer, under the cir- Ins. Co., 4 Allen, 116. We doubt cumstanoes stated in the text, is if this construction of the contract estopped to claim a forfeiture of ■would be adopted elsewhere. The the Insurance, tendency of the cases is to hold DATS or GRACE. 169 cessary that the insurance shall be continued and the property covered by the policy until the expiration of the days of grace.^ • Salvin v. James, 6 East. 571 ; the insurers are liable, as when Tarleton v. Staniforth, 5 T. R. the condition is, that "no policy 695 ; Simpson v. Accidental Death will be considered valid for more Ins. Co., 3 d. B. (N. S.) 298; than fifteen days after the period Bradley v. Potomac F. Ins. Co., limited therein unless the premium 32 Md. 108. and duty for the renewal of such Where the assured stipulated to policy shall have been paid within pay half-yearly on certain days a that time." This is taken as a posi- certain sum, and that he would, as tive insurance for one year and flf- long as the managers agreed to teen days. Hays & Jones (Irish accept the same, malce his pay- Exchq. R.), 256. See Williams ments within fifteen days after the «. Albany City Ins. Co., 19 Mich. designated days, it was held upon 451, where a note was given for a loss happening within the fifteen the premium, under a stipulation days, the premium being unpaid, that if it was not paid at maturity but tendered afterwards before the premium should be considered their expiration, that the insurers as earned and the policy to be- were not liable. Tarleton «. Stain- come void, while the note re- forth, 5 T. R. 695. mained overdue and unpaid. A In the foregoing case the con- loss occurred after the maturity tinuation of the insurance was of the note and before it was paid : made by the terms of the contract Held, that during the time the to depend on whether the assured note remained overdue and unpaid paid the premium within the flf- the policy was suspended, and the teen days and the insurers accept- insured could not recover for a ed it ; but if by the terms of the loss occurring during the default, contract it appears that the insur- although the payment of the note ance is to continue for a year, and would revive the insurance during fifteen days longer, then, in case the remainder of the term. of a loss within the fifteen days. 170 PIEE INSUEAlfOE. Return of premium. 15. Where the risk has not been begun, whether this be the fault, pleasure, or will of the assured, or any other cause, except actual fraud on his part, the premium must be returned/ If fraud be committed by the underwriters, an action lies against them for the premium,^ But if the policy is void on account of illegality, the premium can- not be recovered back; each party, being equally in fault, has no remedy against the other,^ If the insured has not an insurable interest he is entitled to a return of the premium ; but he cannot recover it back where there is a .defect in the policy which makes it void, of which he had full knowledge when he paid it ;* nor if the policy never attached in consequence of his own fraudulent misrepresentations.* If the risk has once commenced there can be no appointment or return of the premium.^ Under a condition in a policy of insurance, re- serving to the insurers the right to terminate the ' Tyrie «. Fletcher, Cowp. 666 ; 575 ; Browning 9. MorriB, Cowp- Waters v. Allen, 5 Hill (N. Y.), 790. 421 ; Hoyt «. Gilman, 8 Mass. • 8 Upper Canada, Q. B. 363. 336 ; Clark v. Manufacturers' Ins. ' Friesmuth ». Agawam Mut. Co., 2 Wood & Min. 472. F. Ins. Co., 10 Cush. 587. ! Carter ®. Boehm, 3 Burr, 1909. e YvWiotx v. Lancaster Ins. Co. , ' Howson II. Hancock, 8 8. R. 7 Ohio, 335. RETURN OF PREMIUM. 171 insurance at any time, on giving notice to that effect and refunding a ratable portion of the pre- mium for the unexpired time, the return of the premium is the essential part of the condition to be performed, as a prerequisite of the right to terminate the risk. K'otice, without a return of, or offer to return, the premium, amounts to nothing. Whatever negotiation may take place, until a return or tender of the premium is made, the policy still remains in forc.e. A promise, by the insured, to bring the policy to the office of the agent to be cancelled, when he is to receive the return premium, neither anjounts to a valid agreement that the policy shall be held and deemed cancelled, without a return of the pre- mium, nor to a waiver of the performance of the condition on which the right to terminate the risk depends.^ The assured must be sought put ■ Hathomi). Germania Ins. Co., 51 111. 343. " There is no obliga- 55 Barb. 28. Where the policy tion resting upon the assured," reserves to the insurer the option said the Court in the latter case, to cancel the policy, for any cause " to dance attendance at the place he may elect, after notice to the of business of an insurance corn- insured or his representative, of pany, and await their pleasure." his intention so to do ; binding Forthwith with their determina- him in such case to refund the tion to cancel a policy, should be premium for the unexpired term, . their tender of the unearned pre- the act of refunding and cancella- mium. Peoria M. & F. Ins. Co. ?>. tion, it is held, must be simultane- Botts, 47 Ills. 516 j Hollingworth v. ous. .^tua Ins. Co. 1). Maquire, The Germania Ins. Co., 45 Ga. 394. 172 riEE INSUEANOE. and tender made ; holding the premium subject to his call is not sufficient. The insurer must be certain also that the whole "ratable proportion" is refunded. This is a condition precedent, and payment of a less sum does not terminate the insurance.^ In Helme v. Philadelphia Life Insurance Com- pany," it was held to be admissible to prove a custom among life insurance companies to allow thirty days' grace for payment of premiums due, even where a clause of forfeiture for non-payment on the day exists ; and also to prove the practice of the company to notify the assured of the times the premiums were due and payable, and that this practice was omitted on the occasion of the default. "If the company so dealt with her," said Thompson, C. J., " as to induce a belief that the clause of forfeiture would not be insisted on in her case, in case of a dereliction of payment at the day, and it was declared that the only risk she ran in not paying at the precise time, was death occurring in the interval of non-payment of overdue premiums, and thus put her off her guard, they ought not to be permitted to take advantage of a default which they may them- 1 Van Valkenberg v. Lenox F. 2 11 P. p. Smith, 107. Ins. Co., 51 N. Y. 465. RETUE]S" OP PREMIUM. 173 selves have encouraged." Hence the assured was entitled, under the circumstances stated, to recover back the premiums she had paid on her policy ; the policy having been wrongfully for- feited by the company. CHAPTER YIL AGENTS. 1. Power of agent to bind his 7. Waiver by agent, principal. 8. The president, directors, and 3. Insurance by part-owner. secretary. 3. Principal chargeable with 9. When insurer estopped to acts of agent. deny the acts of his agent. 4. Agent of the insured. 10. Agent of both insurer and 5. Agent of the insurer. insured. 6. Whether agent may insure 11. Whether insurer can malse in a mutual company. his agent the agent of the insured. Power of agent to hind Ms principal. 1. An agent acting within the general scope of his authority hinds his principal, notwithstand- ing he may have departed from his instructions, provided the party with whom he contracts had no knowledge of these instructions.^ And even ' Perkins ®. Washington Ins. authority, and, therefore, cfiuld Co., 4 Cowen, 645 ; New York not bind the company, Breeae, Central Ins. Co. «. National Pro- C. J., in delivering the opinion of tection Ins. Co., 28 Barb. 468; the court, said: "When a loss Lightbody «. N. A. Ins. Co., 33 happens, they (the insurance com- Wend. 18 ; Eastern R. K. Co. v. panics) should not be permitted to Relief P. Ins. Co., 105 Mass. 570. say, in any case, their agent acted In .ffltna Ins. Co. v. Maguire, beyond the scope of his authority, 51 111. 343, where it was urged that unless it shall be made to appear the lofel agent, in his acts and the assured was informed of, and declarations, was acting without knew the precise extent of the au- AGENTS. 175 in cases where the contract might be avoided, in consequence of the agent departing from his in- thority conferred. Any other principle, in its operations, would be turning loose upon an vmsus- pecting, honest, and confiding people, a horde of plunderers, against which no ordinary vigil- ance could guard. " See also F. & M. Ins. Co. V. Chestnut, 50 111. 111. In Lightbody v. N.- Am. Ins. Co., 33 Wend. 18, Branson, J., in delivering the opinion of the court, said: "I shall assume, for all the purposes of this case, that the agent departed from his in- structions in taking a risk at Utica. This hypothesis will not aid the defendants. Haynes was a gene- ral agent for eflFecting insurances on behalf of the company, and acted within the general scope of his authority in taking this risk. Although he must answer to his principals for departing from their private instructions, he clearly bound them so far as third per- sons dealing with him in good faith are concerned. The ques- tion is not so much what authority the agent had in point of fact, as it is what powers third persons had a right to suppose he possess- ed, judging from his acts and the acts of his principals. This rule is necessary to prevent fraud and encourage confidence in dealing. It is diflacult to conceive how the defendants could have conferred i. a more unlimited authority upon the agent, so far as third persons are concerned, than they did by furnishing him with policies al- ready executed by the officers of the company and ready to be delivered to any one who might wish to contract, after his bame, the subject insured, extent of the risk, and date of the transaction had been inserted in the contract. . . . The rule is diiferent in rela- tion to a special agent ; he cannot bind his principal beyond the pre- cise limit of his authority. But Haynes was a general agent, act- ing within the scope of his pow- ers ; and if he was wrong in tak- ing this risk, that is a question to be settled between him and his principals. The objection that this was a special risk, and that Haynes had no authority to take special risks without consulting the company, depends on- the same principle as the objection already noticed, and requires no separate consideration." 176 riKE INSUEANCE. structions, a subsequent ratification by his prin- cipal, even after a loss, makes it binding.^ As a general rule, where an agency is created and enforced by a written instrument, the nature and extent of the writing must be ascertained from the instrument itself, and cannot be enlarged by parol evidence of the usage of other agents in like cases, or of an intention to confer additional powers, because that would be to contradict or vary the terms of the written instruments.^ Insurance hy part-owner. 2. One part-owner has no authority to insure for the rest of the owners, although such part-owner is also the ship's husband ; but if he does it, and the other part-owners ratify his act, even after a loss, the underwriters will be bound. And the bringing an action on the policy in the names of the part-owners is a sufficient ratification of the insurance.* But one part-owner insuring in his own name, without any words indicating an in- tention to insure beyond his own interest, cannot maintain an action on the policy in the names of ' Oliver v. Mut. Com. M. Ins. cox, 57 111. 180. See qualifica- Company, 2 Curtis, 377 ; Routh v. tions of this doctrine as stated in Thompson, 13 East. 274 ; Haau- Story on Agency, sees. 76, 77, 279, son V. Oliverson, 2 M. & S. 485. » Finney v. The Fairhaven Ins. 2 Hartford Fire Ins. Co. v. Wil- Co., 5 Met. 192. AGENTS. * 177 all the owners, upon parol proof that the applica- tion for insurance was for the benefit of all, and that this was well known to the insurers, and that it was the intention and understanding of all the parties that the policy was to cover the interest of all the owners.^ Members of a part- nership, who are agents to effect insurances, have all the powers of the firm to make parol contracts of insurance.^ Principal chargeable with acts of agent 3. As a corporation can act only through agents, it is responsible for the acts and contracts of such agents within the scope of their authority,* The declarations, too, of its agents, acting as such within the scope of their authority, are evi- dence against the company.* If these agents in the line of their employment are guilty of falsehood and fraud, their principal is liable for the consequences which may flow therefrom. If they commit a fraud in the course of their employment, and while acting in the business of their principal, the parties injured by ' Finney ». The Bedford Conn. Ina. Co., 4 Barr, 185; Clark «. Ins. Co., 8 Met. 348. City of Washington, 13 Wheat. 2 Kennebec Co. v. Augusta Ins. 40 ; Barring v. Pierce, 5 Watts & and Banking Co., 6 Gray, 204. Serg. 548. ' Hackney v. Allegheny Mut. • 4 Barr, 185. 12 178 PIRE IliTSUEAN-CE. their misconduct or fraud can resort for redress to the persons who clothed them with the power to act in their behalf, and who have received Ihe benefits resulting from their agency. Hence where insurance is effected, and premium notes are given on the faith of representations made by an agent of an insurance company duly authorized to make contracts of insurance, as to the solvency of the company, its ability to meet its liabilities, the amount of its capital stock, and the mode of its investment, and it turns out that these repre- sentations were false and fraudulent, this consti- tutes a good defence to a suit on the notes.^ ^ Agent of the insured. 4. If an agent employed to obtain insurance should practise a fraud on his principal in effect- ing such insurance, that does not enable the in- ' Fogg ». Griffin, 3 Allen, 1 ; -whicli turn out to be false, are not Fuller V. Wilson, 3 Ad. & Ell. N. admissible as a defence to an ac- J. 58. On the other hand, it has tion on a premium note. Nor is been held that an agent for a spe- it admissible to proye that at the ciai purpose, to receive applica- time of his appointment similar tions for insurance and the pre- representations were made to him mium thereon, has no authority by the president of the company, to bind the company beyond that Hackney ■». Allegheny Co. Mut. purpose. Chase ». Hamilton Mut. Ins. Co., 4Barr, 185. Suchrepre- Ins. Co., 23 Barb. 527. Hence sentations not being within the his representations as to the places scope of that officer's duties, wliere the company take risks. AGENTS. 179 surer to avoid the policy; the fraud being as to him res inter alios} On the other hand, an agent who undertakes to procur,e insurance and does so, but so unskilfully that the policy is worth- less, is liable for the amount of the loss, and this although he acted in procuring the insurance voluntarily and without compensation.^ An agent is not bound to insure for his principal unless expressly instructed so to do ; or unless an understanding to that effect exists between them. And when the evidence clearly discloses the fact that the principal had not instructed his agent to insure the property in his hands, and that there was no understanding between them to that effect, it is competent for the agent to show, by extrinsic evidence, that the property of such principal in his hands was not intended to . be covered by an insurance effected upon pro- perty held in trust for other consignors.^ If a merchant is in the habit of effecting in- surances for his correspondent, and is directed to make an insurance and neglects to do so, he is himself answerable for the losses that may occur, as insurer, and is entitled to a premium as such. The measure of damages against him is, what an ' Oliver v. Mut. Com. M. Ins. Esp 75. See also Keane «. Co., 2 Curtis, 277. Brandon, 12 La. An. 20. « Wilkinson n. Coverdale, 1 ' Lee v. Adsit, 37 N. Y. 78. 180 PIEE INSUEAIiTCE. underwriter would have been liable for in case a policy had issued. If he can excuse himself for not having effected an insurance he is answerable for nothing ; if he cannot excuse himself he is then answerable for the whole.^ Accordingly, when books were sent to a merchant for sale on, commission, and he agreed to have them insured but failed to do so, and they were subsequently destroyed by fire, he was held liable for the value of the books, as damages for the breach of the contract. In the absence of evidence, the pre- sumption in such case is, that if the goods had been insured it would have been for' their value. This value, then, is the only measure of damages.^ An executor and trustee, however, is not per- sonally liable for not keeping up the insurance on .his testator's estate held under lease, and which contained a covenant on the testator's part to keep the premises insured.^ Indeed, an executor ' Morris v. Summerl, 2 Wash. 2 Ela ». French, 11 N. H. 356. C. C. 203 ; Keane v. Brandon, ^ Fry «. Fry, 27 Bevan, 146 ; «««pra; Elliott 41. Ryan, 6 Lower Irwin's Law of Trusts, 383; Canada, Q. B. 87. In the latter Crawford v. Hunter, 8 T. R. 13. case it was held that when the In Pry «. Fry, supra, the testator custom and usage of the place re, had died after the premium had quire the consignee to Insure the become due ; the policy, therefore, goods, or when he is hound by had lapsed in his lifetime. The agreement to insure, he is liable question thence arose whether the for their loss or damage by fire if executor and trustee was bound he fails to insure. to re-insure. AGENTS. 181 is not bound to insure, or continue .an insurance, of his testator's property against fire.^ Agent of the insurer. 5. An agent to procure applications for insur- ance and forward them to the company for ac- ceptance, represents the company in regard to whatever is incident to the business of procuring and forwarding such applications, and which may be necessary to complete them. Hence when the applicant for insurance states the facts relative to the property to be insured correctly, but the agent reduces them to \mKo7i, J., said : "The courts of the terms used, which divide of this State have not thought it the opinions of the most learned proper to follow the precedents jurists. Yet the insured are bound made by some other courts of re- at their peril, however ignorant garding local agents, in rendering they may be on points of law, to aid in the issuing of policies, as give them their true legal con- the agents of the applicants rather struction. Now we know from than of the insurance companies, common observation that not one They have rather taken the ground in a hundred of those who procure that public policy and the protec- policies give any attention what- tion of the community require ever to the finely printed page that the contrary rule should be containing the conditions of a adopted. A modern policy is a policy. They cannot afford to very complicated contract. Be- spend the time required to study 216 FIEE INSUEANCE. ~We think the principle involved in the lan- guage of Chief Justice Woodward, as cited above, namely, that " no company has a right to select and send out agents to solicit patronage and business for its benefit, and then to saddle their blunders upon its customers," a very salutary one ; and although an applicant for insurance with his eyes open, may by express agreement make the agent of the insurer his agent, this is a wholly different thing from the insurer shifting the burden of his agent's acts upon the shoulders of others, by providing in his by-laws that such agent shall be deemed the agent of the person who applies for insurance. It is true that the them over, and they take it for same time to screen as far as pos- gran.ted that they would not be sihle their employers from loss. enlightened if they should. They It was well remarked by EUs- rely with full confidence, and worth, J. (35 Conn. 477), ' There whatever may be the law, or is great danger that injustice will whatever stipulations may be in- be done to persons obtaining in- serted in the policy, they always surance who are inexperienced in will rely on the representations the business, and place full confi- of the agents, and always will re? dence in the word of an insurance gard them as the representatives agent, accredited as he is by his of the company, and will always public appointment.' This court consider themselves as safe in do- have, therefore, in a series of de- ing whatever receives their sane- cisions held companies bound by tion. These local agents, how- the acts of local agents whenever ever, are under a strong tempta- it could be done consistently with tion to use undue influence to in- the evidence and rules of law." crease their business, and at the AGENTS. 217 member of a mutual company is bound to take notice of its by-laws, and the authority of its agents. But he does not become such member till the contract is complete. In the preliminary negotiations that lead to the contract, he is not chargeable with knowledge of the by-laws which make the agent of the insurer also the agent of the insured.^ ' In the Susquehanna Ins. Co. insurance, to transmit them to the V. Perrine, 7 Watts & Sergeant, company, and upon their deciding 348, it was a provision of the act to take the risk, to receive and of incorporation that a party in- deliver the policy upon receipt of sured should ipso facto be a mem-' the premium, was held not to be ber of the company, and it was the agent of the company when also a provision of the by-laws he undertook to draw up an ap- that the surveyor of the company plication for the assured. "If, should be deemed the agent of the under such circumstances," said applicant for insurance. Hence Ames, C. J., "the plaintiflF chose the company were held to be re- to employ the agent of the in- lieved from their contract on the surers to do a duty which was ground that the application which incumbent on himself under the had been incorrectly filled up by contract, and thus to make him the surveyor (notwithstanding for the performance of that duty full and accurate information had Ms agent, he is not to be released been furnished him by the appli- or excused from the consequences cant), was the act of the latter's resulting from the carelessness or agent. The application by the want of skill of the person thus terms of the policy was made a employjed by him, because that warranty. person is also employed by the In the case of Wilson v. The other contracting party in another Conway Fire Ins. Co., 4 Rhode portion of the same transaction." Island, 141, an agent authorized [See to the same effect Lowell v. to receive written applications for Middlesex Fire Ins. Co., 8 Cush. 218 riRE IKSUEAKCE. In reference to this question the following case, as stated in the Superior Court of New York, is 127.] In this case the applica- tion was made a condition of the poliqy. In Smith ». Empire Ins. Co., 35 Barb. 502, the plaintiflF requested . the agent of tlie company who received his application for a po- licy, and which contained the items of property to be insured, " to fill out the rest of it when he got where he could write." This was held to constitute the agent, the plaintiffs agent, to complete the application ; and although no- thing passed between him and the plaintiff with whom he did the business, in regard to incum- brances on the property to be in- sured, the plaintiffs were held re- sponsible for all that he afterwards inserted in the application to make it complete, including the words, " there is no incumbrance except the Petrie mortgage." "Van Camp (the agent) must have understood, from what was said when he took the application for the policy, that he was to^ insert in it whatever he should deem proper to make it perfect, ' when he got where he could write,' or he would not have inserted the sentence in it as to incumbrances. The plaintiff must suffer for this act of Van Camp, on the principle that where one of two innocent parties must sufier from the im- proper act of a third, the one shall suffer who has enabled such third person to do the act. The plain- tiffs, by permitting Van Camp to complete the application in their absence, enabled him to insert the false statement in it, that there was no incumbrance on the pro- perty to be insured, except the Petrie mortgage, and they must suffer the consequences of that act. The application was made a part of the policy, by an express reference therein to it, as forming a part of it. In the foregoing cases, on the authority of the latter decisions, the insurers would be estopped from showing the error or mistake of their agents to defeat their own contracts. ' ' Any other rule would be fraught with mischief. Insur- ance companies send out an arnjy of agents to solicit business. Pro- perty-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 AGENTS. 219 interesting, and to the point : " The proof esta- blishes that the agent of the company made out the application for the plaintiff to sign. He used the blank furnished to the agents for that pur- pose. It is true that the by-laws of that com- pany make the person taking the survey the agent of the applicant. !N^evertheless he is still the agent of the company. He is not divested of his office by being deemed the agent also of the person making application for a policy. I have always regarded this clause in the by-laws of these companies as a device resorted to by them for the purpose of shunning just responsi- bility. They employ their own agents and send them abroad in (the) community with their printed blanks, and such instructions as the offi- cers of the company deem proper and necessary survey, to meet the rigid and ela- be transacted before a policy can borate requirements of tliese cor- be effected, the Insurance broker porations, while experience shows becomes the agent of the appli- that they are not expected to do cant for insurance, would seem to so. Hence these agents render be an unnecessary and undesir- such services as are necessary to able refinement." FuUerton, J., enable the contracting parties to in Rowley v. Empire Ins. Co., 36 attain their respective objects— N. Y. 385. See also 40 N. T. 87, the one to insure, and the other to 557 ; 43 Mo. 148, ante, p. 202 et seq. be insured, against fire. To hold Smith v. The Empire Ins. Co., that in performing these prelimi- 25 Barb. 497, was referred to and nary labors, touching the very overruled by Rowley v. Empire business which must necessarily Ins. Co., 36 and 37 N. Y. 285. 220 FIEE INSURANCE. to give them. The business of these agents is to obtain insurances for their principals, the com- pany employing them for that purpose. The public know nothing of their by-laws or the in- structions under which such agents transact their business. They are regarded as the agents of the company, and confided in as being competent to transact the business intrusted to them accu- rately and according to law. . . . The assured, being an old lady seventy years of age, relied upon Mr. Gray (the agent) to transact the busi- ness, and do whatever was necessary to be done to insure her a valid and binding policy. It ap- pears that Gray was informed by the son of the plaintiflF at the time he made out the application, and while drawing it for the plaintiff to sign, that there was a mortgage on the premises, given by Lucas, and told him all the particulars about it. !N^otwithstanding such information the agent left the application entirely a blank in relation to any incumbrance upon the property. . . . His being declared by the by-laws the agent of the appli- cant, as above remarked, did not divest him of his attributes as an agent of the defendants. He was in the employment of the defendants, solicit- ing risks, and making contracts for the company with anybody and everybody who might wish to insure. He also made out the applications, and AGETSTTS. 221 prepared the necessary papers to effect insurances, and it would, in my opinion, he little less than legal- ized roibery to allow these insurance companies to escape from liability upon the merest technicality possible, and that too when created by their own by-laws, which remain a sealed book to ninety-nine out of every hundred persons insured. The autho- rities settle this question against the defendants, and without showing any more valid defence against the plaintiff's claim the judgment cannot be disturbed."^ ' Masters v. Madison Co. Mut. for the acts of their agents to the Ins. Co., 11 Barb. 634. simple receipt of the premium See also Sexton v. Montgomery and delivery of the policy, and Mut. Ins. Co., 9 Barb. 191, 200 ; treating the agent as to all other McEwen v. Montgomery Co. Mut. acts as the agent of the assured. Ins. Co., 5 Hill, 101. In this case " The tendency of the modern an agent to make surveys and decisions in tliis country," say the receive applications for insurance Court, " is steadily in the oppo- was notified of a prior insurance, site direction. The powers of the and this was held to be binding on agent are prima facie coexten- the company, although it never sive with the business intrusted to reached them. Tide N. E. Eire his care, and will not be narrowed & M. Ins. Co. a. Schettler, 38 111. by limitations not communicated 166. to the person with whom he deals. See also Com. Ins. Co. v. Ives, An insurance company establish- 56 111. 403, and Ins. Co. s.' Wil- ing a local agency must be held kinson, 13 Wallace, 233, where responsible to the parties with the Court comment on the as- whom they transact business for sumed power of insurance com- the acts and declarations of their panics to limit their responsibility agent, within the scope of his 222 riRE IIJ-SUEANCK. employment, as if they proceeded from the principal." Conover v. Mut. Ins. Co. of Al- bany, 3 Denio, 354. In this latter case the secretary had indorsed upon the policy and subscribed an assent to an assignment. The policy prohibited an assignment of the interest of the assured, unless by the consent of the company manifested in writing. There was no by-law or written resolution of the company giving the secre- tary authority to consent to the assignment of policies ; but he had often done so. This authority, therefore, was presumed, the con- trary not appearing, and that his acts had been approved by the • company. " And besides, it was enough that the secretary was a principal officer or agent of the company, and that he gave the consent on application for that purpose at the place where the company transacted its business. ' ' State Mut. F. Ins. Co. «. Arthur, 6 Casey, 316, 324. In Connecticut a policy was re- sisted on the ground that the offi- cers of the company had told a local agent that he must consider himself more the agent of the in- sured than of the company. The agent failed to communicate to the company certain facts material to the risk, of which he had been apprised by the applicant, and the policy was issued without the company possessing a linowledge of these facts. It was held that they were bound. "Of course," said Hinman, J., "the company could not make their agent also the agent of the insured, unless the insured chose to recognize him as his agent ; and however desirous the defendants may have been that their^ agent should conduct fairly with appli- cants for insurance, most appli- cants, probably, would prefer for their own agent some one not connected with the company." 35 Conn. 51. CHAPTEE yill. "WARRANTY AND REPRESENTATION. 1. What is a representation. 10. Insurance on the applica- 2. What is a warranty. tion of a third party. 3. Insured only held to literal 11. Construction when doubtful compliance. whether rep^'esentation or war- 4. Burden of proof. ranty. 5. When representation be- 13. When policy refers to appli- comes warranty. cation and survey as representa- 6. Conditions when part of tions. policy. 13. Construction of warranties 7. When by-laws warranties. and representations. 8. The application. 14. Change of risk. 9. Survey. What is a representation. 1. A representation precedes the contract of insurance, and is no part of it, but nevertheless must be materially true.^ It is an implied con- dition of the validity of the policy that the party proposing the insurance should make a true and complete representation respecting the property which he seeks to insure, and of the hazards to ' Williams v. New England M. mium. This question of materi- F. Ins. Co., 31 Me. 280 ; Glendale ality is one of fact for the jury. M. Co. V. Protection Ins. Co., 21 Columbia Ins. Co. v. Lawrence, Conn. 19. A decisive test of ma- 10 Peters, 507 ; NicoU v. Ameri- teriality is, whether, if the true can Ins. Co., 3 Wood. & Minot, state of facts had been stated, it 529. would have enhanced the pre- 224 riEE INSUEANOB. which it is exposed. Hence policies of marine insurance and policies against fire are violated by any material misrepresentation, even though not fraudulently made/ And the misrepresenta- tion, made by an agent in procuring a policy, is equally fatal, whether made with the knowledge or consent of the principal or not, or whether made by mistake or by design.* A policy ob- tained by misrepresentation is, in legal intend- ment, no insurance at all ; it has no legal effect.^ But a false representation will only avoid the policy when the actual risk is greater than it would be if the representation had been true.* In other words, misrepresentations do not avoid a policy of insurance unless they are material or prejudicial to the insurers.® "When the insurer makes his contract on his own knowledge of the character of the risk, on the faith of an examination and description by his own agent, the representations of the assurefl are immaterial, unless indeed information of cir- ' 10 C. B. (N. S.) 860; Mar- Cush. 342; -Carter v. Boehm, 3 shall «. Ins. Co., 7 Foster, 157 ; Barr, 1905, 1909. Cumberland Valley Mut. Protec. ' Clark v. N. E. Mut. Ins. Co., Co. «. Schell, 5 Casey, 31. 6 Cush. 343. * Carpenter v. American Ins. * Wall «. Howard Ins. Co., 14 Co., 1 Story, 57; Gould v. York Barb. 383. Co. Mut. F. Ins. Co., 47 Me. 403 ; = Witherell v. Maine Ins. Co., Clark v.'N. E. Mut. Ins. Co., 6 49 Me. 200. "VVAEEANTT AND REPEESBNTATION. 225 eumstances plainly tending to increase the risk is withheld. In that case the contract would be avoided on the ground that such withholding of information is incompatible with good ifaith.^ And a false representation of something outside, and independent of the property insured, does not affect the validity of the contract, when the misrepresentation has not contributed in any degree to the loss ; as where the representations regarding the occupancy of the building contain- ing the insured goods were in part untrue.^ And where the representation is, that a count- ing-room in the insured building is warmed with coal by one stove, and that the funnel and stove are well secured, this, being a true representation at the time it was made, does not bind the as- sured to keep the stove and funnel well secured when not in use. The meaning of such a repre- sentation is, that when the counting-room is warmed at all it is warmed in the manner de- scribed ; not that the stove and funnel are well secured during the summer season, when there is no occasion to warm the room. Nor is the as- sured under any legal or moral obligation to keep 1 5 Casey, 31 ; Roth v. City Ins. ' Howard' P. and M. Ins. Co. ■». Co., 6 McLean, 334; Michael v. Cornick, 24 111. 455. Mut. Ins. Co.-, 10 La. An. 737. 15 226 FIKE IBTSUBANCE. his stove secure against fire that may be kindled in it by trespassers and burglars, nor against for- bidden acts of persons whom he may admit to the room for shelter. Though the building is represented as occupied for storing lumber, and having a counting-room in it, yet the use of the counting-room for a single night, as a shelter for strangers, is not such a change of use as exempts the insurer from paying for the loss arising from a fire kindled by such strangers.^ What is a warranty. ^ 2. A warranty is a part of the contract, and must be exactly and literally fulfilled.'' Being in the nature of a condition precedent, it is not a subject for discussion whether sudh condition be material or immaterial ; it must be literally com- plied with whether it be one or the other.^ ' Loud v. Citizens' Mut. Ins. chants' & Man. Mut. Ins. Co., 5 Co., 3 Gray, 331. Ohio St. R. 450. 2 Glen «. Lewis, 8 Wils. Hurl. ' Lycoming Ins. Co. «. Mitchell, andGord. (Exchq.) 607; BllUngs 12 Wr. 367; Abbott ®. Shawmut V. Tolland Co. Mut. F. Ins. Co., M. F. Ins. Co., 3 Allen, 213 ; For- 20 Conn. 139 ; DeHahn v. Hart- bush v. Mass. Ins. Co., 4 Gray, ley, 1 T. R. 348 ; Kennedy v. St. 337; Miles ®. Conu. Ins. Co., 3 Lawrence Co.. Mut. Ins. Co., 10 Gray, 580. In Lycoming Ins. Barb. 286 ; 31 Conn. 19 ; Wall v. Co. ■». Mitchell, mpra, Agnew, J., Howard Ins. Co., 14 Barb., 385; stated the distinction between a Washington Mut. Ins. Co. d. Mer- warranty and a representation WAERANTT AND EEPEESENTATION. 227 A warranty is a binding agreement that the facts stated are true.* The assured by his war- ranty engages that whatever may be the condi- tion of things "when he makes his application, the facts shall be as warranted when the policy attaches. The building may be occupied as a powder magazine to-day, but when the risk com- mences it must be what he has warranted.^ Insured only held to literal compliance. 3. While the insurer has a right to exact of the insured a literal performance of a warranty, and cannot be compelled to accept a substantial com- pliance, or show that the breach was any way material to his interest, yet, on the other hand, the insured is only held to a bare and literal com- pliance with his engagement, which is not to be extended by construction to include what is not thus: "A warranty ia a policy is Witherell «. Marine Ins. Co., 49 understood to be a contract re- Me. 200 ; Tibbitts v. Hamilton lating to an existing fact, and not Mut. Ins. Co., 1 Allen, 305 ; Cal- a coTenant for future acts, and vert b. Same, Ibid. 308; Daven- diflfers from a representation in port«. N. E. Ins. Co., 6 Cush. 840. the circumstance that it is a bind- ' Lycoming Ins. Co. «. Mitchell, ■ing agreement that the fact is as 13 Wr. 867. warranted ; while the representa- ^ State Mut. Ins. Co. v. Arthur, tion is not an agreement that it is 6 Casey, 315. See also Frisbie ». so, but such a statement of it as Fayette Mut. Ins. Co., 3 Casey, will constitute a misrepresenta- 335. tion if it be untrue." See also 228 MBE IN-STJEAKCE. necessarily implied in its terms.^ Henee the warranty of a force pump in a mill, ready at all times for use, includes a warranty of power to work the pump ; but not any particular kind of power. And the warranty to be at all times ready for use is not broken if the pump should be disabled by fire, that being the very peril in- sured against.^ And a warranty that there is a force-pump in the insured building, with water to feed it, is not broken because there is no hose provided to be attached and used in extinguishing fires. A hose is not included by implication. It might be exceedingly useful in case of fire, but buckets and other means can be used to extinguish a fir6 where a supply is furnished within the building by a force-pump.^ Hide v. ' Turley v. North Am. Ins. Co., the application that if any untrue 25 Wend. 374. answer was given, then the in- ' Sayles «. The Northwestern surance was to be void, and the Ins. Co., 2 Curtis, 610. policy of no effect. It was not ' Peoria Marine and Fire Ins. contended that the buildings, or Co. «. Lewis, 18 111. 553. In any part of them, were then Aurora Fire Insurance Co. «. warmed by a stove, but that one Eddy, 55 111. 213, the question was subsequently used for the was asked, " How is the building purpose, and that this representa- warmed ? If any stove and pipes, tion was a continuing one, and how are they secured ?" To this was a warranty that a stove would it was answered, "No stoves not be used for warming pur- used." The insured agreed in poses. It was held, that, as the WAERA2JTY AND REPRESENTATION". 229 Bruce^ is a familiar ease, and often referred to in illustration of the principle that a warranty- is not to be extended by construction to include what is not necessarily implied in its terms. The warranty there was that a ship "should have twenty guns." The guns were on board, but there were not men enough to work them; and it was held by Lord Mansfield and his asso- questaons and answers were in In Aurora Fire Ins. Co. v. the present and not in the future Eddy, supra, there was a stipu- tense, the use of the stove was not lation in the policy that the as- a breach of the warranty. " We sured should keep eight buckets will not," said the Court, "give filled with water on the first a forced construction to language floor, where the machinery was to enable a party to enforce a run, and four in the basement by forfeiture, but rather adhere to the reservoir, ready for use "at all the natural import of the language times in case of fire. It was held used." If the stove had been that a reasonable construction of used recklessly it might be re- this stipulation requires that garded as increasing the risk. while, from freezing or unavoid- in Schmidt v. The Peoria P. & able causes, a literal compliance M. Ins. Co., 41 m. 295, a repre- with the warranty might have sentation similar to that in Aurora been impossible, and could not Fire Ins. Co. v. Eddy, supra, was have been in the contemplation of held not to be a continuing war- the parties, still it was incumbent ranty that there should be no fire on the assured to show that the in the tannery except under the required number Of buckets, in boiler, as represented during the good and serviceable condition, life of the policy, but only a repre- were at the places designated in sentation of the condition of the the agreement, ready for instant property at the time the policy use. was issued. ' 3 Doug. 313. 230 PIEE INSURATS'CE. ciates that the warranty had been complied with, there being no pretence of fraud. . While therefore the insured must comply with his warranty, even in matters that do not seem to affect the risk, yet the Courts, it will thus be seen, are liberal to the insured in giving an in- terpretation to the warranty. And besides they attach no importance to the printed words, when the written words even impliedly indicate an in- teiition different therefrom ; and they are strict in requiring the insurer who draws up the policy and deliberately chooses his own language, to use such language as will in its literal understand- ing clearly convey the intended meaning. For example, where " houses building or repairing" were included among extra-hazardous occupa- tions, the words were confined to the trade of house building or repairing, and the policy at- tached, although the insured was making very extensive alterations and repairs in the house. ^ 1 Wall ■». Howard Ins. Co., 14 was worked by the water-wheel. Barb. 383. See also ante, p. 84 The assured interrupted the sup- et seq. A cotton factory was in- ply of water for several days for sured upon the representation that the purpose of substituting a new the works were in good condition, stone bulk-head for a wooden one and that there was a forcing pump which was decayed and niinous, therein, designed expressly for but might have been temporarily protection against Are, and at all repaired or replaced by another times in condition for use, which one of similar materials in much "WARRANTY AND REPRESENTATION". 231 ^ni a -warranty in a policy on buildings in the course of construction, as follows : " Water tanks to be well' supplied -with water at all times," is complied with by supplying the water tanks with all reasonable diligence, having reference to the progress in the construction of the building in- sured. The assured is not, under such a policy upon buildings in the course of construction, required to hare at all times, from the first mo- ment the policy issues, " water tanks well sup- plied with water at all times," in the manner and to the extent he would be upon a finished building.' Burden of proof. 4. The burden of proving the performance of all warranties made by him rests upon the as- sured ; but where the promissory stipulation is not made a warranty, and the Courts are inclined, if they can, to construe such stipulations to be less time. It was made a condi- quired to render the premises tion in the contract of insurance useful for the purposes to which thatif, after insurance effected, the they were devoted. This right, risk should be increased by any of course, might be modified or means whatever within the con- relinquished by an express agree- trolofthe assured, it should render ment. Towtisend v. North west- the insurance void. It was held ern Ins. Co., 18 N. T. 168. that the assured had a right, with- ' Gloucester Man. Co. «. How- out vacating his policy, to make ard Fire liis. Co., 5 Gray, 497. any repairs which might be re- 232 riEB INSUEANCE. representations merely, the proof of the hreach of th.em is a matter of defence only, and the burden of proof rests, of course, upon the in- surers.^ When representation iecomes warranty. 5. Warranties are not necessary in fire policies, inasmuch as representations which must be true in all particulars material to the risk are entirely adequate to protect the interest of the insurer. But it has become quite usual to convert repre- sentations into stipulations of warranty by some reference or condition in the policy, and it be- hooves the applicant for insurance to scrutinize the terms of the contract very critically before he accepts it, or else he may find that it affords him no real security. "Many of these companies have encumbered their policies with so many condi- tions," said Chapman, J., in Abbott v. Shawmut Mutual Fire Insurance Company,^ "that they can seldom be held responsible for losses, except at their own option." And Woodward, C. J., in ' Wilson ®.' Hampden Fire Ins. Co., 8 Gush. 83 ; Clark v. Hamil- Co., 4 R. I. 159 ; 1 Amould on ton Mut. Ins. Co., 9 Gray, 148 ; Ins. 686, note 1, and cases cited. Henon v. Peoria Marine and Fire Catlin v. Springfield Fire Ins. Ins. Co., 38 111. 335. Co., 1 Svun. 435, 448 ; Jones' 2 3 Allen, 314. Man. Co. v. Man. Mut. Fire Ins. WAEBANTT AHD REPRESENTATION". 233 Columbia Insurance Company ?j. Cooper,^ spoke of the conditions as " four times as voluminous as the policy itself, and which, if strictly con- strued, take back nearly all the policy grants, and leave the assured about as empty-handed as he began." A representation inserted in the policy becomes a warranty,^ and a representation when referred to in the policy as forming a part of it has the same effect as though it was written in the body of it, that is, the representation becomes a war- ranty.' But a mere reference to another paper, as a survey or an application, does not make it part of the policy, nor bind the insurer by its contents, as by a warranty.* 1 14 Wr. 340. B. Monroe, 634 ; Wall «. Howard 2 WilUams v. N. E. Mut. Fire Ins. Co., 14 Barb. 383; Stebbens Ins. Co., 31 Me. 219 ; Ripley v. v. Globe Ins. Co., 3 Hall, 633 ; .ffitna Ins. Co., 30 N. T. 136. Delonguemare v. Tradesmen's ' Williams v. N. E. Mut. Fire Ins. Co. , 2 Hall, 589 ; Burnitt v. Ins. Co., 31 Me. 319. Gabagan o. The Saratoga Co. Mut. Fire Ins. Union Mut. Ins. Co., 43 N. H. Co., 5 Hill, 188 ; Trench ». The 176; Ripley a. Mtna. Ins. Co., Chenango Co. Mut. Ins. Co., 7 supra; Philbrook v. K. E. Mut. HiU, 133 ; Frisbie «. Fayette Ins. F. Ins. Co., 37 Me. 137 ; Com- Co., 3 Casey, 325 ; The Jefferson monwealth Ins. Co. v. Moninger, Ins. Co. v. Cotheal, 7 Wend. 73 ; •18 Ind. 352 ; .^tna Ins. Co. «. Snyder v. The Farmers' Ins. and Grube,, 6 Minn. 82; Abbotts. Loan Co., 13 Wend. 92 ; Jennings Shawmut Fire Ins. Co., 3 Allen, v. The Chenango Co. Mut. Ins. 813. Co., 2 Denio, 75. • Ibid. ; Ins. Co. v. Southard, 8 Where by the conditions of the 234 FIEE INSURANCE. Where the policy refers to a particular survey, not annexed to the policy, but on j&le elsewhere, as the survey and description of the property in- sured; and .the conditions attached to the policy make such survey a part of the contract, and a warranty of the truth of the statements therein made, it is a question for the jury whether the sur- vey produced at the trial is the survey referred to in the policy. But it is not a proper question for the jury, whether the insured supposed it was the same paper, and if not, then as the minds of the parties, while meeting as to the insurance, did not meet as to the survey, which invalidated it, the insured would be entitled to recover.^ The survey being false and inaccurate, he could not recover, although he did not understand the sur- vey in question as the one referred to in the policy.^ When, however, a reference is made to the ap- policy, the representations con- premises did not correspoild with tained in the survey referred to in the description, increased the risk the policy are made part of the or not. This would be correct as policy and declared to be war- to representations, but not so as ranties, the insurer may insist to warranties. Le Roy v. The upon them according to their Market Fire Ins. Co., 39 N. Y. tenor, and it is error to submit to 90. the jury the question whether the ' Le Roy v. The Market F. Ins. particulars, in which, at the time Co., 45 N. T. 80. when the policy was made, the " Ibid. ■WAEEANTT AND EEPEESENTATION'. 235 plication for a more particular description and as forming part of the contract, and the application declares that if the assm-ed should suffer a judg- ment or decree operating as a lien on the insured premises or any part thereof, to pass against him, without communicating the fact to the insurers, the policy should he void, this constitutes an express warranty, and a violation of it avoids the policy.^ And where an application and survey are made by the insured to accompany a policy, or are referred to as forming part of such policy, such application, survey, and policy are to be construed together as part of one entire contract.^ But where the application is made part of the policy merely for the purpose of description and identification only, the understanding and legal effect is, that it is not tp be regarded as a stipu- lation or warranty.* ' Egan V. Mut. Ins. Co. of Al- cannot read in evidence tlie policy, banjji 5 Denio, 336 ; First N. without also reading with it the Bank, etc., v. Ins. Co. of N. A., application referred to and pleaded 50 N. T. 45. by the defendants. He must pro- 2 Clinton o. Hope Ins. Co., 51 duce it, or account for its non- Barb. 647 ; Eipley a. .^tna Ins. production. Lycoming M. Ins. Co., 30 N. T. 136 ; Elliott v. Ha- Co. ■». Sailer, 17 P. F. Smith, 108. milton Mut. Ins. Co., 13 Gray, ' Cumberland Valley Mut. Pro- 139 ; 14 Gray, 454. tection Co. ■». Mitchell, 13 Wr. Where the application is de- 374. See also Kennedy o. House, clared by the policy to be a part 5 Wr. 39 ; Trench ^. The Che- of it, it seems that the plaintiff nango Co. Mut. Ins. Co., 7 Hill, 236 riEB nrsuKANCE. Where the policy is sent to the insured, and at the same time a survey is sent to be filled out and returned, and where there is no agreement that the delivery of the policy is to be condi- tional upon the procuring of a survey, the survey returned is inoperative, and has no effect upon the i;ights of the parties as fixed by the policy.^ Conditions when part of policy. 6. Conditions annexed to a policy of insurance are a part of the policy, and have the same effect as if they were incorporated into it.^ But it is 133 ; Ins. Co. ■». Southard, 8 B. ' conditions of insurance' on the Monroe, 634 ; Snyder c. Farmers' other. There can be no doubt Ins. and Loan Co., 16 Wend. 481. of the intent that both should be But see Sheldon «. Hartford Fire taken together. The assured ac- Ins. Co., 32 Conn. 235; Clinton cepts the policy with what pur- «. Hope Ins. Co., 51 Barb, 647; ports to be conditions on the same S. C, 45 N. Y. 454. sheet or any sheet physically at- ' Le Koy v. The Park F. Ins. tached. There is, in such case, Co., 39 N. Y. 56. no need of an express reference 2 Fire Association a. William- by the policy to the conditions in son, 2 Casey, 196 ; Desilver «. order to fix the meaning. (Emer- State Mut. Ins. Co., 2 Wr. 133 ; son a. Murray,, 4 N. H. Rep. 171; Roberts s. Chenango Co. Mut. Stocking a. Fairchild, 5 Pick. Ins. Co., 3 Hill, 501. 181.) The juxtaposition of the In Roberts a. The Chenango Co. papers is a sufficient expression, Mut. Ins. Co., iupra, Cowan, J., at least prima facie. That may •in delivering the opinion of the be rebutted by parol evidence, as court, said : "As I understand by showing that the two were this case, the policy was printed thus connected by mistake," etc. on one half of the sheet, and the See to the same effect Murdoch v. WAEEANTT AND REPRESENTATION". 287 inadmissible to treat as warranties, other matters, not required to be stated by anything contained in the policy, or the conditions annexed, or de- scriptive of the premises, notwithstanding they may be inserted in the survey, and referred to "for a more particular description of the pre- mises," and for the purpose of description alone made part of the policy. They are to be re- garded as representations and construed accord- ingly.^ And though it may be provided in the policy that the conditions annexed are "to be used and resorted to in order to explain the rights and obligations of the parties," in cases not specially provided for ; and though one of the conditions may be that a false description by the agents of the assured shall avoid the policy, and that a description shall be taken as a part of the con- tract, and as a warranty on the part of the as- sured; yet it is competent for the assured to show that the insurer's agent knew the character of the property from verbal description by the assured, and from actual survey; that he pre- Chenango Co. Mut. Ins. Co., 3 nango Ins. Co., 7 Hill, 133. See Comst. 310 ; Sexton v. Mont- also Elliott «. Hamilton Mut. Ins, gomery Co. Mut. Ins. Co., 9Barb. Co., 13 Gray, 139; Richmond- 191. ville Seminary v. Same, 14 Gray, ' Protection Ins. Co. ■». Harmer, 459. 33 Ohio, 453 ; Trench v. The Che- 238 FIRE ESrSUEAKCB. pared the description which was then signed by the assured; and .consequently that any errors and omissions therein were those of the agent and not of the insured, and for which he was not responsible. In other words, the conditions pro- vided against a false description by the insured, but not against a false description by the insurer or his agent.^ The words " on condition that the applicants take all risk from cotton waste" were inserted between the statement of the sums insured on the property and the statement of the place where the property was situated, and it was held that though the term " condition" was used, yet the words did not constitute a condition in its legal sense. For there was nothing which the insured was to do or to omit, by way of performing the supposed condition, and no event was to happen in order that it might be saved. " What, then," ' Howard Fire Ins. Co. v. Bru- Co. v. Hall, 15 B. Monroe, 411. ner, 11 Harris, 50. See also New In Bruner v. Howard Ins. Co., Castle Ins. Co. o. Macmoran, 3 supra, the agent was a general Dow. 355 ; Stephens' Nisi Prius, agent of the company, which was vol. iii. p. 2081. not a mutual but a stock company. The language of one of the con- Vide Smith v. Ins. Co ., 12 Harris, ditions was, "The office will be 330; The North Am. F. Ins. Co. responsible for the accuracy of ». Throop, 13 Mich. 146 ; The surveys and valuations made by JE^ina, F. & L. Ins. Co. «. 01m- its agents." See Protection Ins. stead, 21 Mich. 346. WARRANTY AKR REPRESENTATION. 239 said Metcalf, J., " are the legal meaning and effect of these words ? We are of opinion that they are to be regarded as a proviso added to the policy and expressing the intention of the de- fendants not to insure against the risk of fire originating in cotton waste, nor to pay a loss caused by a fire thus originating. "We cannot regard the words as an exception to the loss by fire, for which the defendants promised to pay ; for they are not inserted in that part of the policy which contains the promise to pay, nor are they referred to ; but they are inserted in the preamble or recital which precedes the promise. If they had been inserted after the words 'burnt, de- stroyed, or demolished by reason or means of fire,' perhaps 'they might have constituted an exception, which the plaintiffs should have no- ticed and negatived in their declaration.'" "Where a policy contains an express condition that it should not cover goods held in trust or on commission unless they are so declared, and the insured obtains his insurance without making any specific statement of the nature of his in- terest in the goods destroyed, he cannot recover for the loss. The right of the insurer to limit ' Kingsley ®. N. E. Mut. F. Ins. Lounsbury v. Protection Ins. Co., Co., 8 Cush. 393. See Vavasour 8 Conn. 459. V. Ormond, 6 Bam. & Cres. 430 ; 240 FIKE INSUEANCE. the extent of his risk by such a condition is in- disputable.^ A condition in a policy requiring the party in-^- sured as a mortgagee, in the event of a loss, to assign to the company the mortgage upon the insured premises, together with the debt secured thereby, or so much thereof as will be sufl3.cient to pay the loss, with a forfeiture of the insurance in case of refusal to make such assignment, is complied with by an assignment of so much of the mortgage debt as will cover the amount of the insurance.^ The insured cannot be required to assign the entire debt, when it. exceeds the amount insured. And it is not unreasonable that the insurers, upon the assignment being made, should collect such debt at their own cost.* Conditions and provisos in policies of insurance are to be construed strictly against the under- writers, as they tend to narrow the range and limit the force of the principal obligation.* An insurer may prescribe any conditions to his undertaking that he pleases, and if he makes in- surance on condition that a constant watch shall be kept on the premises, otherwise the policy ' Baltimore Fire Ins. Co. «. ' Ibid. Loney, 30 Md. 20. , " Hoffman v. .aEtna Ins. Co., 33 2 N. E. F. & M. Ins. Co. ■». N. T. 405. Wetmore, 33 111. 331. WAREANTT AN"D REPEESElSrTATION". 241 shall cease and be void, and the assured fails to comply with the condition, his policy ceases and no question can be made whether compliance affected the risk in any way or not. But when such condition is qualified by the limitation that it is a failure dependent on the question whether it is material to the risk, it opens that question in each particular case.^ "Where the survey is made part of the policy, and where in answer to the inquiry contained in the survey, whether a watchman is kept in the mill or on the premises during the night and at all times when the mill is not in operation, or when the workmen are not present, the applicant says yes, this question and answer constitute a warranty. And it is no defence that previous to the fire an execution against the assured was levied upon the personal property in the mill, and the sheriff thereupon excluded the servants of the assured, took the keys and locked up the building. It was the default of the assured in not paying the judgment that caused the issuing and levy of the execution. The levy, therefore, is no excuse, and does not relieve the assured from performing the warranty. If the sheriff had ' Parkers. Bridgeport Ins. Co., v. People's Mut. Fire Ins. Co., 8 10 Gray, 302. See also Crocker Cush. 79. 16 242 PIEB INSUEAK-CE. undertaken with the assured to act as watchman, the result might be different.^ WJien hy-laws become warranties. 7. The rules and regulations of the insurer, when annexed and referred to in the policy, form a part of it. And when the contract of insurance is made subject to the by-laws and act of incor- poration, they form a part of the conditions upon which the policy was issued, in the same manner as if they had been introduced into the body of the policy.^ But printing the by-laws on the back of the policy without any distinct reference to them does not, it seems, constitute them a part of the conditions of the policy/ In Hygum v. ^tna Insurance Company,* how- ever, where the articles of incorporation and by- laws were printed upon another leaf of the same sheet that contained the policy, but were not directly referred to as forming a part of the con- tract, they were nevertheless held to be express stipulations. ' First N. Bank, etc. ■». Ins. Co. Co., 33 N. H. 203 ; Shepherd v. of N. A., 50 N. T. 45. Union Mut. F. Ins.Co., 38 N. H. * Marshall v. Columbia Mut. F. 233. Ins. Co., 7 Poster, 157; Holmes 0. ^ Kingley s. N. E. Mut. Fire Charlestown Mut. F. Ins. Co., 10 Ins. Co., 8 Cush. 393. Met. 211 ; Fabyan v. TJ. M. F. Ins. » 11 Iowa, 21. "WAERANTT AND REPEES^NTATION". 243 A mutual insurance company has no right, without consent of the insured, to impose any new condition affecting the contract to his injury; as a by-law passed after making the contract/ But a regulation or by-law will not make void a policy issued by the directors in contravention of the by-laws, if the policy is not voidable upon other grounds. A by-law is not a limitation and restriction of the power which is lodged by the charter ot a company in the board of directors.^ It is well settled, that although the by-laws of a mutual insurance company provide that in case of loss the assured shall furnish certain prelimi- nary proofs to the officers to entitle him to re- cover for the loss, yet the officers may in any particular case waive this stipulation ; that such waiver may be either express or implied ; and that it may be implied from the fact that in refusing to pay the loss they neglect to state their objec- tions to the preliminary proof, and place their refusal on other grounds.^ An article of the by-laws provided that " when any property insured by this company shall be taken possession of by a mortgagee, or in any ' N. E. Mut. Fire Ins. Co. «. » Priest d. Citizens' Mut. Fire Butler, 34 Me. 451. Ins. Co., 3 Allen, 603 ; Underbill ' Campbell v. Tbe Merchants' v. Agawam Ins. Co., 6 Cusb. 440. & Farmers' Ins. Co., 37 N. H. 35. 244 FIRE INSUEANCE. way be alienated, the policy shall be void." It appeared that there had been an entry and taking possession by the mortgagee previous to the ap- plication for the policy in question, and subse- quent to the issuing of the policy, the mortgagee, under the supposition probably that the former entry was ineffectual, again formally took posses- sion of the premises for breach of condition. It was held that the first entry ws^s a material fact to be disclosed in relation to the title and condi- tion of the property ; and the second entry ren- dered the policy void. In this case the applica- tion was expressly made part of the policy, and contained an agreement that if the answers therein did not give a full, just, and true exposi- tion of all the facts and circumstances in relation to the condition, situation, value, and risk of the property to be insured, the pohcy should be void.^ Hie appKcation. 8. Unless required by the policy or the condi- tions attached to it, an application in writing by the assured is not essential to the validity of the contract. If the underwriter chooses to issue a policy withou*, such application, or with an ap- ' Jacobs v. Eagle Mut. P. Ins. Co., 7 Allen, 133. WAKEANTT AHD REPRESENTATION. 245 plication defective but true as far as it goes, he must be held to have waived the want of the ap- plication or its defects.^ If the application contains a question to be answered by the applicant, as to the mode in which the building offered for insurance is to be occupied, and the agent of the insurance com- pany is informed by the applicant of the intended mode of occupation, but fills out the application without inserting any answer to that question, the company, by issuing the policy without such answer, waives it, and cannot afterwards object to any use of the premises of which the agent was fairly notified. But if the, . agent had no notice of the intention to use the premises for the purpose to which they were put, and they were not actually so used at the time of the applica- tion, then it would be a question for a jury whether the insured had subsequently so used ' Blake v. Exchange Mut. Ins. a waiver of the questions tn so Co., 12 Gray, 365; Hall v. Peo- far as they remained unanswered ; pie's Ins. Co., 6 Id. 185 ; Liberty that to receive the premium, and Hall Association a. Housatonic issue the policy upon the answers Mut. Fire Ins. Co., 7 Id. 261. as given, and afterward avoid the In Lorillard Fire Ins. Co. ■». policy on the ground that the McCulloch, 20 Ohio St. R., p. answers were not full, would be to 176, it was held that the receipt practise a virtual fraud upon the of the application, and the issu- insured. Clinton v. The Hope ing of the policy thereupon, was Ins. Co., 45 N. T. 454. 246 FIRE INSURANCE. the premises, and whether such use had increased the risk.^ Undoubtedly whatever is material to the risk should be set forth in the application, where an application is required ; but if the application be taken by the agent of the company acting for them, and he is aware of the facts which are not included in the application, the company will be presumed to know them ; and under such circum- stances an unintentional misrepresentation or concealment of facts will not make void the policy.^ Thus, where the application omitted toi state that there was a small steam-engine in the building, which fact, according to the rules and regulations of the company, would have prevented the issuing of a policy upon the building, and by implication upon its contents ; it was held that inasmuch as the application was drawn by the agent of the company, who knew of the steam- ' Dodge Co. Mut. Ins. Co. v. When the insurer issues a policy, Rogers, 12 Wis. 337. It was a relying entirely upon his knowl- conditionof the policy that if after edge of the facts, and dispenses insurance is effected, the risk shall with any information from the in- be increased hy any means what- sured, he is precluded from deny- ever within the control of the ing the truth of any statement in assured, such insurance shall he the application, or setting up any void and of no effect. mistake or omission of the same. 2 Marshall ®. Columbian Ins. Commercial Ins. Co. ■». Ives, 56 Co., 7 Post. 157 ; Masters o. Madi- 111. 403. son Mut. Ins. Co., 11 Barb. 634. WAERANTY AND KEPEESBNTATIOlir. 247 engine, the company was chargeable with the knowledge of their agent, and was estopped to take advantage of the defect in the application to avoid the policy.^ The . application being referred to and made part of the policy, stipulated that it was a full, just, and true exposition of all the facts and cir- cumstances in regard to the condition, situation, value, and risk of the property, so far as the same are material to the risk ; and in reply to a ques- tion, it stated* that "the premises are constantly worked." This was held to mean that the mill or premises were to be constantly worked, during the usual and customary working days and hours, for the prosecution of like business.^ If an application signed in blank is sent to an insurer, either by the applicant himself or his agent, an authority is implied to the insurer, by which he is authorized to fill it with appro- priate answers to the questions therein contained. And in the absence of any fraud on the part of the insurer in filling the blanks, or any insertion of answers which he knew to be false, there is no ground on which the applicant could deny that • Campbell v. Merchants' and gus Co. Mut. Ins. Co., 18 N. Y. Fanners' Mut. Ins. Co., 37 N. H. 393, and ante, p. 303 et seq. 35. See also Plumb v. Cattarau- ^ Prieger v. Exchange Mut. Ins. Co., 6 Wis. 89. 248 FIRE INSUEAN-CB. the application is binding on him. And espe- cially would he be estopped to make such denial in a case where his prior application for insurance on the same premises is in possession of the in- surer, and when the new policy was intended as a substitute for the old one, issued on that ap- plication.^ Surviey. 9. The word " survey" in the law of insurance means only a plan and description of the present existing state, condition, and mode, of use of the property. It does not import that any statements or representations of a promissory or executory nature are embraced within it, relating to any contemplated alteration or improvement in the property, or to the mode in which the premises are to be occupied during the continuance of the policy." Insurance on the application of a third party. 10. One insurer issuing a policy at the instance of another insurer, to whom the application for insurance was made, is not chargeable with no- ■ Liberty Hall Association v. = Deny ®. Conway Stock and Housatonic Mut. F. Ins. Co. 7 Mut. Ins. Co., 13 Gray, 492. Gray, 261. ■WAEEANTT AKD REPEBSENTATIOK. 249 tice of material facts known to the latter, but not communicated to the former; as, for example, where the title is in the wife, and the second in- surer, without notice of that fact from the first insurer to whom it was communicated, issues a policy on the property in the name of the hus- band, who had no insurable interest.^ In the latter case, in the event of loss, the husband cannot recover, having no interest. Ccmstruction whm doubtful whether representation or warranty. 11. If it be doubtful from the words of a policy whether certain statements made by the apphcant relative to the subject of insurance are to be re- garded as warranties or as representations, they will be regarded as the latter.^ And where a statement by the applicant for insurance is not responsive to any inquiry, the burden of proof is on the insurer to show its falsity and materiality. And these are to be determined by a jury.^ And ' Johns v. The Rutgers F. Ins. 580 ; Eclipse Ins. Co. v. Shoemer, Co., 8 Bosw. 585. See also Denny 3 Cincinnati S. C. Rep. 195. B. Conway Stock and Mut. Ins. ' Daniels v. Hudson River Fire Co., 13 Gray, 493. Ins. Co., 13 Cush. 417. * Wilson V. The Conway Fire In this case the policy was made Ins. Co., 4 R. I. 143 ; Garcelon «. in reference to the terms and con- Hampdon Fire Ins. Co., 50 Me. ditions annexed; but these were 250 ' FIRE IN-SURANOE. a statement in an application for insurance, as we have already seen, is to be consideredT a repre- sentation rather than a warranty, unless it is clearly made a warranty by the terms of the policy, or by some direct reference thereto, as forming a part of it.^ An ambiguity in the answers of the insured, growing out of the form of the questions in the application, are charge- able to the insurer who prepares them.^ When policy refers to application and survey as representations. 12. Applications or surveys, when referred to and embraced in policies, are not to be regarded as warranties if termed or treated in the policy as representations.^ Hence if the applicant for referred to, not as conditions pre- they contract, and the relations in cedent, but "to be used and re- which they stand to each other, sorted to, in order to explain the They are not warranties, but are rights and obligations of the par- to be treated as representations, ties hereto, in cases not herein Where there is any l:oom for con- otherwise specially provided for." struction, the leaning of all courts Hence they are not to control or is, to hold stipulations to be rep- alter any express provision in the resentations, rather than warran- contract, or become parts of the ties. Ibid, policy ; but they are statements in '. Ibid. . a collateral document, which both ' Wilson v. Hampden Ins. 'Co., parties agree to, as an authorita- 4 R. 1. 159. tive exposition of what they both ^ Catlin v. Springfield Fire Ins. understand as to the facts, in the. Co., 1 Sum. 435, 443 ; Houghton «. presumption and truth of which Manu. Mut. Ins. Co. , 8 Mich. 114, AVAEEANTY AND EEPEESENTATION. 251 insurance covenants in his application that it contains " a just, full, and true exposition of all the facts and circumstances in regard to the con- dition, situation, value, and risk of the property to be insured, so far as the same are known to the applicant, and are material to the risk ;" and if the policy declares that the application is made a part of the policy, and that the policy itself "is made and accepted upon the representations of the assured in his application," the statements made in the application being termed representations in the policy would probably be deemed so ; but whether representations or warranties, limited in their character, their materiality and truth must necessarily be submitted to a jury. If warran- ties, they are such only so far as the facts stated in the application "are known to the applicant, and are material to the .risk.'" The applicant is 120 ; Jones Manu. Co. v. Manu. by-laws declared : " Unless the Mut. Fire Ins. Co., 8 Cush. 83, 84; applicant for insurance shall make Wilson v. Conway Fire Ins. Co., a true representation of the pro- 4 R. I. 143 ; Garcelon v. Hampden perty on which he requests insur- Fire Ins. Co., 50 Me. 580. ance, so far as concerns the risk ' Garcelon v. Hampden Fire and value thereof, the policy is- Ins. Co., 50 Me. 580; Lindsay v. sued thereon shall be void." Held, Union Mut. Ins. Co., 3 R. I. 157 ; that only those representations ^tna Ins. Co. «. Qrube, 6 Minn, which concern the risk and value 82. of the' property, affect the con- In Chase v. Hamilton Mut. Ins. tract, and that this being so, the Co., 33 Barb. 527, an article of the questions arising upon all omis- 252 PIEE INSURANCE. not presumed, as an inference of law, to know all the facts ; the question of knowledge is one of fact, to be left to the jury upon the evidence.^ Gonstruction of warranties and representations. 13. "Where the answers and stipulations in the application are made an essential part of the po- licy ; and where the applicant in his answer to an interrogatory states that his ashes are taken up in metallic vessels, which are not allowed to stand on wood with ashes in them ; and that if deposited in or near the building, they are deposited in .vaults of brick or stone; and when too the appli- cation contains this clause, " if ashes are allowed to remain in wood,. the company will no(r assume the risk," and the ashes are in point of fact de- posited either on the ground a rod or more from the building, or in a wooden barrel in the wood- house adjoining the insured premises, the eon- tract is broken and the policy becomes void. " It is conceded," said Dewey, J., " that the plaintiffs had no vaults of brick or stone for the deposit of ashes. Had they had. such, and had the usual course been to deposit their ashes therein, an Bions to make true representations See also Ayres o. Hartford F. Ins. of the property, become questions Co., 17 Iowa, 176. of fact whether the risk was in- ' Houghton s. Man. Mut. Fire creased or the value over-stated. Ins. Co., 8 Met. 114. WARRANTY ASH EEPBESElfTATION. 253 unauthorized departure in one or two instances by their servants might not have affected the policy. But under the circumstances of the present case, placing the ashes for a period of two or three weeks continuously, and up to the time of the loss by fire, in a wooden barrel in the wood- house, which adjoined the school-house, and in which the fuel for the school-house was kept, by the agent employed by the defendants to make the fires and take charge of the school-house, was in direct violation of the terms of the contract for insurance, and must preclude the plaintifis from recovering for the loss which has occurred.'" On the other hand, where the applicant for in- surance makes a representation as to the mode in which his ashes are kept, his policy is not avoided if he keeps them in a different mode, provided such mode is as safe as the mode described in the application. It is not necessary to conform to the precise letter of the application, as to the mode of conducting all the various details of the business of an establishment ; other modes equally safe may be used.^ ' City of Worcester «. Worces- Fire Ins. Co., 6 Cush. 440. See ter Mut. F. Ins. Co., 9 Gray, 27; also Houghton v. Manufacturers' Protection Ins. Co. v. Harmer, 23 Mut. Fire Ins. Co., 8 Met. 114 ; Oliio, 452. Protection Ins. Co. v. Harmer, 23 2 Underbill v. Agawam Mutual Ohio, 452. 254 . FIRE INSURANCE. An application which was made part of the contract contained the following question and answer: "During what hours is the factory worked?" "We run the cards, picker,' drawing frames, and speeder, day and night, the rest only twelve hours daily. We only intend running nights until we get more cards, etc., which are making ; shall not run nights over four months." It was held that the statement of an intention to cease running, when the applicants received the cards then being made, was equivalent to an agreement to cease upon that event. Accord- ingly, on proof of a running at nights after they received more cards, which were then making, the policy would be avoided. And the subse- quent clause, " we shall not run nights over four months," is plainly but a precise definition and limitation of this agreement.^ A clause in the application as follows, "there ' Bilbrough v. Metropolitan Ins. Justice Oraj/, referring to the case Co., 5 Duer, 587. It is, we think, of Bilbrough «. Metropolitan Ins. only on the ground that the re- Co., supra, said : "Wedonotfind presentations in this case establish that Mr. Duer's views have been an express promise that the deoi- approyed in any court of New sion can be maintained. See Als- York, except in one single in- ton V. Mech. Mut. Ins. Co., 4 Hill, stance by one judge of the Supe- '39, and Bryant «. Ocean Ins. Co., rior Court of the city of New 33 Pick. 300. Duer on Insurance, York while Mr. Duer was a mem- vol. 3, p. 749. In Kimball b. Mt- ber of that court." na Ins. Co., 9 Allen, 540, Mr. "WARRANTY AWD REPRESENTATION. 255 will be a stone chimney built, and the pipe will pass into it at the side," is a promise, a contract, that the insured will make the specified change, and not the expression of an intention to make it. And as the application formed a part of the con- tract of insurance by the express terms of the contract, the failure to make the change and build the chimney within a reasonable time avoided the policy.^ But where, in a notice to the insurer of altera- tions by the insured, it is stated that a kiln- drying machine is for burning hard coal, this does not constitute a warranty that the machine should be used with hard coal. It is a mere statement that the machine was designed "for burning hard coal," without binding the insured not to use other fuel, if it should become ne- cessary; provided the risk is not thereby in- creased. Hence the use of wood instead of coal, the risk not being increased, does not avoid the policy.^ Where insurance is effected on the applicant's stock as rope manufacturer, contained in a cer- tain building, this sanctions the insured in using ' Murdockj). The Chenango Co. ^ Tillou v. The Kingston Mut. Mut. Ins. Co., 3 Comst. 210. See Ins. Co., 7 Barb. 570. also Clark v. Manufacturers' Ins. Co., 8 How. 235. 256 riEE INSTIRANCE. his stock as rope manufacturer in that building ; and one of those uses would be the manufacture of ropes, although that may be enumerated as among the specially hazardous trades in the policy. The application for insurance upon his stock as rope manufacturer, contained in a build- ing occupied as a store-house, is not a warranty that the building is used only as a store-house. It is a representation and not a warranty, and it would be a question for a jury whether the occu- pation differed in any material respect from the representation.^ Change of risk. 14. The usual clause in policies of fire insur- ance, that if the situation or circumstances affect- ing the risk upon the property insured shall be altered or changed, by or with the advice, agency, or consent of the assured or their agent, so as to increase the risk thereupon, without the consent, of the company, the policy shall be void, is a stipulation and condition, without a substantive compliance with which, the insurer, from the time of its happening, ceases to be bound by the contract. This clause binds the assured, not only not to make any alteration or change in the • Wall «. Howard Ins. Co., 14 Barb. 383. "WAERAKTY AKD EEPEBSENTATIOKT. 257 structure or use of the property, which will in- crease the risk, but prohibits him from intro- ducing any practice, custom, or mode of conduct- ing his business which would materially increase the risk, and also from the discontinuance of any precaution represented in the application to be adopted and practised with a view to diminish the risk. Precautions, however, may be adopted intended to accomplish the same purpose, and which may reasonably be considered equally or more efficacious. For example, when it is stated that ashes are taken up in iron hods, it would be a substantial compliance if brass or copper were substituted. So when it is represented that casks of water, with buckets, are kept in each story, if a reservoir were placed above, with pipes to con- vey water to each story, and found by skilful and experienced persons to be equally efficacious, it would be a substantial compliance.^ "When the insurer alleges that there has been an increase of risk by a change of circumstances disclosed in the application, the burden of proof is on him to show such increased risk. It cannot be assumed as an implication of law, or as matter of fact, that by an alleged change, such, for ex- • Houghton V. Man. Mut. Fire Ins. Co., 8 Met. 114. 17 258 PIKE INSUBANCE. ample, as the substitution of a cook stove in place of an open, fire, the risk of fire is increased.^ ' Newhall v. Union Mut. Fire Ins. Co., 53 Me. 180 ; Smith «. Ins. Co., 13 Harris, 330. CHAPTEE IX. "WARRANTY AND REPRESENTATION (continued). 1. Inaccurate description. 8. Descriptive and executory 2. Description of locality. stipulations. 3. Description as to nearest 9. Stipulation as to occupying buildings. . and vacating the premises. 4. Proviso as to untrue state- 10. Whether pursuits of the ments and material facts. occupants need be disclosed. 5. Whether insurance on a 11. Representation as to title, dwelling-house implies occupa- 12. Where true title required tion. to be expressed. , 6. Effect of oral promise to oc- 13. Substantial truth of repre- cupy the premises. sentation. 7. Construction of clauses with 14. Variance between verbal respect to occupation. and written statement. Inaccurate description. 1. Where the description of the premises amounts to a warranty that the property answers the description, an error in the description whe- ther arising from design or mistake avoids the policy.^ Thus a policy which describes the sub- ject insured as the stock in trade of the insured, contained in a two-story frame house, filled in with, trick, '^o. 152 Chatham Street, whereas it was not filled in with brick, is void.*^ If the de- • ' Fowler «. iEtna Ins. Co., 6 was false ; that is, the description Cowen, 673; Hardy ». Union Mut. was of a frame house "filled in F. Ins. Co., 4 Allen, 217 ; Tibbetts with brick." In truth, the walls V. Hamilton Ins. Co., 1 Allen, 305. were hollow. See Woods v. At- 2 Ibid. In Fowler B. .^Etnalns. lantic Mut. Ins. Co., 50 Mo. 113. Co., 6 Cowen, 673,'the description 260 I^IEE INSURANCE. scription is only a representation, then, a mistake or omission, whether wilful or accidental, does not avoid the policy unless material to the risk insured.^ Whether the description in the policy covers or fairly describes the property intended to be insured, is a matter of fact for a jury to deter- mine, and the terms of the policy are to be rea- sonably construed with reference to the whole subject matter.^ Thus, where the policy described the dwelling of the assured as built of stone and covered with tin gables through the roof and plafond, iron doors and shutters ; and where the fire which destroyed the building began in an adjoining house, and spread from thence to a wooden building on the premises of the assured, from which it was communicated through a door- way of the dwelling-house, which was open, although having an iron door, to the interior of the last-mentioned edifice, it was held that the description of the premises, whether regarded as a warranty or representation, was substantially true, and, being an express contract, there was no room for implication, viz., that the " iron dqors ' Stetson V. Mass. Mut. P. Ins. Mut. Fire Ins. Co., 6 Gray, 185. Co., 4 Mass. 330. See also Jefferson Ins. Co. «. Co- 2 Tesson «. Atlantic Mut. Ins. theal, 7 Wend. 73. Co., 40 Mo. 33 ; Hall «. People's WARBANTT AND EEPEESENTATl'oN. 261' and shutters" should be kept closed. And fur- ther, that their being open in the middle of Au- gust at half-past eight o'clock was no proof of negligence; besides, fire resulting from negli- gence is covered by the contract of insurance.^ If a building be described as of one class in- stead of another requiring a larger premium, the policy will be nugatory.^ But if the description, although not strictly accurate, makes no differ- ence in the premium, and does not mislead the insurer, nor increase the risk, the inaccuracy is immaterial.^ Thus, premises were insured as a "barn," but although agricultural buildings, the term " barn" was not strictly applicable. " The ' Scott V. The Quebec Fire As- the knowledge and consent of the surance Co., 1 Stewart's Lower insured. The Court held that the Canada R. 149 ; 4 Lower Canada, policy was Yoid. The policy pro- Q. B. 107. posed to insure a machine shop, * Newcastle Fire Ins. Co. v. and the building destroyed by fire MacMoran, 3 Dow. 355 ; Fowler was not a machine shop. The V. jEtna Ins. Co., 6 Cow. 673. representation was untrue and In the recent case of Goddard v. material ; for the risk of fire was Monitor Ins. Co., 108 Mass. 56, greater in an organ manufactory the insurance was made upon the than in a machine shop, representation of a person who ap- ' Jefferson Ins. Co. v. Cotheal, plied for the policy in the owner's 7 Wend, 73 ; Prieger v. Exchange name, that the building was occu- Mut. Ins. Co., 6 Wis. 89. See pied as a machine shop. In fact also Phoenix Fire Ins. Co. ». Gur- it was occupied as an organ fac- nee, 1 Paige (N. y.), 378 ; Rex v. tory, without the knowledge or Ins. Co., 3 Philadelphia R. 857. consent of the insurers, but with 262 riEB nsrsuRANCE. word " tarn" said Lord Tenterden, C. J., " is not the most correct description of the premises ; but it would give the company substantial informa- tion of their nature : there would be no difference in the risk, and the insurance would have been at the same rate, whether the word ham or a more correct phrase had been used ; I think, therefore, that they are substantially well described."^ Where the agent of an insurance company cer- tifies to his employers that he has surveyed cer- tain property intended to be insured, and given a written description thereof to the company, in- cluding a kitchen building not then in existence, and thereupon a policy is issued, and afterwards the property is destroyed by fire ; if the objection be taken by the company that the description was false as to the kitchen building, the insured may show, by oral testimony, that the building was in contemplation at the time of the policy, and therefore included in it, the company being in- formed of the facts, and that it was afterwards erected, and may recover for the loss. If, under such circumstances, it appear by the evidence that the additional building did not conform to the intention of the insured as communicated to the company's agent at the time of the survey, ' Dobson «. Sotheby, 1 Moody bian Ins. Co. o. Lawrence, 3 Pe- & Malkin, 90. See also Colum- ters' R. 35. WAEEANTT AKD KEPRESENTATIOK. 263 the variation does not, of itself, vitiate the policy. It stands upon the principle of an alteration, and avoids the policy only in case the risk is thereby increased^ — a question of fact to be decided by the jury.^ An insurance agent making and sending to the insurer a diagram of the buildings proposed to be insured, and from which the buildings are de- scribed in the policy as detached instead of as connected with other buildings, binds his princi- pal by his description, and his error cannot be taken advantage of by his principal to deprive the assured of his remedy on the policy.^ A by-law of the insurers provided that no in- surance agent or broker forwarding applications to the office was authorized to bind them in any case whatever; and the application also stated that they would not be bound by any act done or statement made to or by any agent or other per- son which was not contained in the application itself. In the application which was filled up by the agent the building proposed to be insured was described as a stone dwelling-house, without any reference to a wooden kitchen which was ' Perry Co. Ins. Co. t. Stewart, Co., 9 L. C. 61. See also Peoria 7 Harris, 45. M. & P. Ins. Co. v. Perkins, 16 2 Somers d. Atlieneum F. Ass. Micli. 380. 264 FIRE IlSrSUEANCB. attached to and formed a part of the establish- ment. It was held that inasmuch as the descrip- tion was essentially inaccurate, that instead of being a stone dwelling-house it was partly of wood, the insured could not recover ; and that the knowledge of the agent was immaterial.^ "In this case," said Grover, J., "there was no evidence that Atwood (the agent) had any au- thority from the defendant to make surveys, that he had ever made any to the knowledge of the defendant, or that he made any statement to the plaintiff as to the correctness of the application. There is no feature necessary to constitute an estoppel in the case ; besides, I am at a loss to discover how an estoppel is to be based upon the acts and declarations of an agent whose acts and declarations it is agreed shall not affect the party against whom the estoppel is claimed." Where the policy describes the insured pro- ' Chase a. Hamilton Ins. Co., that at the date of the application 20 N. Y. 53. When by the ap- and policy the insured expressed plication and policy, the assured •himself to the company's agent warrants that the premises insured as being uncertain whether the arebuiltof brick, and are situated description was correct, and pro- entirely detached, when in truth posed to furnish plats which the warranty is false, they being would show the true character of built partly of brick and partly the building, and actually did frame, yet it is held that the as- furnish the agent with such plats, sured may recover in case of loss. Woods b. Atlantic Mut. Ins. Co. , provided the jury are satisfied, 50 Mo. 112. WARRAKTT AKD REPRESENTATION. 265 perty as a five-story brick building, it is not a misdescription that there is a cellar underneath. A cellar is never called a story, and the word building includes it, unaffected by the idea of its height above the foundation.^ A condition in the policy required the nature and material structure of the buildings and pro- perty insured to be fully and accurately described in the policy. The buildings had in them a steam-engine, which was described in the policy. This steam-engine had been used for hoisting, but afterwards some machinery was added to it, and it was used for grinding food for horses. It was held that this change did not render the description inaccurate. The term "nature and material structure of the buildings," refers to what may be called the essence of the building, and not to its incidents. It was not obligatory on the insured to describe every alteration in the machinery in the buildings. " The jury found," said Pollock, C. B., " that there was no increase of risk by using the steam-engine for grinding, and the society, having had notice of the nature of the risk, were not entitled to any notice by reason of the increase of danger. A person who insures may light as many candles as he pleases ' Benedict v. Ocean Ins. Co., 31 N. Y. 389. 266 riEE INSUEAKOE. in his house, though each additional candle in- , creases the danger of setting the house on fire.'" A condition in the policy that if "any person shall insure his or their building or goods, and shall cause the same to be described in the policy otherwise than as they really are, so as the same be charged at a lower premium than is herein proposed, such insurance shall be of no force," relates to a misdescription of the property in- sured, and not to the character of the title or interest in it.^ A policy was issued on applicant's " wooden four-story paper mill." The application was made part of the policy, and a warranty on the part of the insured. In answer to ah inquiry the main building was described as made of wood, sixty or seventy feet from above basement, ten feet between floors, and ceiled with wood. It appeared that there was a bleach-house adjoin- ing the mill insured, built of brick, which was not called a part of the mill. The bleach-house was built separate and connected with the main building by a shed-roofed building called the salt-box. The bleach-house made one wall of it, the mill the other end of it. These had been erected before the application for insurance was • Buxendale «. Harvey, 4 2 Franklin Fire Ins. Co. «. Hurlst. & Norman, 444. Coates, 14 Md. WAEEANTT AND EEPEESEISrTATIOlS". 267 made. The bleach-hoiise and salt-box were in- sured by another company. A false description by the insured, by express agreement, avoided the policy. He had stated, in answer to the inquiries proposed, that there was no building within three hundred feet, except the stock-house, which was neither the bleach-house nor salt-box. If the latter were a part of the mill, the descrip- tion was incorrect in omitting them ; if " not a part of the mill," said the Court, "then the appli- cation is false in stating that there was no build- ing within three hundred feet, when the bleach- house and salt-box were within that distance. That they were not a part of the mill would seem fairly inferrible from the fact that they were both insured elsewhere, for parties would be little likely to insure different parts of the same build- ing in different offices."^ The description of the insured property as " the five-story brick building and three-story brick addition, known as the Lawrence block, occupied as stores on the first fioor" is sufficient, if any of the rooms on the first floor were occupied as stores. It does not mean that each one of the rooms must have been occupied, and that if any one was not, the policy should be null ; but that ' Day «. Conway Ins. Co., 53 Me. 60. 268 FIRE IT!5"SURAN-CB. the first floor as a whole was intended to be thus occupied.^ On the other hand, a description of the insured building as " occupied as a store-house," is a war- ranty that the building was thus occupied. It did not create an obligation on the insured that such occupancy should be continued during the continuance of the risk f but, in point of fact, at the date of the policy the building was occupied in part for the purpose of storing hemp, and in part for the purpose of preparing the hemp to be spun by machinery into rope yarn, and of spin- ning it. This was not occasional, but was the legitimate use to which the building was applied. And as occupied as a store-house imports not occupied for any other purpose, the policy was vacated.^ ' Carter «. Humboldt Fire Ins. -was used in part as a billiard sa- Co., 17 Iowa, 456. loon, and in part as a restaurant 2 O'Neil v. Buffalo Ins. Co., 3 and saloon, having a bar -where Comst. 123. liquors were sold. Under the » F»d« Wall fl. East River Mut. terms and conditions of the po- Ins. Co., 3 Seld. 370 ; Sarsfield o. licy it was held that the building Metropolitan Ins. Co., 61 Barb, was warranted as a dwelling 479. house and used as such exclu- In this case the building was sively, and that the insurance insured as a dwelling hoase only, was void, there having been a whereas at the time of the Are, it breach of the warranty. WAREANTT AND REPRESBNTATIOlSr. 269 Description of locality. 2, The same rules of construction which are applicable to all other instruments, are equally applicable to a policy of insurance. Hence, an inaccurate description may be corrected by con- struction, if there is enough besides to identify the place, and thus supply the means of making the correction ; or if the instrument as a whole shows certainty that it was an error, and shows with equal certainty how the error should be corrected. When the property is described as situated in a certain yard between Mead and AtcTi Streets, whereas it was between Mead and A.sh Streets, the objection of variance was over- ruled. Arch Street as written in the policy being neither a necessary nor material part of the de- scription, and could be rejected, and the descrip- tion still sufficiently designate the locality of the insurance/ And an agent authorized to issue policies and receive premiums may, after a policy has been delivered by him to the insured, and before the payment of the premium, correct a misdescrip- tion in the name of the street on which the pro- perty insured is situate.^ ' Tonkers & N. T. Fire Ins. Ins. Co., 14 Wis. 318. As the Co. V. Hoffman P. Ins. Co., 6 delivery of the policy without Robt. (N. T.) 316. payment of the premium would 2 Warner v. Peoria M. & F. imply that a credit was given for 270 riKB INSURANCE. Description as to nearest buildings. 3. It seems to be a well-settled rule that the applicant for insurance who merely states the nearest buildings, without proposing to do more or to make any further statement, does not warrant that there are no other buildings within a given distance. If thtere are other buildings, it amounts to a withholding of -information which was called for by the interrogatory, and then the important question arises whether it was material to the risk. If it did not increase the risk, then the information was immaterial. This is a ques- tion of fact proper for a jury.^ the premium, and consequently The Madison Co. Mut. Ins. Co., that the contract was complete 3 Comst. 43. without such payment, it would In Hardy «. Union Mut. F. Ins. seem to follow that an agent em- Co., 4 Allen, 317, the answer. of powered to issue policies and re- the applicant for insurance to the ceive premiums, could alter a po- question, " What is the distance licy after it was duly executed and direction from each other, and delivered, so as to make it and from other buildings within accurate in the description of the one hundred feet, and how are property insured. But such a such other buildings occut>ied? power, unless strictly confined to Make plan on back hereof, show- the one specific purpose, might ing the relative position of all the involve an insurer in risks that buildings," was: "See plan." lie would not have undertaken. But the plan annexed did not and be productive of great injus- . show all the buildings within one tice. hundred feet of the insured pre- ' Masters v. Madison Co. Mut. mises. The application was ex- Ins. Co., 11 Barb. 634; Gates «. pressly made a part of the policy WAERANTT AKD EEPEESENTATION. 271 If the statement of the insured in his applica- tion as to contiguous buildings is a warranty and contained a clause inserted after the printed questions by whicli the applicant covenanted that the " foregoing is a just, full, and true exposition of all the facts and circumstances in regard to the condition, situa- tion, value, and risk of the pro- perty to be insured, so far as the same are known to the applicant, or are material, and of all the facts inquired for." The omission to disclose several buildings within one hundred feet of the property insured in reply to the above question was held to avoid the policy, although such omission was not material. The following cases were referred to by the cSurt as sustaining their decision, viz.: Bowditch Ins. Co. v. Winslow, 3 Gray, 415 ; Davenport v. New England Ins. Co., 6 Cush. 340 ; and Vose v. Eagle Life and Health Ins. Co., 6 Cush. 43. " The later case of BUiotto. Hamilton Ins. Co. , 13 Gray, 139," said Dewey, J., in delivering the opinion of the court, ' ' apparently qualifies the previous cases, at least so far as to hold that when an application con- cludes with the agreement 'that it is a correct description of the property so far as regards the con- dition, situation, value, and risk on the same,' and 'that the mis- representation or suppression of niaterial facts shall destroy his claim for damage or loss,' it is not a warranty of the truth of the answers, except so far as they are material to the risk, although the policy was made subject to the by-laws, and by an article of the by-laws it was provided ' that un- less the applicant shall make a correct description and statement of all facts inquired for in the ap- plication, and also all other facts material in reference to the insur- ance, or to the risk, the policy shall be void. ' This case has been followed by that of Richmondville Union Seminary v. Hamilton Ins. Co., 14 Gray, 459, where the same doctrine was recognized, and it was held that under the form of that policy an omission to disclose the fact that buildings were situ- ated nearer to the premises in- sured than the distance named in the answer, unless the existence of such buildings was material to the risk, would not defeat the po- licy. TMs statement was some- what broader than the case re- 272 riKB IHrSUEANOE. that there are no other buildings within the spe- cified distance, the fact of the actual existence quired, as the same was stated in the report for the full court. " But these cases were followed by Tibbetts v. Hamilton Ins. Co., 1 Allen, 305, where it was held that the omission, to mention seve- ral buildings within a hundred feet of the property insured, in reply to a question, ' What is the distance of said building from other buildings Within one hun- dred feet, and how are such other buildings constructed and occu- pied ?' will avoid the policy. When recurring to the application and policy in that case, and com- paring the same with the ease of Elliott V. Hamilton Ins. Co., it will be found that they have simi- lar provisions as to making the written application of the assured and the by-laws of the company a part of the policy, a similar pro- vision as a by-law, and also the further provision that the repre- sentation shall be a warranty of the facta stated. The only ground for a distinction between the two cases was the diflFerence in the statement at the close of the ap- plication and answers to the inter- rogatories propounded to the party applying for insurance. The con- cluding part of the answer in the case of Elliott v. Hamilton Ins. Co. has been already stated. That of the applicant in the case of Tibbetts v. Hamilton Ins. Co. was thus : The applicant ' cove- nants and agrees with said com- pany that the foregoing is a cor- rect statement and description of all facts inquired for, or material in reference to this insurance ;' ' the applicant further agrees that the misrepresentation or suppres- sion of material facts shall de- stroy his claim for damage or loss. ' The difference between these two statements was held suflBcient to change the result, and in the lat- ter case this court held the policy void. It is true that in the latter case there was one provision in the by-laws which is not found in the present case, viz., that 'the application upon which a policy is founded shall be held to be a warranty on the part of the as- sured, and as absolutely a part of said policy and of the contract of insurance as if it were actually incorporated therein in full. ' The like provision was found in the case of Elliott v. Hamilton Ins. Co., where a policy was held a "WAREANTT AND REPRESEITTATION. 273 of other buildings there at the time would falsify the warranty and avoid the policy. But when, in answer to the inquiry, " how bounded, distance from other buildings of less than ten rods, and for what purpose occupied, and by whom ?" the applicant stated as follows : " The nearest build- ing east, is the dwelling-house occupied by C. E., which is about forty-eight feet ; on the north and about five rods distant is a shop, used in the valid one, and of course the omis- rial facts shall destroy his claijn sion or existence of this by-law for damage or loss.' Taking the ■was not necessarily decisire on first part of this statement, it will the question of the validity of the be found to be quite similar to that policy. in the case of Elliott v. Hamilton " The present case has the state- Ins. Co., where, by the effect ment at the close of the applica- given to the whole language of tion in language somewhat differ- the application, the false state- ing from either of these cases, ment in it was held not fatal to although in part it is similar to the policy, unless the same was each of them. Thus it is cove- material to the risk. But the nanted and agreed with the com- statement goes further, and con- pany ' that the foregoing is a just, tains the additional stipulation, fuU, and true exposition of all the deemed so material in the case of facts and circumstances in regard Tibbetts v. Hamilton Ins. Co., to the condition, situation, value, that the assured covenants and and risk of the property to be agrees that the answer is a full insured, so far as the same are and true answer ' of all the facts known to the applicant, or are inquired for.' This makes the material ; and of all the facts in- present case more analogous to quired for. "... The applicant the latter of those cited, and may further agrees ' that the misrepre- distinguish it from the former." sentatjon or suppression of mate- 18 274 FIEB INSUEANOE. season of navigation for manufacturing setting poles ; and on the west, the nearest building to the west end of the barn and shed is the dwelling- house occupied by F., which is about fourteen feet distant. The tavern stand is at present occupied by S. :" It was held that the statement of the assured related in terms only to the nearest buildings, and did not import that those build- ings were the only ones within the circuit of ten rods.^ • On the other hand, where the assured is re- quired to state the relative situation of his tene- ment as to other buildings, distance from each if less than ten rods, and he only enumerates a part of the buildings and omits all mention of the others ; and when the conditions of the policy provide that any misrepresentation or conceal- ment in the application should avoid the contract, such omission defeats the contract of insurance.^ But where the applicant for insurance, in reply to the question as to distance of other buildings, answered, " East side of the. block, small one- story sheds, and would not endanger the building if they should burn ;" and where he omitted to ' Gates V. The Madison County 2 Burritt v. The Saratoga Co. MvA. Ins. Co., supra. In this case Mut. Fire Ins. Co., 5 Hill, 188. the application was referred to in See also Jennings v. Chenango the policy as forming part thereof. Co. Mut. Ins. Co., 2 Denio, 75. waeea:ntt and representation. 275 mention certain wooden buildings standing forty- nine feet ofl' from the insured premises, on another street, from which, however, the fire was commu- nicated that occasioned the loss, it was held that the applicant was only bound, in answer to the interrogatories, to state the distance and situation of those buildings which a man of ordinary capa- city would judge likely to endanger, in case of fire, the building insured, not those which might possibly cause its destruction.^ A warranty in relation to the situation of the property is a condition precedent, and unless substantially true, the policy will be void.^ Hence, where the inquiry in the application calls for the relative situation as to other buildings, distance from each within ten rods, and for what purpose occupied, and the answer is, "In the middle of a block of three stores ; one clothing store ; one grocery ; one hardware and stove store; one tin-shop; mansion house across the street, about six rods ; cabinet shop, three rods ; harness shop, five rods ; grocery and dwelling- house, five rods; wagon shop and blacksmith 1 Dennison v. Tiomaston Mut. Ins. Co., 10 Barb. 285; The Far- Ins. Co., 30 Me, 125. mers' Ins. & Loan Co. v. Snyder, 2 Murdocks. The Chenango Co. 16 Wend. 481 ; Frost v. Saratoga. Mut. Ins. Co., 3 Comst. 310; Ken- Co. Mut. Ins. Co., 5 Denio, 154. nedy v. St. Lawrence Co. Mutual 276 riEE INSUBANCE. shop, about eight rods; two small bams from four to eight rods ; new building to be used for tin shop, about three rods ; one store-house and one barn about four rods ;" and where in addition there is added at the end " all exposures within ten rods are mentioned:" the policy is avoided by there being other buildings within ten rods be- sides those contained in the answer. The appli- cation was referred to as forming a part of the policy, and was treated as a warranty.^ Where there is a violation of the warranty, in omitting to state buildings within ten rods of the property insured, yet if the policy covers both stock and building, it will be avoided as to the latter, but (so it was held in one case) remain valid as to the former.^ "If this be law," said ' Chaffee v. Cattaraugus County which it is occupied. All this is Mut. Ins. Co., 18N. T. 376. See sensible and intelligible, when also Brown «. Same, Ibid. 385. understood in reference to build- 2 Trench v. Chenango Co. Mut. ings ; but would be absurd and Ins. Co., 7 Hill, 133. unintelligible when applied to " The condition relied on by the personal property." defendants," said BeardsUy, J., In Kennedy «. St. Lawrence "refers exclusively to applications Co. Mut. Ins. Co., 10 Barb. 385, for insurance upon buildings. It Willard, P. J., thus referred to requires the applicant to state Trench v. The Chenango Ins.' Co., ■yhere the property is situated; s^pra; " It is argued by the plain- its materials, dimensions, con- tiffs' counsel that this doctrine is struction, chimneys, fireplaces, not applicable to a policy on and stoves; its distance from other goods, and relates exclusively to buildings, and the purpose for one on buildings. The case of "WARRANTY AND REPRESENTATION. 277 Hand, J., in Sexton v. Montgomery County Mu- tual Insurance Company,^ " I doubt very much whether it is applicable where personal property only is insured, and the statement respecting Trench t. The Chenango Ins. Co. is relied on as establishing this distinction. In that case the policy after specifying the amount insured, proceeded thus : ' Refer- ence being had to the application of the said J. and T. T. (the in- sured) for a more particular de- scription, and the conditions an- nexed, as forming a part of the policy.' The court held that this language did not constitute the application a part of the policy, but only the conditions annexed. And they further held, that the conditions, in that part which re- quired a statement of the ' relative situation as to other buildings ; distance from each, if less than ten rods,' was inapplicable to per- sonal property, and had no refer- ence except to buildings. The difference between that case and this is, that in that the application was not made a part of the policy, but only the conditions ; whereas in the present case the application is expressly made part of the policy, and the conditions are not. . . . This case is still further dis- tinguished from Trench ®. The Chenango Mut. Ins. Co. in this : that it is conceded by the plead- ing in this case, that the insured were required to state the number of buildings within ten rods of that wherein the property insured was deposited, and an issue was joined on the question whether there were or were not other buildings within the ten rods, not mentioned in the application, and that issue was proved in favor of the de- fendants. The parties had a right to make a warranty in relation to the situation of personal property ^ as well as in reference to build- ings. It was as material to the risk in one case as in the other. The plaintiffs, having made the warranty, cannot recover without showing it was complied with." See Wilson «. Herkimer County Mut. Ins. Co., 3 Seld. 53, where the court discarded the notion of there being any difference, so far as the provision relating to the distance of the other building is concerned, between real and per- sonal property. • > 9 Barb. 191. 278 PIEE INSURANCE. other buildings within ten rods of that in which the goods are kept. At all events, I think the question of concealment, and its materiality, should at least have been submitted to the jury." And in Wilson v. The Herkimer County Mutual Insurance Company,^ the !N^ew York Court of Appeals declined to make any distinction in this respect, between an insurance upon the building and an insurance upon the goods contained in it. Where the application gives a description of the premises to be insured, and, with a view to point out their situation with respect to contig- uous buildings, a map or diagram is subjoined, or inserted in the application, which contains only three buildings, the rest of the space being marked vacant, proof is inadmissible that subse- quently to the insurance the assured had erected other buildings, immediately contiguous to the store insured, and on the ground represented as vacant, and that the risk of loss was thereby in- creased, unless the insurer can also show that the fire which caused the loss originated in the build- ings thus erected, or was communicated by them to the assured premises.^ ' 3 Seld. 53. M. Ins. Co. v. Stephenson, 1 Wr. 2 Stebbinsa. TlieGlobe Ins.Co., 293. 3 Hall, 683. See also Girard F. & Where, in answer to the ques- WAEEANTT AND REPRESENTATION. 279 In The Susquehanna Insurance Company v. Perrine,^ it was a condition of the policy that the application should contain " a full and true expo- sition of all the facts and circumstances in rela- tion to the condition, situation, value, and risk of the property insured, so far as the game are material to the risk." To the interrogatory as to the relative situation of the premises proposed for insurance as to other buildings, and distance from such if less than ten rods, no answer was re- turned. A by-law of the company required that the application should contain this precise infor- tion, " description and distance of truth of the survey; but it was adjacent buildings, of what con- held that the diagram was not in struction, dimensions, and how fact part of the survey, and could occupied ?" it was said, " see dia- not be deemed to be incorporated gram." The diagram showed that therein ui legal effect, except in all the buildings of the bleachery those particulars, and for those were connected together, and on purposes, in regard to which it the ground-plan of No. 5 was was referred to by the survey, written, " boiler-house, stone and And the survey nowhere referred brick, roof wood." In point of to the diagram as showing the fact, the boiler-house proper was materials of which the buildings ofstone and brick ; but at the end insured were constructed. Ifany- of it was a shelter in front of the thing contained in the diagram boiler, about twelve feet long, one amounted to a material misrepre- side of which was wood. The sentation, it would be a defence, end, also, so far as it was inclosed, but this was a question of fact for was of wood. It was insisted that a jury. Sayles v. The North- this amounted to a breach of war- western Ins. Co., 3 Curtis, 610. ranty. Under the terms of the ^ 7 Watts & Serg. 348. policy, the insured warranted the 280 PIEE INSUEANOE. mation ; the proof on the trial however was that there were other buildings less than ten rods from the insured premises, which materially increased the risk, and it was accordingly held that there had been a fatal want of compliance with the par- ticular requisite of the conditions. But might not the insurer more properly be held to have waived the answer to the interrogatory as to the relative situation of the premises ?^ And was the appli- cant for insurance bound by the by-laws until he became a member of the company ? In answer to the question, " relative situation as to other buildings," it was said, " a dwelling- house and cabinet-maker's shop with fifty feet." There was a cabinet shop two feet from the pro- perty insured. The insurers contended that the answer implied that the shop was at the distance of fifty feet; that fifty feet intervened. The court held that the true construction of the answer was, that the buildings were within fifty feet. If the insurers desired a more precise answer, they should have sought it by additional inquiries. The answer they received was correct as far as it went.^ If no answer is returned as to the proximity of other buildings, and the insurer • See Hall v. People's Mut. F. 2 Allen v. Charlestown Mutual Ins. .Co., 6 Gray, 185. F. Ins. Co., 5 Gray, 387. WARRANTY AISTD REPRESENTATION. 281 issues a policy upon the application as it is, he waives all claim to further answers. Before issuing the policy he should have put other in- terrogatories if he desired more exact informa- tion.^ In Clark v. Union Mutual Fire Insurance Com- pany,^ the insured signed the application in blank, and the agent after a survey of the premises filled it out. It was inaccurate as to the occupancy and proximity of other buildings. It was held that the question whether there had been misrepresen- tation or concealment material to the risk, on the part of the insured, was for the jury ; and that notwithstanding a by-law which provided that " in case the application is made through an agent, the applicant shall be held liable for the represen- tation of such agent," the company were charge- able with the knowledge of the agent, and were estopped to set up his omissions or mistakes in making out the application as a defence to the policy.^ ' Hall a. People's Mut. F. Ins. ley «. Troy Fire Ins. Co., 3 Wis. Co., 6 Gray, 185. 254 ; ante, p. 203 et seq. 2 40 N. H. 333. Where no mention was made in ' See also Marshall v. Colum- the application of a certain wooden bian Ins. Co., 27 N. H. 157; building, but the insured testified Campbell v. Merchants' and Far- that after signing the application, mers' Ins. Co.,37N. H. 35; Kel- he remembered it, and returned 282 FIRB IK8UEAN0B. . Proviso as to untrue statements and material facts. 4. Where the policy contains a. proviso that any untrue statements shall avoid it, it is vitiated by any statement false in fact, whether material or not.^ But a policy with a condition that " if the said assured, or their assigns, shall hereafter make any other insurance on the property hereby insured, and shall not obtain the consent of this company thereto, and have such consent indorsed upon this policy, then this insurance shall be void and of no effect," is not defeated by a sub- sequent insurance, if such subsequent insurance is invalid.^ Where the proviso is, " that the misrepresenta- tion or suppression of material facts shall destroy the claim of the assured for damages," the policy is not defeated by misrepresentation or suppres- and informed the agent of it, who knowledge of the fact, adjust the replied it would make no differ- loss and promise to pay it, this is ence: fieM, if true, the company a waiver of all right of defence could not defend an action on the growing out of this cause. Ibid, policy upon this ground. F. &M. ' Cazenove b. British Assurance Ins. Co. «. Chestnut, 50 111. Ill ; Co., 6 C. B. (N. S.) 437 ; Anderson Atlantic Ins. Co. v. Wright, 33 v. Fitzgerald, 4 House of Lords 111. 474. But whether true or not. Cases, 484. where the company through its ^ Hardy v. Union Mut. F. Ins. authorized agents, and with full Co., 4 Allen, 317 ; ante, p. 57. WAEEAKTT AND EEPRESENTATION. 283 sion, unless the facts misrepresented or omitted are material to the risk.^ W hether insurance on a dwelling-house implies occupation. 5. Where a building is insured as a dwelling- house it is not a warranty that it is a tenanted house, nor that it shall be always occupied while the risk endures, nor- that it shall be guarded by a keeper.^ And even if a building be insured as ' Elliott 11. Hamilton Mut. Ins. upon the policy. The premises Co., 13 Gray, 139; Eichmondville were in the same condition when Union Seminary «. Hamilton Mut. the fire occurred as when the policy Ins. Co., 14 Gray, 459. was issued, and the agent of the 2 Soys V. Merchants' Ins. Co., company was informed of their 6 La. An. 761. In general, the condition when he issued the po- use of the insured premises, and licy. They were vacant then and how heated, need not be repre- vacant when destroyed by Are. sented except in reply to inquiries. "The company took the premi- Phillips on Ins. 636. See also Gi- ums, knowing the condition of rard F. & M. Ins. Co. v. Stephen- the premises, and their condition son, 1 Wr. 393 ; Shearman v. The being the same when destroyed NiagaraF. Ins. Co., 46N. T. 526. by the Are, they should not be A stipulation in the policy pro- permitted to escape liability on videdthatif the premises, at any that ground." Com. Ins. Co. «. time during the life of the policy, Spankneble, 53 111. 53 ; LUce v. should from any cause be vacant Dorchester Ins. Co., 105 Mass. or without occupant, the insur- 397. ance should be void and of no In the latter case, by the express efiFect, unless notice of such va- terms of the policy, any increase of cancy or non-occupancy should the risk by the act or with the first have been given to the com- knowledge or consent of the as- pany and mentionedin or endorsed sured, in any manner, avoided the 284 FIRE INSTJRANCE. an occupied dwelling-house, and the application was made for a policy on an occupied dwelling- house, this is not a warranty that it shall remain occupied, hut only a warranty of the fact that it was so occupied at the time the insurance was effected.^ The hazard of fire may be greater when a dwelling-house is left untenanted, and it may be equally so when there is a change of tenants ; but a change of. tenants, unless in vio- lation of express agreement, has no effect on the contract of insurance, notwithstanding the first tenant might have been a prudent one and the second a grossly negligent one.^ policy. BeM, that it was a question Ins. Co. v. Wetmore, 32 111. 221; for the jury whether voluntarily Mayor of New York «. Brooklyn leaving the building unoccupied Fire Ins. Co., 4 Keyes (N. Y.) more than a year increased the 465 ; Joyce v. Marine Ins. Co., 45 risk ; that this was a subject Me. 168 ; O'Keal ■». The Buffalo within common knowledge, and Fire Ins. Co., 3 Comst. 123. therefore the opinions of experts '' Cumberland Valley Mut.Prot. were inadmissible ; that whether Co. v. Douglass, supra ; Gates «. permitting the premises to remain Madison Co. Mut. Ins. Co., 1 Sel- untenanted was material to the den, 469. See also West Brancli risk might be tested by the testi- Ins. Co. «. Helfenstein, 4 Wr. mony of underwriters as to 289 ; Gamwell d. Merchants' and whether in such cases a higher Farmers' Mut. Fire Ins. Co., 13 premium is charged, but proof of Cush. 167. In Cumberland Val- the custom of the particular com- ley Mut. Prot. Co. v. Douglass, pany is inadmissible. supra, Strong, J., in delivering ' Cumberland Valley Mut. Prot. the opinion of the court, said: Co. V. Douglass, 8 P. F. Smith, " And even if a building be in- 419 ; New England Fire & Marine sured as an occupied dwelling' WAEBANTT AWD EEPEESENTATION: 285 Mffect of oral promise to occupy the premises. 6. A policy, having once taken effect, cannot be terminated or avoided, in the absence of fraud, by the subsequent breach of an oral agreement made before it was executed. Hence an express oral promise to occupy the premises does not avoid the policy pn proof of failure to occupy unless fraud is also proved. The statement of the insured was that "the house would be occu- Tiouse, even if application be made premises at tlie time it was made, for a policy on an occupied dwell- during the continuance of the po- ing-houae, while it might amount licy ; nor was any inquiry made to a false representation if the whether a change of tenant was property was unoccupied at the contemplated. The question put time, it is not an assertion that it was, ' for what purpose occupied, shall remain unoccupied. It is and by whom ?' and it was cor- matter of description of the sub- rectly and fully answered that ject, rather than stipulation re- the premises were occupied as a specting its use Here the tavern stand, and ' at present by question is what was the risk as- Eliphalet Sears. There is nothing sured ? Was it a dwelling-house indicating that Sears would or simply that was insured, or a should continue the occupant dwelling-house occupied ? Did during the continuance of the in- the policy bind the assured to any surance ; but, on the contrary, if use ? We think it did not, further anything may be implied, it may, than that when used, it should be I think, be implied that a change only as a dwelling-house. " of tenants might be made. I see In Gates ®. Madison Co. Mutual no ground to hold th*. policy void Ins. Co., supra, Jewett, J., said: on the ground of a change of ten- " There is no clause in the con- ants, although the first was care- tract prohibiting a change of the ful and prudent and the other tenant in the occupation of the grossly negligent." 286 PIEE INSURANCE. pied ; that he had a man in view who was going to occupy it." There was nothing to show that this statement was not made in the most perfect good faith, and the policy was accordingly up- held, notwithstanding failure to occupy.^ The general principle is, that a verbal representation, to violate a contract of insurance, must relate to ' Kimball v. jBtna Ins. Co., 9 gations, and promises to be pei- AUen, 540. In this case, Oray, formed by each party while the J., stated the distinction between insurance continues. To make promissory representations and the continuance or temjination affirmative representations, and in of a written contract, which has a very clear and satisfactory man- once taken effect, dependent on ner : "The one," he said, "is the performance or breach of an an affirmation of a fact existing earlier oral agreement, would be when the contract begins ; the to violate a fundamental rule of other is a promise, to be per- evidence. A representation that formed after the contract has come a fact now exists may be either into existence. Falsehood in the oral or written ; for if it does not affirmation prevents the contract exist, there is nothing to which from ever having any life ; breach the contract can apply. But an of the promise could only bring oral representation as to a future it to a premature end. A promis- fact, honestly made, can have no sory representation may be in- effect; for if it is a mere statement serted in the policy itself ; or it of an expectation, subsequent dis- may be in the form of a written appointment will not prove that it application for insurance referred was untrue ; and if it is a promise to in the policy in such a manner that a certain state of facts shall as to make it in law a part thereof ; exist or continue during the term and in either case the whole in- of the policy, it ought to be em- strument must be construed to- bodied in the written contract." gether. But this written instru- See also Bryants. Ocean Ins. Co., ment is the expression, and the 23 Pick. 201. only evidence, of the duties, obli- "WARTtAJSTTT AJSTD KEPEESENTATIOK. 287 some past or existing fact material to the risk, and that a representation in the nature of a pro- mise Or stipulation for future conduct on the part of the insured, must be inserted in the policy, or the underwriters cannot avail themselves of it.^ Construction of clauses with respect to occupation. 7. The words in a policy describing a house as " at present occupied as a dwelling-house, but to be occupied hereafter as a tavern, and privileged as such," are not a warranty that the house should certainly be occupied as a tavern.^ IS'or is a representation as to the position of a build- ing with respect to others made by the insured at the time of his application a warranty that the buildings will retain that position during the time covered by the policy.^ To have that effect it must be so expressed in the policy.* But a statement in the application that the building which contained the insured property is occupied as a tavern bara is a representation that the same is so occupied. And where the terms and con- ditions of the policy bind the insured not to ' Alston V. Mechanics' Ins. Co., " Catlin «. Springfield Fire Ins. 4 Hill, 339, and cases there cited ; Co., 1 Sum. 434. Mayor of New York v. Brooklyn ' Stebbins ». Globe Ins. Co., 2 F. Ins. Co., 4 Keyes (N. Y.) 465. Hall, 632. « Ibid. 288 FIRE INSURANCE. occupy the premises so as to increase the risk suhsequent to the insurance, the policy will be avoided by the occupation of the barn as a livery stable.^ But on general principles, a policy of insurance against fire is not avoided by a mere alteration in the use to which the premises are put, after the execution of the policy.^ But the statement ' Hobby v. Dana, 17 Barb. Ill; Jefferson Ins. Co. v. Cotheal, 7 Wend. 72. 2 Smith V. Mech. & Trad. Ins. Co., 33 N. Y. 399; Rafferty ». The New Brunswick Fire Ins. Co., 8 Harrison (N. J.) 480 ; Jenkins b. Chenango Mut. Ins. Co., 3 Denio, 75 ; Wall V. The East River Ins. Co., 3 Seld. 370 ; O'Niel d. The Buffalo Ins. Co., 3 Comst. 133 ; Kimball a. ..Etna Ins. Co., 9. Al- leii, 540 ; Catlin v. The Springfield Ins. Co., 1 Sum. 435 ; New Eng- land P. & M. Ins. Co. V. Wet- more, 33 111. 331 ; U. S. F. & M. Ins. Co. of Bait. v. Kimberley, 34 Md. 234. In Rafferty a. The New Bruns- wick Fire Ins. Co., supra, it was contended that the policy ought to be avoided, because the house was insured as a dwelling-house, and the assured permitted it to be occupied as a boarding-house. Whitehead, J., in delivering the opinion of the court, said : " The keeping of boarding-houses is not prohibited by the policy in express terms. There is no reference to them in the trades or business denominated hazardous or extra- hazardous. And if the company have not seen fit to classify them as exposed to greater risk than ordinary dwelling-houses, they cannot, with any show of pro- priety, ask to avoid the policy on this ground. The true rule, I apprehend, was laid down by Oakley, Judge, in Langdon «. The New York Equitable Ins. Co., 1 Hall, 236 : ' Where the insurance is general, on the building, or where a store, in general terms, is insured, the true construction of the policy undoubtedly is, that all kinds of business may be car- ried on, and all kinds of goods and merchandise kept in the building, ■WARRANTY AND RBPRBSENTATION. 289 in the policy of the existing use of the premises is undoubtedly a warranty that they are so used except such as are expressly pro- or any other articlea were depo- Ji/ibited.^ This case was removed sited for safe keeping and rede- by writ of error to the Supreme liyery in specie. It does not ap- Court of the State of New York, pear that any larger quantities the judgment affirmed, and is re- were kept than the jury have ported in 6 Wend. 623. The Su- considered her business required ; perior Court held, in reference to and, from the evidence, it is not the same question, that ' the enu- probable that the whole stock of meration of certain trades or kinds liquors which she had in decan- of business, as prohibited on the ters, demijohns, and kegs, at any ground of being hazardous, is an one time, was as much as many admission that all other kinds are private gentlemen have in their lawful under the contract.' In cellars for their own use. To Doe V. Laming, 4 Camp. 73, the adjudge the keeping of the spi- court ruled that a coffee-house rituous liquors, under the circum- was not an inn, within the mean- stances of this case, to be a storing ing of a policy of insurance against of them in violation of the policy, fire, enumerating the trade of an would be a perversion of the inn-keeper, with others, as extra- term. There was a clause in the hazardous, and not covered by the policy against using the building policy. ... It is said the policy ' for the purpose of storere^ therein should be avoided, because the any of the articles, goods, or mer- premises were used for storing chandise, in the same proposals spirituous liquors. . . . Was the denominated hazardous or extra- keeping of the liquors in the house, hazardous, or included in the as proved on the trial, a storing memorandum of special rates.' therein prohibited by the policy ? In Langdon a. The New York I think not. The liquors kept by Equitable Ins. Co., 7 Wend. 633, this tenant were for the consump- Sutherland, J., defined the term tion of her family, or to be sold to storing as used in the above policy the boarders or others. No part as ' a keeping for safe custody, of the house was used as a ware- to be delivered out in the same house, wherein spirituous liquors condition, substantially, as when 19 290 FIRE INSUEAIirCE. in presents Hence a statement that the build- ing is " used for winding and coloring yarn, and for the storage of spun yarn," does not warrant that the building is to continue to be thus used. Such statement is only a warranty as to its present use.^ • received ; and applies only where tiffs, and that the building was to the storing or safe keeping is the be taken down, and that it was sole or principal object of the de- not to be any longer used as a posit, and not where it is merely place of public exhibition ; that incidental, and the keeping is there was not a single fire upon only for the purpose of consump- the premises, and that the Ameri- tion. If I send a cask of wine to can Institute would not be allowed a warehouse to be kept for me, to occupy, and was not to occupy that is a storing of it ; but if I put again. This offer was rejected, it into my cellar or my garret to and upon exceptions the Court of be drawn off and drank, I appre- Appeals sustained the court below, hend the term would not be con- "This court," said Woodruff, sidered as applying.' " J. , in delivering the opinion of the ' Jennings B. Chenango County court, "have decided in the seve- Mut. Ins. Co., 3 Denio, 75 ; Bars- ral cases above referred to, that, field «. Metropolitan Ins. Co., 61 under the policy as in fact issued, Barb. 479. the use of the building for the 2 Smith B. Mech. & Trad. Ins. purposes of a public exhibition, Co., supra, as, at the time of the flre, it was On the trial of Mayor of New in fact used, was not prohibited York v. Brooklyn Fire Ins. Co., by the policy which was the writ- 4 Keyes (N. Y.) 465, the defend- ten agreement of the parties, and ants offered to prove that when the only proper evidence of their the present insurance was applied contract. So long, therefore, as for, the person making the appli- that contract stands in force as cation represented orally to the the true declaration of the actual defendants that the premises were contract, its interpretation, as al- then in the possession of the plain- ready many times judicially de- WAERAJSTTT AITD REPRESENTATION. 291 Where the applicant for insurance informs the agent of the insurer of the intended mode of occupation, but in filling out his application omits to answer the interrogatory as to the mode of occupation, the insurer is held to have waived the answer, and cannot object to such use of the premises as the agent was informed of.^ Descriptive and execidory stipulations. 8. "Whether a stipulation in a policy of insur- ance is simply descriptive and affirmative, or whether it is executory, and relates to the future use and condition of the property insured, is fre- quently a question very difficult to determine. Thus the words of a policy as follows : " All the above barns are used for hay, straw, grain un- thrashed, stabling, and shelter," are not a war- ranty that the buildings shall be used in that manner, and in no other. The clause is held to be descriptive of the buildings insured, and not clared must be conclusive .of the and too long and firmly estab- rights and liabilities thence arising lished, to be at this day open to or accruing. To admit evidence discussion." of oral representations made in ■ Dodge Co. Mut. Ins. Co. v. the course of the negotiations be- Rodgers, 12 Wis. 337. See also tween the parties which led to the Haley v. Dorchester Mut. F. Ins. contract, for the purpose of alter- Co., 13 Gray, 545 ; Lorillard Fire ing its legaj effect, would be in Ins. Co. ■». McCulloch, 31 Ohio violation of a rule too familiar, St. R. 176. 292 riEE iNSUBAsrcE. a limitation of their use. It was not intended . to deprive the insured of the enjoyment of his property in the same manner as buildings of that description are generally used and enjoyed. At most it was a warranty that the buildings, at the time they were insured, were such as they were described to be in the policy.^ • A warranty will in no case be extended by construction, nor held to include anything not fairly within its terms. It is true, that in many eases, stipulations in form only affirmative have been held to be in fact promissory. But in these cases, the nature of the property insured, and the- subject-matter of the warranty, rendered such a construction of the contract necessary to carry out the plain intent of the. parties. Hence the answer of the applicant for insurance to the in- terrogatory, " of what materials is the building constructed, how high is it, and for what purpose occupied?" "of wood; two stories high, sixty by forty feet ; formerly used as a machine shop, all of which business is now stopped, and shop fas- tened up, and only used for the purpose of the meeting of the band during two evenings of the week, on the second floor," although made a war- ' Billings 1). Toland Co. Mut. 3 Comst. 133. See also U. S. F. Fire Ins. Co., 30 Conn. 139. See & M. Ins. Co. of Bait. ■». Kimber- also O'Niel «. Buffalo F. Ins. Co., ley, 34 Md. 324. "WARRANTY AND REPRESENTATION. 293 ranty on the part of the assured, is only a war- ranty of the state of things when the policy was issued, and a change in the occupation, not in- creasing the risk, will not avoid the policy. A change in the situation or circumstances affect- ing the risk, hy the agency of the insured, was, by express agreement, to render the policy null and void. " In order, therefore," said the Court, " to give effect to both clauses in the contract, it is necessary to construe the. warranty as being affirmative only, and not intended to apply to the future condition of the property.'" "Where the description of .the property in the application was copied into the policy, and where inter alia it was said, " store attended by appli- cant and clerk ; clerh sleeps in the store," it was held that these words did not constitute a war- ranty for the future, but were descriptive of the mode in which the building was then occupied.^ And where in the application for insurance the premises are described as a dwelling-house with some boarders, this description of the premises is not an express warranty that the house and premises should not be used during the existence ' Blood V. Howard F. Ins. Co., ' Frisbie v. Fayette Mut. Ins. 12 Cush. 472 ; U. S. M. Ins. Co. Co., 3 Casey, 335. of Bait. D. Kimberley, 34 Md. 224. 294 riKE INSUEANOB. of the policy for any other purpose than a dwell- ing-house or boarding-house.^ So, too, where, in answer to the question " who occupied the building ?" the applicant answered, " will be .occupied by a tenant," it was held not to be a stipulation that the building should be so ' New England F. &. M. Ins. if the house or premises shall be Co. V. Wetmore, 33 111. 221 ; He- appropriated to any prohibited non V. The Peoria M. & F. Ins. use, then, so long as it is so appro- Co., 28 HI. 235. priated, the policy shall cease to In New England P. & M. Ins. bind the insurers. Co. V. Wetmore, supra, the objec- Mr. Justice Breeze, in delivering tion was raised on the fact proved, the opinion .of the court, said that that for some time previous to the the New York cases were the Are, but not when the Are hap- other way, but he thought not pened, a room attached to the with good reason. Mead v. N. main building had been used as a W. Ins. Co., 8 Seld. 530 ; Mur- stable for a horse, and the main dock «. Chenango Mut. Ins. Co., building for a saloon in which 3 Comst. 310 ; Hanings «. Same, beer had been sold, and in which 3 Denio, 75. But these cases go a bottle of whiskey was seen, no further than this, that the The application described the pre- violation of an express warranty mises as a dwelling-house, with vitiates the contract, and this is some boarders. A condition of the settled law of insurance. If, the policy was, that if the pre- however, the parties choose to mises should be appropriated to a agree that the violation of the prohibited use, without consent contract shall only suspend the of the company indorsed on the insurance during the time such policy, "then and thenceforth, so violation continues, as they seem long as the same shall be so ap- to have done in the Illinois case, propriated, applied, or used, these they are at liberty to do so ; but presents shall cease and be of no this constitutes an exception to force or effect." It was held that the general principle, the meaning of the condition was. WAERAITTY AND REPRESENTATION". 295 occupied, but rather a representation of his ex- pectation that it should be occupied by a tenant and not by himself. Moreover, even if it were a warranty that it should be occupied by a tenant continuously, it could not prevent the assured recovering, unless it should appear that the risk had been increased by want of a tenant ; the ap- plicant only covenanting that his representation should contain a correct description of the build- ing to be insured so far as regarded the risk on the same.^ In Hough V. City Fire Insurance Company,^ the applicant, in answer to the question "how are the several stories occupied ?" said, " unoccupied, but to be occupied by a tenant." The policy contained this condition: "When a policy is issued upon a survey and description of the property, such survey and description shall be deemed to be a part of the policy, and a warranty on the part of the assured." It was held that there was no stipulation that the insured build- ing should be occupied by a tenant, but simply the reservation of a right to have it so occupied, and to avoid an inference that it was to remain unoccupied. " The object of the inquiry," said Sanford, J., " was to ascertain the kind and cha- ' Herrick v. The Union Mutual ' 39 Conn. 10. Fire Ins. Co., 48 Me. 558, 296 PIRE INSURANCE. racter of the business carried on in the buildings, in order to enable the insurer to calculate the degree of hazard to which those buildings would be exposed. Hence the inquiry, 'how,' that is, in what manner, not by whom, are the several stories occupied. And the first clause of the answer, ' unoccupied,' is directly and completely responsive to the question. liTothing more need have been said, or was said, by way of answer to that interrogatory. But, as the plaintiff had already advertised the premises to let, it was natural, if not necessary, that he should notify the defendants of the fact, and accordingly he added, ' but to be occupied by a tenant,' intend- ing thereby to reserve to himself the right not to incur an obligation, to put a tenant into the vacant building. And so we think the defendants ought to have understood it." Besides, even if the clause in the application, " to be occupied by a tenant," were to be regarded as a warranty, as no time was specified in the policy when the occupancy was to begin, the contract would not be broken if the occupation by a tenant should be procured within a reason- able time after the date of the policy.^ ' Ibid. See also Hawkes ■». In Boardman a. New Hamp- Dodge County Mut. Ins. Co., 11 shire Mut. F. Ins. Co., 20 N. H. Wis. 188. • 551, the application described the "WAREANTT AND REPRESENTATION. 297 Stipulation as to occupying and vacating the premises. 9. A clause is sometimes inserted in the policy- forbidding a change of tenants without notice, property as " occupied by tenants, vacant, although, that state of including a cabinet-maker tenant things was clearly for the advan- in the third story." A second tage of the underwriting party. . application referred to the former . . We conclude, therefore, that one as follows: "For particulars the words in which the applica- relative to the description of the tion describes the premises as brick store, reference is made 'occupied by tenants, including a to my application in policy No. cabinet-maker tenant in the third 12,018. The application by the story,' were merely representa- terms of the policy was made a tion, and not express warranty ; part of it. The representation and that the plaintiff is bound by contained in it, namely, that the them no further than they were third story was occupied by a material. They were material if cabinet-maker, was in point of fact they were such as may be sup- true when the first application posed to haye had a bearing upon was made, but untrue at the time the contract, and to have influ- of the second application, it then ence'd the defendants in adjusting being vacant. its terms ; and a misrepresentation Oilckrist, J.: " It can hardly be of any fact that is not material, supposed that it was the intention does not, as has been said, avoid of the parties that the plaintiff the contract. Whether the mis- should be bound by his descrip- representation was or was not tion to such an extent that its material is a question for the jury, accuracy, in every particular. The authorities on this point are should form a condition in the numerous." contract. If so, its benefits would The representation was that the be forfeited if the third story, third story was occupied as a which was occupied as a cabinet- cabinet-maker's shop, and this re- maker's shop, which was of a presentation was expressly made hazardous description, was in fact a part of the policy. Was it not, 298 riKB INSUKANCE. and if the insurer means to prevent a change of occupancy or custody he should expressly stipu- late to that effect ; otherwise a change of tenants does not vitiate the insurance.^ A clause, too, may be inserted in the policy binding the insured to have the premises occupied the entire year ; and also not to carry on any unlawful business therein. In the latter case, if the premises should be occu- pied as a hotel without having a license as re- quired by law ; or, in the former case, should be permitted to remain unoccupied, the insurance would be defeated.^ A stipulation that if the building remain un- occupied over thirty days without notice, the policy jShall be void, is not complied with by tools remaining in it, and by its being visited daily for examination. The stipulation means that the building is to be occupied practically, that is, used for the purpose of occupation.^ therefore, a warranty that the attached? The premises might third story was thus occupied ? become vacant subsequently, for It is not a case of construction of it was not a warranty for the doubtful words, but a case where future but for the present. a fact is stated and the statement ' See West Branch Ins. Co. «. make part of the contract, and the Helfenstein, 4 Wr. 389. fact is found to be untrue. Can = Campbell v. Charter Oak F. & the question of materiality arise M. Ins. Co., 10 Allen, 213. in such a case ? Must not the fact a Keith ». Quincy Mut. F. Ins. as stated be true when the policy Co., 10 Allen, 328. WAERAKTT AND RBPEE8EKTATION. 299 Where notice is required to be given, if the in- sured personally vacates the premises, such notice must be given to a properly authorized agent, and it is immaterial that the insured is ignorant of the agent's want of authority.*' Whether pursuits of the occupants need he disclosed. 10. The owner of a house or a tenant for years is not bound to disclose or communicate to the insurer the names and pursuits of the tenants, or sub-tenants, living on the premises. If the in- surers wish to guard themselves against the risk or dangers supposed to result from certain pur- suits or occupations of the tenants or sub-tenants of houses on which they make insurance, whether it be on the property itself, or on goods in it, they may insert in the policy a warranty to that effect. Where there is no warranty, and a fact is concealed, the assured's right of recovery is not affected, unless the fact concealed is material to the risk. In that case the policy would be avoided on the ground of fraud, or because the underwriters had been misled. Hence where the assured concealed from the insurer the fact that a gambling establishment was kept in the ' Harrison v. City F. Ins. Co., 9 Allen, 231. See also Wustum ». City F. Ins. Co., 15 Wis. 138. 300 riEE iNSUEAiiircE. premises which contained the insured property, notwithstanding the insurer's agent pending the negotiation expressed an unwillingness to insure property in the neighborhood of such establish- ments, it was held to be a question for the jury whether the fact concealed was material to' the risk.^ The building insured was described in the policy as a shoe manufactory, but on the evening preceding the fire a lottery was drawn in one of the rooms of the building, the assured being pre- sent and holding tickets in the lottery. It was contended . that inasmuch as the building de- scribed in the policy was described as a shoe manufactory, the occupation or even temporary use of it for another purpose would avoid the insurance. But it was held that the assured •might occupy and use his estate for any other lawful business or purpose not restrained by any provision or condition in the contract, and which did not increase the risk. The drawing of a lot- tery, it is true, was in violation of law, but it did not affect the building; it rendered the owner ■■^ho permitted the drawing therein guilty of a misdemeanor, and personally liable therefor. " It is therefore," said Shaw, C. J., " an unlawful use ' Lyon V. Com. Ins. Co., 3 Rob. (La.) 366. WARRANTY AND REPRESENTATION. 301 of the house only in the sense in which every person may be said to make unlawful use of his house, who commits an offence under its roof against good morals or positive law. There is no natural, probable, or actual connection between the offence committed and the loss by fire. If, indeed, it were in the- direct commission of some unlawful act, by the assured, that the fire was kindled, so that the relation of cause and effect could be shown between the unlawful act done and the loss occasioned, it would present a very different question.'" Insurance on a dwelling-house is jiot ipso facto avoided by proof that it was used as a bawdy house, althoiigh the applicant is required to state m fairness and good faith all the material circum- stances within his knowledge which may affect the risk, and notwithstanding the application was made a part of the policy, and there was a failure to disclose the purpose for which the house was occupied. In determining the question of the materiality of the fact suppressed, only the nat- ural consequences of the use to which the house was applied are to be regarded ; and if the use to which it was applied enhanced the risk, and the ' Boardman ®. Merrimack Mut. F. Ins: Co,, 8 Cush. 583. 302 FIKB IN8UEANCE. destruction by fire was the natural consequence of such use, the insurers are not liable. In Loehner v. Home Mutual Insurance Com- pany/ the buildings and furniture were destroyed by a mob, provoked by the death of a citizen at the insured building, caused by violence. The furniture and piano were removed by the mob during the fire to the yard and burnt. The court held that acts of lawless violence were not justi- fied by the use to which the house was applied, nor could they be regarded as a natural conse- quence of the conduct of the insured with regard to the building ; nor was it necessary that the furniture and piano should have been actually in the house at the time they were burnt. Having been burnt under the circumstances stated, the loss was secured by the policy.^ If there is a clause in the policy, that a false description by the assured shall invalidate it, and the application states the character and occu- pancy of the insured property as " a hotel, by H.," and stipulates that it contains " a just, full, and true exposition of all the facts and circum- stances in regard to the condition, situation, value, and risk of the property to be insured, so far as the same are known to the applicant j" the ' 17 Mo. 347. 2 See S. C. in 19 Mo. 628. WAEEANTT AND EEPRESENTATIOK. 303 occupation of the premises as a house of ill- fame, with the knowledge of the applicant, or of his agent who made the representation, would avoid the insurance. But if the building was leased as a hotel, and apparently used as such, but in fact was used by the tenant as a house of ill-fame, without the knowledge or consent of the assuredj such use would not affect the insurance. " The inquiry," said Shaw, C. J., " it must be considered, was as to the then description of the building, not what it was intended to be used for, nor whether it was let on a lease at will or for a term of years. ... If it was a hotel, and used as a hotel at the time, there would be no false representation if it was used otherwise by the tenant without the lessor's knowledge or consent.'" Where there is a warranty as to future use, the designated use must continue, or the warranty will be broken, for the insured cannot abandon the particular use or occupaflcy, and allow the premises to lie idle or vacant. But where the policy contains no warranty of continued use, a change of the use, keeping within the same cha- racter of risk (the property being specially in- sured on account of the use), calling for the same ' Hall ■». People's Mut. F. Ins. Co., 6 Gray, 185. 304 PIKE IN8UBANCE. special rates, will not avoid the insurance, the risk not being increased/ "Where, in reference to the use of premises adjoining those insured, there is no condition in the contract, express or implied, and there has been no representation or suppression of any fact relating to the subject-matter, the insured has the same right to use such adjoining premises, and is governed by the same obligations in re- spect of their use, as any other owner. If such use be in itself lawful and right, though in its consequences a loss result, it is a loss but not an injury, and no legal responsibility therefor rests on the owner.* ' Smith v. Mech. & Trad. Ins. the warranty might have been Co., 33 N. Y. 399. impossible, and could not have In Aurora Fire Ins. Co. v. Eddy, been in the contemplation of the 49 HI. 106, it was a stipulation of parties, still it was incumbent on the 'policy, " that the assured is the assured to show that the re- to keep eight buckets filled with ciuired number of buckets, in good water on the first floor where the and serviceable condition, was at machinery is run, and four in the the places designated in the agree- basement by the reservoir, ready ment ready for instant use. What for use at all times in case of was a substantial compliance was fire." a minor question." Breeze, C. J., in delivering the » Miller v. The Western Farm- opinion of the court, said: " We ers' Mut. Ins. Co., 1 Handy's R. think . . . that the jury should 208 ; Gates v. Madison Co. Mut. have been told, that whilst from Ins. Co., 1 Selden, 469. But see freezing or other unavoidable Stebbens®. Globelns. Co., SHall, causes, a literal compliance with 633 ; Howard «. Ky. & Louisville WAEEANTT AND REPRESENTATION. 305 Representation as to title. 11. In general, the insured is only required to disclose the matters inquired about, a*nd not the particulars of his title, unless interrogated in respect thereto, or unless it is made imperative upon him by a condition of the policy.^ In other Ins. Co., 13 B. Monroe, 282 ; Boat- said : " There is some conflict of Wright XI. Miaa. Ins. Co., 1 Strob- authority as to whether it is the hart, 281. duty of the assured, in a policy ' Insurance Co. v. Woodrufli 2 against fire, to communicate to Butcher's Reports (New Jersey), the underwriter, in the first in- 541 ; Curry B. Commonwealth Ins. stance, and in the absence of any Co., 10 Pick. 535; Fletcher b. inquiry on the subject, the extent Com. Ins. Co., 18 Pick. 419; and character of his interest, when Strong B. Man. Ins. Co., 10 Pick, it is of a special or limited nature. ■40 ; Morrison v. Tennessee M. & In the case of the Columbian Ins. F. Ins. Co., 18 Mo. 262 ; Hough v. Co. d. Lawrence, 2 Peters, 25, it City Fire Ins. Co., 29 Conn. 10 ; was decided that such fact ought Tyler t). Mtaa, Ins. Co., 12 Wend, to be communicated, and the same 507, and authorities there cited ; principle was affirmed in 10 Pe- Niblo v. North Am. F. Ins. Co., ters, 507, when the case came be- 1 Sandf. 551. See also Franklin fore the Supreme Court on another Fire Ins. Co. i>. Coates, 14 Md. occasion. The same principle 285 ; Cumberland VaUey Mutual was announced in Carpenter «. Prot. Co. v. Mitchell, 12 Wr. 374; Washington Ins. Co., 16 Peters, Hartford Protection Ins. Co. t. 495. On the other hand, the Harmer, 22 Ohio, 452 ; City Fire courts in this country have gene- Ins. Co. of Hartford v. Mark, 45 rally refused to give their assent 111. 482. to this principle. This will be In Franklin Fire Ins. Co. v. apparent from an examination- of Coates, supra, Bartol, J., in de- the great number of cases on this livering the opinion of the court, subject, collected and explained 20 306 FIRE INSUEANOE. words, and briefly, by the general law of insur- ance the interest of the insured in the property is not rec|.uired to be specifically described in the policy. But an untrue answer in an application for insurance, in reply to a question respecting in- cumbrances, or the interest of the insured, renders the policy void, and this whether the company has a lien on the property or not. By.asking the question, it would be manifest that the company in. the American Leading Cases, the disclosure or concealment is a 2 vol. 637 to 642. The ruling of question of fact which must be the courts in this country has submitted to the jury. See 10 generally sustained the validity Peters, 516." of such policies as the one we are In Tyler d. .ffitna Ins. Co., au- considering, if they have been pra. Nelson, J., stated the reasons procured in good faith, even why a disclosure of title is not although the assured has only a essential thus : " The necessity limited or partial mterest in the of disclosing the title of the appU- property insured, and has not cant would greatly embarrass the communicated that fact to the operation of insurance, without insurers. It is not necessary, for affording any essential benefit to the decision of this case, to ex- the offices. Any error in the press our opinion on this point ; deduction or description of title for, whether we adopt the views might be fatal. The rights of the expressed by the Supreme Court insurer are sufficiently guarded of the United States on this ques- by having it in his power to exact, tion, or those of the courts of Mas- by inquiry, a description of the sachusetts. New York, and other interest of the applicant, and by States, the result in this case will the recovery being limited in- case be the same. It is everywhere of loss to the value of the interest conceded, that the materiality of proved on the trial." "WAEEANTT AND EEPRESENTATION". 307 deemed the information material, and it would be material that the applicant should answer it truly.^ On the other hand, where no disclosure of in- terest or title was called for, and the applicant insured a stock of tobacco as Ms, when in fact it was held in partnership, the policy was upheld to the extent of his interest.^ And this on the ' Davenport v. New England Napier, that he was only the M. F. Ins. Co., 6 Cush. 340 ; Hay-- owner of one-half, they surely ward v. New England M. F. Ins. would not have permitted him to Co., 10 Cush. 444 ; Marshall ii. eflFect an insurance on more than Columbian Mut. Fire Ins. Co., 7 one-half of the property insured ; Fost. 157 ; Bowditch Mut. Fire he had, in the first place, only Ins. Co. ®. Winslow, 3 Gray, 431 ; one-half as much interest in pro- Draper V. Charter Oak Ins. Co., tecting it from destruction by fire 2 Allen, .569. as he would have had otherwise. 2 Protection Ins. Co. a. Har- In the second place, being the mer, 3 Ohio St. R. 453 ; Peoria owner of only one-half, and hav- M. & F. Ins. Co. v. Hall, 13 Mich, ing insured for the whole in his 203 ; Finney v. Bedford Com. Ins. own name, and for his own bene- Co., 8 Mete 348. But see Catron fit, he had much higher tempta- V. Tenn. Ins. Co., Humphrey tion to apply the brand with his (Tenn.) 176. own hand. And in the third In Catron v. Tennessee Ins. place, had the corporation known Co., gttpra, 176, the assured, be- that Felix Catron was the owner ing owner of only one undivided of the one-half, they might not moiety of the premises, did not have chosen to risk upon his care communicate this feet to the in- and diligence, in securing the pro- surers, but effected an insurance perty from loss." upon the whole estate in his own The applicant in this case was name, and for his own benefit, not interrogated as to his title. It was held that this vitiated the and the only representation he insurance. "If the insurance made was as follows : "I wish a company had been informed by furnace and forge insured. . . . 308 PIRE INSURAIirCB. ground that the nature or amount of the interest held by the assured in the property at risk, in the absence of specific inquiries, need not be communicated to the insurer.^ So, too, a de- scription in the policy of the buildings as Ms, when the assured was only a tenant by the year, is not a warranty that he is the owner of the tenements. If the insurers desire infonnation as to the nature and extent of his interest, they can ask for it ; and it must be given to them truly, if given at all. If no inquiry be made, or state- ment given, and on the happening of a loss, it appear that the assured had no interest in the subject matter, he cannnot recover. If he have a qualified property or interest, he will recover accordingly.^ situated," etc. The court held in and selling goods, and the busi- accordance with the doctrine of ness was transacted in the name Columhian Ins. Co. «. Lawrence, of A. & B., the goods being in 2 Peters, 25. There were other fact wholly owned by B. Insur- elements in the case, howeyer, ance was effected on the goods in which were important in deter- the name of B., and the policy miningthe judgment of the court, was sustained. In this case, to wit, that the property was therefore, the interest insured grossly overrated, and that it was was truly the interest of the ap- fraudulently insured with the de- plicaht. sign on the part of the insured to ' Ibid. ; Sussex Co. M. Ins. Co. destroy it. «. Woodruff, 2 Dutch. (N. J. ) 541. In Gould «. York Co. Mut. P. * Niblo n. North Am. Fire Ins. Ins. Co., mpra, A. permitted his Co., 1 Sandford, 551 ; Fletcher «. son B. to use his name in buying Com. Ins. Co., 18 Pick. 419. ■W^AERAKTT ANB KEPRESENTATION. 309 Where the applicant for insurance described the property as his stock, whereas it had been manufactured under a firm name, and was in possession of the firm (the applicant, however, owning the whole capital of the firm, and the other partner having no interest except in the profits arising therefi'om), the insurance was sus- tained. And this notwithstanding it was a con- dition of the policy that " if the interest in the property be a leasehold interest, or other interest not absolute, it must be so represented to the company, and expressed in the policy in writing, or otherwise the insurance shall be void," It was held that the interest of the assured was an absolute interest. It was not contingent ; he had a right to have the whole property applied to his use at the time the insurance was effected. An equitable interest may be as absolute as a legal title, and the assured in this case was the sub- stantial and beneficial owner.^ In Hough V. City Fire Insurance Company,^ it ' Irving a. The Excelsior Fire 2 39 Conn. 10. In Com. Ins. Ins. Co., 1 Bosw. 507. See also Co. v. Spankneble, 52 111. 53, a Pacific Ins. Company v. Catlett, trust deed had been made to one 4 Wend. 75 ; Niblo o. North Am. Greenbaum, and there was in- Ins. Co., 1 Sandf. 551 ; The Co- serted in the policy this language : lumbia Ins. Co. v. Cooper, 14 Wr. "Loss, if any, payable to Elias 331 ; Ayres n. The Hartford Ins. Greenbaum, trustee, as his inter- Co., 17 Iowa, 176. est may appear." Held to be a 310 PIRE INSUEANCB. was a condition of the policy that " if the interest in the property to he insured is not absolute, it must he so represented to the company, and ex- pressed in the policy in writing ; otherwise the insurance shall he void.'^ The applicant repi'e- sented the property as Ms house, and. it was so described in the policy. In fact he had only agreed to purchase the property, hut under his agreement he had paid a considerable portion of the purchase-money, had taken possession, and made valuable improvements. It was held that the assured by his contract and its part perform- ance had acquired an absolute interest in the property, and was entitled to recover for a loss under the policy. " The subject of insurance," said the court, " was an interest, not a title. It is an interest, not a title, of which the conditions of insurance speak. The terms interest and title are not synonymoufe. A mortgagor in posses- sion, and a purchaser holding under a deed de- fectively executed, have' both of them, absolute, as well as insurable interests in the property though neither of them has the legal title. . . . The condition in question speaks only of the character of the interest to be insured, not of its sufficient description of the inter- closure of the facts relative to the est aa required by the conditions title. of the policy ; and a sufficient dis- WAEEANTT AND REPEESESTTATION". 311 quantity. Absolute is here synonymous with vested, and is used in contradistinction to con- tingent or conditional."^ ' In Reynolds «. Tlie State Mu-> for insurance in this company the tual Ins. Co., 3 Grant's (Pa.) applicant shall state the true value Cases, 326, the applicant for in- of the property, and also the en- surance was in possession under cumbrance on the same." an article of agreement to pur- It was held that the insurers chase, on which he had made a were not liable on the policy, payment. He insured the pro- The opinion of the court was de- perty as his own, and in reply to livered by Black, J., as follows : the interrogatory, "Is it encum- " The case of the plaintiff below bered? If so, to what amount ?" had one fatal defect in it. He he answered " No." The appli- was not the owner of the property cation contained the following insured, and did not disclose the agreement: "And the said appli- real situation of his title in the cant hereby covenants and agrees application. He had made a con- to and with said company, that tract for the purchase of it, and the foregoing is a just, full, and had paid a small sum upon it, but true exposition of all the facts and not nearly so much as the amount circumstances in regard to the insured. Of course, I will not condition, situation, and value of say, that an equitable owner has ,the property to be insured, so far not an insurable interest, nor do as the same are known to the ap- I assert that one who has bought plicant, and are material to the and paid for property is bound to risk," etc. mention when he gets insured It was also a condition of the that the deed has not yet been policy, that "if the interest in the executed. But when the pur- property to be insured be a house- chase-money has been only par- hold, or other interest not abao- tially paid, his interest or estate lute, it must be stated in the pol- in the land goes no further than icy, otherwise the policy shall be the payment, and the insurer al- void." ways has a right to know what it Another condition provided, is. If we regard the difference that "in all cases of application between a legal and an equitable 312 PIEE IKSTJKANCE. In Gaylord v. Lamar Fire Insurance Com- pany,^ the property insured was sold under a decree of foreclosure of a mortgage; the pur- chaser assigned his certificate of purchase to G., who insured the property as owner; under the laws of Illinois the mortgagor was entitled to title as totally immaterial (and icy was defeated by the repre- perhaps we ought so to regard it), sentation that there was no en- then the unpaid balance of the cumbrance. But we do not think purchase-money must be treated that it can be laid down as a gene- as an incumbrance. What we ral principle that the purchaser decide now is this simple point : of an estate who has not yet re- that one who occupies property ceiyed his title-deed, but who has for which he has no deed, but taken possession and paid part of which he has agreed to purchase, the purchase-money, cannot in- cannot conceal the facts, and have sure the property as his, and in it insured on his own account for case of loss recover the full amount a larger sum than the amount of of the insurance. If he is interro- the purchase-money he has actu- gated as to the particulars of his ally paid at the time of the insur- title and misrepresents or conceals ance. With this rule standing the facts, the insurance will be directly in his way the plaintiff vitiated; but otherwise, as he is could not possibly recover." liable for the whole purchase- As the insured in this case pioney, he has a right to protect could not obtain a title until he himself by an insurance of the had paid the residue of the pur- whole estate. In the case of a chase-money, the property may mutual company having a lien on perhaps be said to have been en- the property, the applicant would cumbered to that extent. We be bound to disclose the nature of doubt, however, if it was that his title. See Lorillard Fire Ins. sort of encumbrance which was Co. v. McCuUoch, 21 Ohio St. R'. intended and referred to in the 176. application. Admitting, however, ' 40 Mo. 1. that it was, then clearly the pol- WAREANTY AND REPRESENTATION. 313 fifteen months for, redemption before the final deed was executed ; no redemption having taken place, such deed was executed and delivered to the assured, but not until after the loss of the premises by fire. The policy contained a clause to this effect : " If the interest in the property to be insured be a leasehold, trustee, mortgagee, or reversionary interest, or other interest not abso- lute, it must be so, represented to the company and expressed in the policy in writing; other- wise the insurance shall be void." ISTo written application was made before the policy was issued. The verbal representation was simply to the effect that the insured were the owners of the property. It was contended that the assured was not the absolute owner in fee simple title at the date of the policy or the loss, and that there was a breach of warranty in this respect, or a misrepresentation of the interest of the insured, which, under the foregoing clause, avoided the policy. Holmes, J. : " The object and intent of this clause would seem to have been, that if the interest of the insured in the property was only that of a lessee, trustee, mortgagee, or other estate less than a freehold, or carved out of a fee simple, the same should be particularly stated and described in the policy. As to the absolute or full ownership of the property, whether it was by 314 PIRB INSUBANCE. virtue of a legal or eg[uitable title, it would seem to have been left to the general law on the sub- ject of the interest of the assured. If he were the owner at the time of the loss, that would be enough ; if he were not the owner, there could be no recovery on the policy. Under a somewhat similar claim, it has been held that the ' absolute interest' referred rather to the actual ownership than to the nature of the title, and meant a vested interest of which the owner could not be deprived without his consent, in contradistinc- tion to a contingent or individual interest.^ An equitable title that would be protected by a court ' Hough ®. City Firp Ins. Co., part of the policy, otherwise the supra. policy to be void. Subsequently A partnership was formed, un- an assignment of the policy to D. der which D. put in his "mill was made with the consent of the property, etc., as his part of the company. Seld, that the part- capital of the concern." The mill nership had no title to the insured property was not conveyed to the property, and no interest in it, partnership, nor to any person in other than the temporary use and trust for the partnership. The employment of it under the part- firm applied for insurance on the nership agreement ; and that as mill property, representing it to the policy was void in its incep- be theirs in their application. A tion from misrepresentation of the policy was issued to the firm upon title, the assignment of it with the the condition that, if the interest assent of the insurer, gave the as- of the assured in the property be signee no greater rights than were other than the entire, uncondi- possessed by the assignor. Citi- tional, and sole ownership, it must zens' F. Ins. Co. v. Dow, 35 Md. be so represented to the company, 89. and so expressed in the written WAEEANTT AND EEPEESEXTATIOlSr. 315 of equity as such, may be an ownership as abso- lute as the legal title. The clause does not con- cern the particular character of the owner's title. This title was subject, it is true, to be divested by redemption under the statute, and may be said to have been so far conditional, or rather defeasible. "We are inclined to think such a contingency did not come within the special in- tent of this clause, which rather related to lesser estates, or interests, of the class particularly enumerated; nor do we see any I'eason for a dif- ferent construction ; for if the title had failed by reason of a redemption, there could have been no recovery on the policy even without this clause ; not failing, the loss would fall on the . plaintiffs, and they would be justly entitled to indemnity. The indefeasibility of the title is not the criterion of an insurable interest ; an expectancy coupled with a present existing title is enough. . . . But whatever doubt there may have been on this point, we think the controversy is closed by the. operation of the fiction of relation, whereby for all the purposes of this insurance, the commis- sioner's deed is to be considered as relating back to the date of the sale and certificate, and as vesting the full legal title in the plaintiffs as of a date anterior to the date of the policy ; and that 316 riEE IN8URAN"CE. they are to be regarded as having been the abso- lute owners of the title at that date and at the time of the loss." Where it is a condition of the policy that " if any person effecting insurance in this company shall make any misrepresentation or concealment touching the risk to be insured," or " if the in- terest of the assured in the property be any other than the entire, unconditional, and sole owner- ship of the property, for the use and benefit of the assured, it must be so represented to the company, and so expressed in the written part of this policy, otherwise the policy shall be void," and before the delivery of the policy or payment of the premium the assured informs the- agent of the company that he is only a part owner of the property, and also that it is encum- bered, and the agent treats this information as of no importance, and does not have it inserted in the policy, his action binds the company and amounts to a waiver of the condition. " It was his business," said Holmes, J., "to receive the application and draw up the policy in proper form. He was placed by the company in the office of the agency at St. Louis, with full au- thority to receive applications and issue policies in the name of the company; and the defendant WARRANTY AKD REPRESENTATION. 317 must be held bound by all his acts and doings within the scope of his authority."^ In Peck V. l^ew London Mutual Insurance Company,^ A. and B. obtained insurance on mill and stock as joint owners. The one was sole owner of the building, and the other sole owner of the stock. The agent, with full knowl- edge of this, filled up and issued the policy, de- scribing the assured as joint owners of the pro- perty. It was objected that as the declaration set forth a joint ownership of the property, and the proof was, that each of the assured owned in severalty, the action could not be maintained. But it was held that the insured had disclosed their several interests to the agent, and it was not competent for his principals to deny the joint title of the insured to the property. They had ' Franklin v. The Atlantic Fire but the twelve months allowed for Ins. Co., 42 Mo. 456 ; Hough v. redemption had not expired. It. City Fire Ins. Co., 29 Conn. 10 ; was held that the non-disclosure Peck V. New London Mut. Ins. of this sale avoided the policy, Co., 22 Conn. 575. See ante, p. under the condition requiring the 202 et seq. ; Ins. Co. of N. A. a. assured, if his interest was not the McDowell, 50 111. 120. entire, unconditional, and sole In Reaper City Ins. Co. «. Bren- ownership of the property, to so nan, 58 111. 158, at the time the represent the fact to the company, insurance was effected the pro- and have it expressed in the wiit- perty had been sold on a judgment ten part of the policy, and execution against the assured, " Supra. 318 FIEE INSURANCE. through their agent described the title as joint, and they were bound by such description. "While in stock companies equitable interests may be insured and without being described as such, yet in mutual insurance companies, entitled by law to a lien on the premises insured by them for the premiums and deposit notes, it would operate as a fraud on the members of such com- panies if the applicant for insurance could be permitted to describe the property, proposed for insurance as his, and thereupon obtain insurance, when in fact he had but a contingent interest in it, as a bond for a deed. In such a case he is bound to disclose his real title and interest.^ • Brown ®. Williams, 38 Me. Mm. In virtue of this bond, 253 ; Smith ». Bowditch Mut. F. Wilde had entered upon the two Ins. Co., 6 Cush. 448 ; Treadway lots, and was erecting houses B. Hamilton Mutual Ins. Co.; 39 thereon, when the policy was Conn. 68 ; Lowel u. Middlesex made. As this constituted an Mut. Ins. Co., 8 Cush. 137. equitable title, perhaps this ought In the latter case the applicant not to be considered as a false represented the estate to be mort- representation of title, were the gaged to L. for $3000. "In point question upon the substantial of fact, it appears by the case," truth or falsity of the representa- said Shaw, C. J. , " that at the time tion ; though when the very pur- of the policy made, Wilde, the pose of the representation is, to assured, had no legal title to the enable the party making it to estate ; but that he had a bond for enter into and become a member a deed, from Lowell, the owner of a company of proprietors of of the land, stipulating on certain real estate, and when by the act conditions to convey the land to of doing so, and by the operation WAEEAIirTT AKD REPRESENTATION. 319 Nevertheless, if he fails to make such dis- closure, it is said that the materiality of such failure or concealment is a question for the jury, and cannot be assumed by the court as matter of law.^ In Chase v. Hamilton Insurance Company,^ the by-laws provided that any policy issued by the company should be void unless the true title and ' interest of the assured were expressed in the application for insurance, and unless all encum- brances, and the amount and nature thereof, were therein disclosed. The assured, having a con- tract for a conveyance, entered upon the land, of law, he professes to subject his It 'was not true in form or sub- own estate to a real lien, as a se- stance.'" Pinkham v. Morang, curity for the performance of a 40 Me. 587 ; Falls v. Conway Mut. mutual obligation, this might seem F. Ins. Co., 7 Allen, 46 ; Marshall to be more doubtful, and would v. Col. Mut. F. Ins. Co., 7Fost. require further consideration. But 157 ; Allen v. Charlestown Mut. assuming that a bond to convey F. Ins. Co., 5 Gray, 384 ; Mutual estate, and being let into posses- Ins. Co. in Bait. Co. v. Deale, 17 sion, constitute an equitable title, Md. 26 ; Bowditch Ins. Co. «. which would reasonably satisfy Winslow, 3 Gray, 431 ; S. C, 8 the representation that he was the Gray, 44 ; Eminence Mutual Ins. owner; the representation went Co. «. Jesse, 1 Met. (Ky.) 523; further, and stated that this title Merril v. Farmers' & Mechanics' to the estate, of course including Mut. F. Ins. Co., 48 Me. 285. the buildings then in the process ' Mutual Ins. Co. «. Deale, 18 of erection upon it, was subject Md. 26. See also Ins. Co. v. to a mortgage for $2000. This Woodruff, 2 Dutcher's R. (N.J.) representation was material, and 641. must be substantially true. ... '32 Barb. 537. 320 FIRE INSURAN-CE. erected a dwelling-house thereon, paid all the purchase-money, and was entitled to a deed of the premises. Under these circumstances he applied for insurance, and described the property as Ms stone dwelling-house. A loss having occurred, the insurers declined paying the insurance on the ground that the representation as to the title to the property was false. It was held that the assured having paid the entire consideration for the purchase, being in possession, and capable of maintaining that possession, even against the grantor, in whom was vested the technical legal title, was the owner of the house and the pre- mises, and that the description of the property as his was substantially correct. Where the charter of the insurers provides that all policies upon buildings, when the insur- ance is general, shall only be binding when the insured has an unincumbered title "in fee sim- ple," but, that when he has any "less estate therein," the same shall be void, the contract will be sustained, notwithstanding the assured may under his purchase have secured a defective le'gal title. What is meant by a " less estate" is, an estate of less duration, as an estate in fee tail, for life, or years, or at will.^ » Swift «. Vermont Mut. Fire Ins. Co., 18 Vt. 305. WARRANTY AND REPRESENTATION. 321 And though a by-law of the company forming a part of the contract of insurance provides that the policy should be void unless the true title of the assured is expressed in the apphcation, and the applicant tel'ms the property Ms, thei insur- ,ance is not avoided by the fact that the only title of the insvired is the equity of redemption ; the estate being heavily encumbered by mortgages, sales on executions, and otherwise. Having truly answered the interrogatoiy as to the amount of encumbrance, and having the right to redeem such encumbrance, he was justified in terming the estate as Ms. "A right," said Shaw,. C. J., " to redeem an estate by paying off and discharg- ing encumbrances, is a right created, recognized, and secured by law, and constitutes, while it subsists, a real and proprietary interest, a jus in re. . . , He had an estate to which the lien of the company would attach; and that such interest is insurable, is settled by many cases."^ Where true title required to be expressed. 12. When a representation is stipulated for as part of the contract, it must be complied with, and because it is a part of the contract. And in ' Buffum V. Bowditch Mutual Clapp v. Union Mut. F. Ins. Co., Ins. Co., 10 Cush. S40. See also 7 Fost. 143. 21 • 322 PIKE IN8UBAKCE. such case the, assured's statement as to his title is material, no matter whether the insurer has a lien on the estate insured for the security of the premium and deposit notes or not.^ Conse- ' Loehner v. Home Mutual Ins. Co., 17 Mo. 247 ; Birmingham ■». Empire Ins. Co., 42 Barb. 457; Leathers v. Farmers' Mutual Ins. Co.,4Fost. 359; Warner «. Mid- dlesex Mutual Ass. Ins. Co., 21 Conn. 444 ; Jenkins v, Quincy Mut. Fire Ins. Co., 7 Gray, 370; Philips V, Knox Co. Mutual Ins. Co., 20 Ohio, 174; Shaw v. St. Lawrence Co. Mut. Ins. Co., 11 Upper Canada (Q. B.) 73 ; Wilbur V. Bowditch Mut. Fire- Ins. Co., 10 Cush. 446 ; Davenport v. New England Mut. F. Ins. Co., 6 Cush. 840 ; Pinkham v. Morang, 40 Me. 587 ; Treadway v. Hamilton Mut. Ins. Co., 39 Conn. 68 ; Abbott v. Shawmut Mutual Fire Ins. Co., 3 Allen, 213 ; Day v. Charter Oak F. & M. Ins. Co., 51 Me. 91 ; Falls V. Conway Mut. Fire Ins. Co., 7 Allen, 46 ; Patten v. Ins. Co., 38 N. H. 338 ; Ins. Co. ■». Gottsman, 12 Wr. 151 ; Ins. Co. v. Mitchell, 12 Wr. 367. In Loehner v. Home Mut. Ins. Co., the charter provided that if the assured had a lease estate in the buildings insured, or if the premises were encumbered, the policy should be void, unless the true title and the encumbrances be expressed thereon. The build- ings insured were a leasehold estate, and encumbered at the date Of the insurance. The en- cumbrance was not expressed in the application, which was made part, of the contract. To an in- terrogatory in the application re- specting encumbrances, no answer was made. Held that the absence of an answer gave the insurer a right to infer that none existed, and hence the policy was void. The later authorities would imply in such a case a waiver of the answer. In Birmingham v. Empire Ins. Co., the statement in the applica- tion respecting the nature of the plaintiff's title was a warranty, and, it being untrue, the policy did not take effect. By the con- ditions of the policy the applicant was required to specify the nature of his title, if less than fee simple^ His title was an executory agree- ment for the purchase of the lot, WAEEANTT AND KBPRESENTATION. 323 t[iiently where the policy is in terms made sub- ject to the charter and by-laws of the company, and the court ield that inasmuch as there was no representation in the application that he owned the dwelling-house as a chattel not affixed to the soU, and as the con- tract of insurance related solely to the interest which the applicant had in the building, he could not recover. In Leathers «. Farmers' Mutual Ins. Co., by the act of incorpora- tion, if the assured had a less estate in the -buildings insured than a fee simple, the policy may be void, unless the true title of the assured be expressed therein. The assured had a less estate than a fee simple, to wit, an estate for his own life only by the courtesy, and his true title was not express- ed in the policy. Held, that the case fell plainly and unequivocally within this provision of the char- ter. As, however, the charter did not declare the policy absolutely void, in case a lesser title than a fee simple was not truly described in it, it might perhaps be that under this provision the corpora- tion had an election to avoid the policy or treat it as valid. In Warner v. The Middlesex Mut. Assurance Co., the policy referred to the charter, as annexed and made part of the contract ; and the charter provided that no insurance ■ eflFected on any pro- perty shall be good and valid to the insured, unless he had a good and perfect unencumbered title thereto, at the time of effecting such insurance ; or unless the true title of the insured to the same and the encumbrances, if any, be fully disclosed and ex- pressed in the proposals for insur- ance, and be also specified in the policy. At the time the insurance was effected, there was outstand- ing a title to the property insured in a tUrd person, by virtue' of a mortgage of that property to him, previously executed and never released. The insured did not make any disclosure of the true state of his title, and hence the policy was avoided. In Jenkins v. Quincy Mut. Fire Ins. Co., the policy and applica- tion were made subject to the by- laws, and the by-laws provided that unless the applicant should make a trtie representation of his title and interest in the property, etc., the policy should be void. The applicant, in answer to the interro- gatories, "Who owns the build- ings ?" " Whether encumberedi 324 riEE IN8UEANCE. and the by-laws provide that the policy shall be void, unless the insured in his application for by what, and to what amount ?" replied, "Owned by insured." "No." The only title which he had at the time the policy was made, and at the time the loss occurred, was that of mortgagee, who had not entered for foreclo- sure, but holding the property as security for payment of the mort- gagor's debt. Held, that the policy was Toid. In Philips V. Knox Co. Mutual Ins. Co., insurance was eflfected on certain buildings as the pro- perty of the assured ; the applica- tion representing that they stood upon land the title to which in fee simple was in the assured. The application was made- a part of the policy in express terms. The company was entitled to a lien on the premises during the life of the policy. The assured had no title or interest thereto, except as stockholders of an in- corporated company, in which company the title was vested. The fact was not disclosed, but was concealed froin the insurance company. Besides, there were encumbrances on the property, which they were bound to dis- close, but did not. The insur- ance, therefore, w«s defeated. In Shaw v. St. Lawrence Co. Mut. Ins. Co., the applicant de- scribed the property as his, when in fact he was but the lessee of the mill, and represented that two- thirds the value of the mill was £300, and obtained insurance for that amount, when in fact it was worth only £150. Held, that he could not recover. In Wilbur v. Bowditch Mutual F. Ins. Co. , the policy was made subject to the charter and by-laws, and the by-laws provided that unless the true title of the assured be expressed in the proposal or application for insurance, the pol- icy should be void. The appli- cant represented the property as his, and it was so described in the policy. In fact it was his only in part ; there was a clear misrepre- sentation in regard to title, and the policy was held to be void. In Pinkham v. Morang, the charter of the insurers gave them a lien against the insured on all buildings insured by them to the amount of the deposit note. The applicant represented that the property was his, and on the faith of that representation the policy was issued. The title of the as- sured failed as to one-half of the "WAEEANTT AND EBPRESENTATION". 325 insurance expresses his true title ; and he repre- sents that the property belongs solely to him, property, and was fatally defec- part of the contract. To the in- tive as to the whole. Policy terrogatory, " Whose is the pro- treated as void. perty insured?" the answer was, In Treadway B. Hamilton Mut. "Applicants'." The applicants Ins. Co., the charter and by-laws were the "Abbott Worsted Co.," were made part of the contract of and the appUcation was signed insurance, and the by-laws pro- "Abbott Worsted Co., J. W. Ab- vided'that any policy issued by bott, Treas." The property in the company should be void, un- fact belonged to him, and- not to less the true title and interest of the company. Held to be a breach the assured be expressed in the of warranty, and the policy void. application, and unless all encumr In Day v. Charter Oak P. & M. brances, and the amount and na- Ins. Co. , the insured was bound ture thereof, be therein disclosed, by his contract to represent his The applicant represented that he true title and the extent of his owned the premises, and that they interest ; he failed to do so, and were encumbered "about six the policy was declared to be void, thousand dollars." In fact they In Falls ». Conway Mut. F. Ins. were encumbered to an amount Co., the plaintiff took his policy over $13,000, and the remaining of insurance subject to the condi- interest the applicant had con- tions stated in the by-laws ; and veyed by an absolute deed to his these provided that "if the appli- brother. The mortgages, how- cation shall not contain a full, ever, beyond the six thousand fair, and substantially true repre- dollars, as well as the absolute sentation of all the facts and cir- deed, were given without con- cumstances respecting the pro- sideration, and with Intent to perty, so far as they are material defraud the assured's creditors, to the risk ; or if it shall not ex- Held, that this circumstance did press the true title of the assured not change the effect of the mis- to the property, and his interest representation, and that the policy therein, ' ' the policy shall be void, was void. The applicant represented that he In Abbott 1). Shawmut Mutual owned the property, and that it Ins. Co., the application was made was encumbered (with other pro- 326 riEE INSUEANCE. when in fact it only belongs to him in pax't, this perty) one thousand dollars. Pre- vious to the application the plain- tiff had conveyed the premises by an absolute deed, taking back a bond for a re-conveyance on the payment of $600 in five years.. At the expiration of that time the bond was given up to him ; and a further loan made to him, and a new bond given to him for tlie conveyance of the estate upon payment of both sums. The second bond was renewed in like manner ; until, at the date of the application, the plaintiff held a bond which entitled him to a con- veyance on payment of $1400 and interest. The first deed and bond constituted a mortgage ; but the new bonds given in succession were new and independent con- tracts ; they were different in amount, upon a consideration partly new, and to be performed at a different time. They were, therefore, merely personal con.- tracts ; and not being made at the same time with the conveyance of the land, or provided for in any agreement made at that time, did not create any estate in the land. There was no recital in the bond which the plaintiff'held at the time he effected his insur- ance connecting it with the origi- nal bond, or showing that it was intended to be a mere renewal or extension of the other ; and there .was no evidence that it was so understood or agreed by the par- ties. Held, accordingly, that the policy was void for misrepresen- tation of title. See also Trull v. Skinner, 17 Pick. 213; Rice v. Bird, 4 Pick. 350. ■ The policy was also' void on the ground of misrepresentation of the encum- brance, it being fl400 instead of $1000 as represented. In Patton v. Ins. Co., the ap- plication being made a part of the contract, and containing a cove- nant on the part of the insured, that the representations therein expressed were a just, fuU, and true exposition of all the facts and circumstances in regard to the condition, situation, value, and risk of the property, so far as the same were known to the appli- cant, and were material to the risk ; and the applicant having stated, in answer to a direct in- ■ quiry, that the property was not encumbered by mortgage or other- wise, whereas, it was mortgaged to the amount of $9600, the policy was held to be void. In Ins. Co. V, Gottsman, it was a condition of the policy that it WARRAN"TT AITD REPRESENTATION. 327 misrepresentation avoids the policy.^ And the same result follows, if the applicant' for insurance represents the property to be unencumbered, when in fact it has been sold for non-payment of taxes ; the purchaser having a lien on it, in case of redemption by the insured, for his reimburse- ment.^ • Substantial truth of representation, 13. On the other hand, if a representation is substantially true, and the lien or rights of the insurer are not affected, the policy will be up- held, notwithstanding the representation is not strictly and formally accurate. ""We cannot think," said the court, in Allen v. Charlestown should become void "if any en- should not exceed two-thirds of cumbrance should be executed the estimated cash value. Seld, upon the property insured ; or if that the policy being one fixing it should be levied on or taken the value, and the condition not into custody without the consent to insure more than two-thirds of of the company." Two execu- the valuation, being on the face tions were levied on the property of the policy, and referring to before the policy took effect, and future acts, was an undertaking, one afterwards, all of which liens and being broken, and the corn- lasted until the fire occurred, but pany not being informed thereof, were not disclosed to the com- and not waiving the fprfeiture, pany ; policy held to be void. the insured could not recover. In Lycomkig Insurance Co. v. ' Wilbur «. Bowditch Mut. Kre Mitchell, it was a condition of the Ins. Co., supra. policy that the aggregate amount ^ ibn, gee also Barrett v. Union of insurance on the property Mut. Ins. Co., 7 Cush. 175. 328 PIRE INSTJEAIirCE. Mutual Fire Insurance Company,^ "parties ap- plying for insurance are called upon to settle, with very great precision, questions of title." Thus, where the application is made part of the contract, and the contract is made subject to the lien upon the buildings and the land under them ; and is to be void if the application should not contain a full, fair, and substantially true rep- resentation of all the facts and circumstances respecting the property, so far as material and within the knowledge of the insured, the insur- ance will not be defeated because the applicant stated that he owned the land, whereas he had only an estate for life. The title of freehold justified the applicant in describing the land as his, and was substantially true. It gave the in- surers a lien, though limited to the life of the insured,^ Another illustrative case is as follows : Two partners, in an application for insurance, stated that they owned the land on which the building stood. The by-laws of the company required the application to contain "a full, fair, and sub- stantially true representation of all the facts and circumstances respecting the property, so far as they are within the knowledge of the*assured, ' 5 Gray, 384. ' Ibid. See also Chase v. Hamil- ton Mut. Ins. Co., 22 Barb. 527. WARRANTY AND REPRESENTATION. 329 and are material to the risk." The legal title was in one of the partners, but the equitable title was in the firm. The partner holding the legal title held it in trust for the partnership ; the other partner being charged on the books of the firm with half its cost. Hence the statement that the firm owned the estate was not a misrepresenta- tion material to the risk. The policy secured a lien upon the land and buildings, but this made no difference, because each partner is liable in solido. The lien, therefore, was perfect.^ Insurance on personal property is not defeated on the ground that the assured at the time of making application for the policy had made, but not dehvered, a bill of sale thereof, taking in re- turn a promissory note secured by a mortgage of the property. In such a case the applicant for insurance may truly represent the property as his. As between vendor and vendee there has been no such delivery as to pass the property ; d, fortiori, there has been none to change the title as respects third parties.^ ■ Collins V. Charlestown Mut. with knowledge of the dissolution F. Ins. Co., 10 Gray, 155. The and transfer of assets, agreed that partnership was dissolved subse- the policy should stand good. See quently, an(ft,ll the interest of the also Gould ». York Co. Mut. Fire / partner (to whom the policy was Ins. Co., 47 Me. 403. made payable) was transferred to « Vogel v. People's Mut. Fire his copartner, and the insurers, Ins. Co., 9 Gray, 28. 330 PIEU INSURANCE. Where the applicant described the property as Ms, whereas the title was wholly vested in his wife, yet inasmuch. as he had a life estate, in right of his wife, with a right to Ihe pernancy of the product and profits of the land during the coverture, and a curtesy right in the event of his surviving his wife, this gave him an insurable interest. And as the representation made in the application as to the title was not a part of the contract, in the nature of a warranty, the policy would attach unless the company was induced to make it from some misrepresentation or conceal- ment of material facts with regard to the title, which, if they had been truly known by the company, would probably have influenced it in making the contract or estimating the risk.^ On the other hand, where the insurer is entitled to a lien on the estate insured, and where the charter provides that policies should be deemed valid in all cases where the insured has a title in fee simple, unencumbered, but void if he has a 1 Mutual Ins. Co. «. Deale, 18 376, it was held that the husband Md. 36. In this case there was has an insurable interest in goods no provision in the charter, con- settled to his wife's separate use, stitution, or by-laws that in terms they residing together and shar- declared the policy to be void ing in the' use of the property, if the title of the assured was not So, too, an insolvent retains an truly stated. In Goulstone o. The insurable Interest in goods con- Koyal Ins. Co., 1 Fost. & Fin. cealed from his creditors. Ibid. "WAEEAKTT AND REPRESENTATION. 331 less estate, unless the true title be expressed in •the policy, and he represents that he has a clear title to the property when it belongs to his wife, the insurance will be avpided. In such a case the interest of the husband in the real estate of his wife is not a proper subject of insurance. He cannot create a permanent lien on the land for the protection of the insurer, because his inteffest is contingent, and terminates upon his death.^ Where the contract is entire, and where the premium and deposit notes are paid as entire sums without reference to the fact that there may be several subjects embraced in the policy, valvied separately, and a distinct sum insured on each, any cause which ayoids the policy as to one of the subjects, avoids it as to all.^ ' Eminence Mut. Ins. Co. v. Ins. Co., 45 Me. 473 ; Barnes v. Jesse, 1 Met. (Ky.) 533. Union Mutual Eire Ins. Co., 51 ' Prismuth V. Agawam Mutual Me. 110. F. Ins. Co., 10 Mass. 587 ; Lee v. While the weight of authority Howard, 3 Gray, 583 ; Wilson «. is in accordance with the doctrine Herkimer Co. Mutual Ins. Co., 3 of the text, there are cases which Selden, 53 ; Smith v. Empire Ins. hold that a policy which embraces Co., 35 Barb. 497; Kimball v. distinct insurances may be void Howard F. Ins. Co., 8 Gray, 33 ; as to the one and yet be good as Gottsman v. Penn. Ins. Co., 6 P. to the others. Thus, in Phcenix F. Smith, 310; Fire Association ». Ins. Co. v. Lawrence, 4 Metcalf Williamson, 3 Casey, 196 ; Gould (Ky.) 9, it was held that where V. York Co. Mut. F. Ins. Co., 47 the policy makes separate insur- Me. 403 ; Lovejoy«. Augusta Mut. ance upon distinct interests, as 332 FIRE INSUEANOE. Variance between verbal and written statements. 14. We conclude this chapter by repeating what has elsewhere been directly and also inci- dentally stated, namely, that if the insured truly states his title, but the agent in drawing up his application varies from such statement, the pol- icy will nevertheless be sustained.' Knowledge by the agent, with whom the agrement to insure is made, and who takes and fills out the applica- tion of the existence of encumbrances upon the title or of prior insurance, is knowledge on the part of the insurer.^ He is chargeable with knowledge of all the facts stated by the appli- » where there is insurance on a of the buildings did not avoid the store and goods, each for a sepa- policy as to the other. Clarke «. rate sum, and the policy void on New England Mutual Ins. Co., 6 the store for incorrect description Cush. 342. See also Associated of interest, it rema,ins good as to Fireman's Ins. Co. ■». Assum, 5 the personal property. And in Md. 165, opinion of Mason, J. ; Loehner a. Home Mut. Ins. Co., Daniel «. Robinson, Batty, 650. . 17 Mo, 347, it was held that a ' Ante, p. 203 etseq.; Hodgkins policy upon a house and its furni- v. Montgomery Co. Mut. Ins. Co., ture, though void as to the house, 34 Barb. 313. because the insured failed to give * Ames ». N. T. Union Ins. Co., notice of an encumbrance, is not 14 N. T. 252 ; Hartford Protection therefore void as to the furniture. Ins. Co. v. Harmer, 3 Ohio St. R. So, too, where a clause declared the 452. See also Manhattan Ins. Co. policy void if the insured should a. Webster, 9 P. F. Smith, 237; alienate the property insured, it Howard F. Ins. Co. v. Bruner, was held that an alienation of one 11 Harris, 50. "WAEEAJiTTY AND EEPBESEN"TATIOI Citizens' Ins. Co.®. M' Laugh- Co. v. Stephenson, 1 Wr. 298; lin, 3 P. F. Smith, 485 ; Pindar «. Harper v. N. York City Ins, Co., Kings County Fire Ins. Co., 36 33 N. T. 441 ; Franklin Fire Ins. N. T. 648 ; Archer «. The Mer- Co. ■». Updegraff, 7 Wr. 350 ; Nia- chants' and Manufacturers' Ins. ' gara Fire Ins. Co. ■». De Graff', 13 Co., 43 Mo. 434 ; Girard Fire Ins. Mich. 134. 336 riRE INSURANCE. transfer it from the class denominated "extra- hazardous," to a different class denominated " not hazardous.'" ' Pindar v. Continental Ins. Co., 38 N. Y. 364. See also Lee a. Howard Ins. Co., 3 Gray, 593 ; Macomber v. Howard F. Ins. Co., 7 Gray, 257 ; Whitmarsh v. Char- ter Oak Ins. Co., 3 Allen, 581 ; Franklin Fire Ins. Co., 7 B. F. Smith, 74; Diehl v. Adams Co. Mut. Ins. Co., 7 Id. 443; Rich- ards V. Protection Ins. Co.,. 30 Me. 273. In the latter case, Bhepley, C. J., said : "Four classes of hazards are named in the conditions an- nexed to the policy, denominated not hazardous, hazardous, extra- hazardous, and memorandum of special risks. The goods insured were by the plaintiffs declared to be of the first class. The goods before named were not of that class, but were of the second class, denominated hazardous (The plaintiffs procured insurance ' on the stock in trade, consisting of not hazardous merchandise.') Insurance is proposed to be made upon goods contained in these difierent classes' at different rates of premium. The classes of haz- ard, and the conditions of insur- ance annexed to the policy, form a part of the contract between the parties. That contract requires mutual good faith and fair deal- ing. The law presumes that the parties acted with intelligence. The defendants did not propose to insure goods of the class denomi- nated hazardous, at the premium affixed for the class denominated not hazardous. Nor did they pro- pose to insure goods composed partly of one class and partly of the other, at the rate of premium affixed to the least hazardous. This appears from' the language used: for 'groceries, with any hazardous articles,' are enume- rated in the class of hazardous. If the plaintiffs, having procured insurance on their stock in trade, consisting of not hazardous arti- cles, couldl have kept a stock of goods for sale composed entirely of hazardous articles, and could have recovered for a loss of them by fire, they could do so only by compelling the defendants to be- come insurers and to bear the loss for a compensation less than the one affixed to such a class of goods, and less than the one agreed upon by the parties as ap- HAZARDOUS ARTICLES AND TRADES. 337 2a. In Eeynolds v. Commerce Fire Insurance Company/ the insured premises were "privi- leged to be occupied as hide, fat-melting, slaugh- ter, and packing houses, and stores and dwellings, and for other extra-hazardous purposes^' An- nexed to the policy was a classification of haz- ards. In the second were defined "hazardous, !No. 2," " extra-hazardous, No. 2," " extra-hazard- ous, No. 3," and " specially hazardous." The occupations specifically privileged, such as "hide, fat-melting, slaughter, and pacldng houses," were not within the description of "extra-hazardous," but were comprehended within that of "specially hazardous," to which class belonged distilleries. The privileged uses, specified in the policy, were " specially hazardous," and were so defined in the propriate to such a risk. So, if unauthorized according to tiie they could have Isept goods for terms of the contract." Pindar sale composed partly of the first v. Resolute Fire Ins. Co., 47 N. and partly of the second class of T. 114. In this case, although the risks, and could after a loss of policy was claimed to be different them by fire have recovered for from that called for, yet, having them, the defendants would have been issued, delivered, and ac- been compelled to bear the loss cepted and sued upon, the assured for a premium less than that for was bound by its terms, and ex- which they would have know- trinsic evidence of circumstances, ingly assumed the risk. The in- or otherwise, was incompetent to justice in the latter case would change it. not be so great as in the former, ' 47 N. Y. 597. but a recovery would be equally 22 338 PIKE INSUEAIfCB. classification of hazards annexed to the contract. It was held that the words in the policy, "or other extra-hazardous purposes," meant purposes of the same class as those before specified, and that the assured had the right to use the premises for any specially hazardous purposes. 2&. Where the policy, covering a stock of goods, expressly declares that only goods " not hazardous" and "hazardous" were insured, and the keeping of "extra-hazardous" or "specially hazardous" goods on the premises shall avoid the policy, keeping goods of the latter descriptions vitiates the insurance. And evidence is inad- missible that the assured applied for insurance on his stock " such as is usually kept in country stores," and that the insurer in response thereto sent a policy with those words omitted, and ex- pressly restricting the insurance to the two classes of goods defined as not hazardous and hazardous. If such evidence were admitted, it would not justify an inference or finding by a jury that the policy sent was intended as a com- pliance with the request for the particular insur- ance applied for. Besides, the words of the policy were express and unambiguous, and parol evidence, in such case, is not admissible to con- tradict them. Nor is such evidence admissible to show notice to the insurer that the assured HAZAEDOUS ARTICLES AND TRADES. 339 kept in the store such merchandise as is usually kept in country stores, and that hence the pro- hibited articles, being so usually kept, were covered by the policy. Such notice is not ma- terial, so long as the insurer did not accept the risk as offered, or insert in the policy his per- mission to keep the prohibited goods.^ A. description of goods as not hazardous operates as a warranty. 3. The description of the property insured in the body of the policy, when the rate of premium is thereby affected, operates as a warranty, that the property is of the character and class de- scribed; and that the property is all, and not partly, of that character and class. Such a war- ranty is in the nature of a condition precedent, and performance of it must be shown by the person insured, before he can recover upon the policy.^ Hence, as stated in the preceding sec- ' Pindar v. Resolute Fire Ins. In Wood v. The Hartford Fire Co., 47 N. Y. 114. Ins. Co., supra, Sherman, J., in * Richards «. Protection Ins. delivering the opinion of the Co., 30 Me. 373 ; Wood v. The court, said : "Any statement or Hartford Fire Ins. Co., 13 Conn, description, or any understanding 533 ; Bean v. Stupart, Doug. 14 ; on the part of the insured, on the Pawson V. Watson, Cowp. 787 ; face of the policy, which relates to Burritt v. Saratoga County Mut. the risk, is a warranty. Whether Fire Ins. Co., 5 Hill, 188. this is declared to be a warranty 340 PIRE INSUEAIirCE. tion, a warranty that the insured's stock in trade consists of "not hazardous" merchandise, is vio- lated by keeping goods for sale of a different class, denominated hazardous, for the insurance of which a greater premium is required/ And where the insured is privileged to keep fire-crackers on sale, and where it is a condition of the contract that fireworTcs should be specially totidem verbis, or is ascertained will be insured at special rates of to be such, by construction, is premium ; that is, a paper-mill is immaterial. In either case, it is the subject of peculiar risks, and an express warranty, and a con- is to be insured upon special dition precedent. If a house be stipulations. Therefore the de- insured against Are, and is de- scription of this, in the policy, as scribed in the policy as being a 'paper-mill,' relates to the risk, 'copper-roofed,' it is as express a and is, consequently, a warranty, warranty as if the language had It is the only subject of insurance ; been ' warranted to be copper- and if it was not a paper-mill at roofed ;' and its truth is as essen- the time of the loss, the warranty tial to the obligation of the policy was not kept, and the plaintiffs in the one case as in the other. . cannot recover, although the . . In the policy, this establish- change may have diminished the ment is described as ' the one hazard, and been eflPected without undivided half of the paper-mill their knowledge, or against their which they (the insured) own at will." It was held, however, that Westville, etc. ; the other half be- the warranty was duly kept ; that ing owned by William Budding- whatever changes had been made, ton.' If this relates to the risk it the premises were, to all intents is a warranty. That it does is and purposes, a paper-mill, ready evident from the memorandum for use. in the conditions of the policy, • Richards v. Protection Ins. where 'paper-mills' are enume- Co., supra. rated among those articles which HAZARDOUS ABTICLES AND TRADES. 341 written in the policy, being described as " spe- cially hazardous," and adding fifty cents on the hundred dollars to the ordinary rate of insurance, they are not included in the description of " other articles in his line of business ;" and proof that they constitute a part of such articles is inad- missible. The parties are concluded by the terms of their contract which require that fire- works should be specially written in the policy. Besides, the permission to keep firie-crackers, enumerated among the second class of hazards, makes it obvious that the insurer did not mean to permit to be kept fireworks, enumerated as specially hazardous, and requiring a higher rate of premium.^ What is included when general terms are used. 4. But where the insurance is on " groceries," or on " a stock of goods such as are kept in coun- try stores," and a clause in the policy provides that it shall be void, if the premises are used for storing,^ or keeping therein any articles included ' Steinbach n. Ins. Co., 13 Wal- tially, as when received ; and ap- lace, 183. plies only where the storing or ' The word storing as used in safe keeping is the sole or princi- the policy means a keeping for pal object of the deposit, and not safe custody, to be delivered out where it is merely incidental, and in the same condition, substan- the keeping is only for the pur- 342 riRE INSUEANOB. in certain classes of hazards annexed to the policy "except as herein specially provided, or hereafter agreed to by (the insurers) in writing upon the policy," everything is included which is usually comprehended under the term " gro- ceries,'" or is usually kept in " country stores," notwithstanding articles may be kept which are classed as " hazardous," or " extra-hazardous," or "specially hazardous." By the use of a term including them they are " specially provided for in writing on the policy." Insuring a class of goods includes what is usually contained in it, whether extra-hazardous or not. Besides, tur- pentine and gunpowder, for example, being usu- ally kept in country stores, and the insurance being on all goods so kept, a printed clause in the policy prohibiting their being kept is repug- nant to the written clause insuring them, and is governed and controlled by it.* pose of consumption. New York to keep a grocery store, and to Equitable Ins. Co. v. Langdon, 6 conduct it in the usual manner. W-end. 623. See also Hynds «. New York Equitable Ins. Co. v. Schenectady Co. Mut. Ins. Co., 1 Langdon, 6 Wend. 623. Kem. 554 ; Vogel v. People's M. ' Niagara Fire Ins. Co. v. De Fire Ins. Co., 9 Gray, 28. Graff, 13 Mich. 134 ; Pindar v. ' If the business of a grocer is Kings County Ins. Co., 36 N. Y. not prohibited under the policy, 648 ; New York Equitable Ins. the ordinary incidents of that Co. ». Langdon, 6 Wend. 633; business are allowable ; not being Rafferty v. New Brunswick Fire prohibited, the insured has a right Ins. Co., 3 Harrison, 480 ; Mayor HAZARDOUS ARTICLES AKD TRADES. 343 But where the insurance is on the condition that " the use of general terms, or anything less of New York v. Hamilton Ins. Co., 10 Bosw. 537 ; Harper v. The Albany Ins. Co., 17 N. T. 194; Archer v. The Merchants' and Manufacturers' Ins. Co., 43 Mo. 434 ; Phcenix Ins. Co. v. Taylor, 5 Minn. 493 ; Leggett v. Ins. Co., 10 Richardson (S. C.) 393; Moore V. Protection Ins. Co., 39 Me. 97. The Massachusetts cases are of a contrary tendency. See Lee v. Howard Fire Ins. Co., 3 Gray, 593 ; Macoihber v. Howard Fire Ins. Co., 7 Gray, 357; Whitmarsh V. Charter Oak Fire Ins. Co., 3 AUen, 581. In the latter case, Bigelow, C. J., said : " The policy declared on contains a stipulation that it shall cease and be of no force or efiFect if the assured shall keep on the premises any of the articles, goods, wares, or merchandise de- nominated hazardous, or extra- hazardous, or included among the special hazards enumerated in the memorandum annexed to the policy. It is admitted that oil and sulphur, which are expressly named as hazardous articles, and matches, which are deemed extra- hazardous, and all of which sub- ject the building and its. contents to' an increased rate of premium, were kept on the premises at the time of the fire. This was a clear violation of the stipulation in the contract of insurance, and put an end to ex vi termini. It is urged on behalf of the plaintiff, that the general description in the appli- cation and policy of the purpose for which the building was occu- pied, ' as a provision and grocery store,' gives the right by implica- tion to keep these hazardous and extra-hazardous articles, as a part of the stock appertaining to such business. But there are two difS- culties in the way of adopting such an interpretation of the con- tract, which are insurmountable. In the first place, it militates with the clear and unambiguous terms of the agreement. Hazardous and extra-hazardous articles are expressly prohibited, ' if not spe- cially provided for. ' In the face of this language, it is impossible to hold that a general description of the building, and the purpose for which it is occupied, will allow the assured to keep articles of a dangerous and inflammable na- ture, which are not necessarily comprehended within a fair and 3M FIEE INSURANCE. than a distinct, specific agreement clearly ex- pressed and indorsed on the policy, shall not be construed as a waiver of any printed or written condition or restriction thereon," the insured is not at liberty to keep and vend kerosene or petro- leum, liquors, matches, etc., on the ground that the policy was issued on a stock of family gro- ceries contained in a building occupied as a meat ' and family grocery store, the keeping of those articles by the express provisions of the con- tract avoiding the policy, unless the policy con- tains an express agreement in writing that they may be kept. In such case the general terms of the insurance on " family groceries," or on a "meat and family grocery store," are not a waiver of the restrictions agaiiist keeping kero- sene, liquors, etc., marked "extra-hazardous." And this because the parties to the contract have expressly agreed that the use of such general terms shall not constitute a waiver.^ "Where cotton in bales was among the articles enumerated hazardous, keeping a suflficient quan- reasonable interpretation of the matches are usually or properly general words used. In the next kept in stores occupied for the place, we cannot know judicially, sale of groceries and provisions." in the absence of any proof or ■ The People's Ins. Co. ». Kuhn agreement of the parties, that (S. C. Tenn.), Central Law such articles as oil, sulphur, and Journal, vol. 1, p. 214 HAZARDOUS ARTICLES AND TRADES. 345 tity for sale was held not to forfeit a policy upon a stock of goods in a store.^ So, too, having upon the premises the prohibited article, for the purpose of making repairs, as oil and spirits of turpentine, for painting,^ or tar, burned in the building for tarring it, does not avoid the policy.^ Under a condition that " gunpowder, camphene, spirit gas, pine oil, spirituous liquors, or any similar inflammable liquid, or lucifer or friction matches, or fireworks . . . deposited, used, kept, or sold in any building insured, or containing any goods or merchandise insured by this policy, unless by special consent in writing on the policy from the secretary," should have the effect to render the policy absolutely void ; evidence was given that friction matches had been used to some extent, by the workmen employed in the building, contrary to the orders of the insured. It was held, as to the use of matches and cam- phene, that the condition contemplated a use by the authority, express or implied, of the insured. What, however, is going on habitually in the premises the insured is bound to know ; he can- not be permitted to shut his eyes and not see it. He will be presumed to know. If, therefore, the ' Moore «. Protection Ins. Co., " Dobson v. Sotheby, 1 Mood. supra. & Malk. 90. 2 3 Com. B. 123. 346 PIEE INSUEANCE. insured know, or as prudent men ought to know, that these things are used, their orders not to use them will not help them. Use means known and permitted use. Habitual use will be pre- sumed, unless the insured take measures to en- force the prohibition.^ A policy upon goods contained in a store prohibited the use of burning fluid or chemical oils, and in a subsequent clause permitted the use «of kerosene oil for light in dwellings; the ' Farmers' and Mechanic's Ins. that in such a case the assured Co. V. Simmons, 6 Casey, 299. only undertakes that he himself See also The Mer. and Man. Mut. will not do the act, or allow others Ins. Co". 9. The Washington Mut. to do so, if by reasonable precau- Ins. Co., 1 Hand (Ohio), 408. tion he can help it. To the ^ame In the case of The Ins. Co. effect is Aurora Fire Ins. Co. «. of North America ». McDowell, Eddy, 55 111. 213. It was there 50 111. 131, it was stated, in answer agreed that smoking should be to a question propounded to the strictly prohibited in and about assured, and which became a part the premises. This was done, and of the conditions upon which the this was a literal compliance with policy was issued, that smoking the agreement. Had the evidence was not allowed. And it appeared shown that the orders of the as- that there had been smoking by sured were disregarded, and that some of the employees about the it had come to his knowledge, mill, but as soon as the attention then a different question would of the assured was called to the have been presented for the con- fact that it was contrary to the sideration of the court. Daniels terms of the policy, he forbid it, v. Hudson F. Ins. Co., 13 Cush. and put up a notice that it was 426. not allowed. It was there held, HAZAEDOtrS ARTICLES AlfD TEABES. 347 use of kerosene in the store rendered the instru- ment null and void.^ Insurers deemed to know the incidents of the insured business. 5. When underwriters insure property stated to be used in a designated business, as for a place of public exhibition, they are deemed to be acquainted with the nature of the objects ex- hibited, with the means employed to exhibit them, and with the materials ordinarily and ne- cessarily used by the persons engaged in such business. And the keeping of articles to be ex- hibited, or to be used as means and instruments of the exhibition, is not a use of such a building " for the purpose of storing or keeping therein" such articles, within a clause relating to hazard- ous articles." And where the underwriters have insured the property for years, and consequently know the purpose for which it was erected, the manner in which it has been occupied, the general character ' Cerf v. Home Ins. Co., 44 lyn Fire Ins. Co., 41 Barb. 331. Calf. 330. See also Grant ■». Howard Ins. 2 Mayor of New York v. The Co., 5 Hill, 10 ; Bosw. 424 ; Hamilton Fire Ins. Co., 10 Bosw. Brown v. Kings County Fire Ins. 537 ; Mayor of N. York n. Brook- Co., 31 Howard (N. Y.) 508. 348 FIRE INSUEANCB. of its contents, and the nature and extent of the risk (and these facts may be shown by parol), effect will be given to the words of the contract in the precise sense in which they must have been understood and employed by the parties. Underwriters cannot complain if the property is dedicated to the uses contemplated by them, as well as the assured, and embraced in the descrip- tive terms of the policy.^ Insurance for certain defined purposes includes all the usual incidents attendant upon such purposes.^ > Substantial compliance with indorsement of permission. 6. Under a stipulation not to keep in the build- ings occupied by the insured any articles, goods, or merchandise denominated hazardous, or extra or specially hazardous, in the conditions of in- surance annexed to the policy, except as provided in the policy, or thereafter agreed to by the in- surers in writing upon the policy; the insurers agreed and indorsed upon the policy permission to keep one barrel of benzine or turpentine in cans, and one half-barrel of varnish, for use, on ' The Mayor v. Exchange Fire ^tna Ins. Co., 32 N. T. 405 ; Ins. Co., 40 N. Y. 436. BilUngs o. The Tolland Co. Mut. » Ibid. See also HoflFman o. Fire Ins. Co., 20 Conn. 139. HAZAKDOIJS ARTICLES AND TRADES, 349 the premises. By a fair construction of that permission, the insurance is not defeated by keeping the specified amount of benzine in one can. This is a substantial compliance with the indorsement upon the policy.^ The habit of the insured of bringing the benzine upon the pre- mises in a wooden barrel for the purpose of trans- ferring it to the can does not amount to keeping it on the premises in a wooden barrel ; nor does the fact of the fire occurring from the explosion of the benzine while being transferred from the barrel to the can amount to a violation of the permission indorsed on the policy.^ Prohibited trades and unlawful uses. 7. Where, under the classification of specially hazardous, is included the term "carpenters," together with " barns and stables," " breweries," "manufactories," etc., such term has no reference or appUcation to the erection by carpenters of an adjacent building on adjacent ground, when the insured premises are not used by them as a work- shop for that purpose. To avoid the poUcy under this condition, the insured premises must them- selves be used for the purpose of carrying on the ' Maryland Fire Ins. Co. v. ' Ibid. Whiteford, 31 Md. 219, 350 FIRE INSURANCE. prohibited trade, or for the storage of the pro- hibited articles.^ 7a. In -^tna Insurance Company v. Maguire,^ the policy enumerated distilleries and steam saw- mills as property on which no risks would be taken. Seld, that by these terms was understood and contemplated, distilleries and saw-mills in operation. A policy upon the buildings, while inactive and unused, would be binding. The conditions annexed to a policy specified among occupations denominated extra-hazardous, " carpenters in their own shops, or in buildings erecting or repairing." The insurance was on a building for the manufacture of hat bodies, and • Washington Fire Ins. Co. v. machinery, and chemical appara- Davison, 30 Md. 91. tus connected therewith, is pre- In this case an offer was made sumed to know and to have con- to prove, by the secretary of the templated all the casualties and insurance company, as an expert incidents to which the subject in insurance, that the term "car- insured might be liable as such penters," as used in the policy, manufactory, and to have known was generally understood in that all the requisites and adjuncts ofSce to refer to the employment belonging tliereto ; and if he in- and work of carpenters in erect- spects the premises by himself or ing or adding to buildings insured, his agents, he has notice of all an The offer was rejected ; the policy expert ought to know from such being sufllciently plain, and only inspection, and is bound by know- admitting the construction stated ledge to that extent, and cannot in the text. set up in defence the ignorance It was also held in this case or incapacity of the inspectors he that an insurer taking a risk upon employs, a sulphuric acid manufactory and ^ 51 m_ 342_ HAZARDOUS AETICLES AND TEADE8. 351 on the privilege for all the process of said busi- ness. These words were held to include an au- thority to do whatever is necessary in the manu- facture of hat bodies, such as the making of all necessary machinery and its repair, and using a room in the building as a shop for that purpose.^ If the insured premises are used in carrying on a forbidden trade, as when the insured manufac- tures the articles of the forbidden trade for gain, he at once forfeits his policy, according to the conditions and by-laws annexed thereto. In such a case it is not a question of habitual and perma- nent use, but a breach of" his warranty ipso facto f"^ And this without regard to whether the fire ori- ginated from the unauthorized trade, or whether it was carried on by the tenant of the insured without his knowledge or consent. It is his business to see that the tenants do not violate the contract of insurance.' And insurance upon a building by the owner, with a clause in the policy that it shall be void if the building shall be occupied or used for unlawful purposes, is avoided by a tenant's use of the building for an ' Lounsbury v. Protection Ins. Society, 10' Md. 377 ; Duncan v. Co., 8 Conn. 459. Sun Ins. Co., 6 Wend. 493 ; Diehl 2 Harris®. Columbiana Ins. Co., v. Adams Co. Mut. Ins. Co., 8 P. 4 Ohio St. 285 ; Lee v. Howard F. F. Smith, 443. See also Appleby Ins. Co., 3 Gray, 583. ■». Fireman's Fund Ins. Co., 45 ' Howell V. Baltimore Equitable Barb. 454. 352 PIKE INSURAlSrCE. unlawful purpose, even if unknown to the owner. And keeping liquors therein for sale in violation of law is a use of the building for an unlawful purpose within the meaning of the clause, and avoids the insurance.^ Where three buildings were insured under a contract that was entirety (one policy and a specified amount on each), a change of the busi- ness and keeping prohibited articles in any one of the buildings, although done by a tenant with- out the knowledge of the owner, will avoid the policy on all. In this case the conditions annexed to the policy prohibited the occupation of a grocer, and required groceries and gunpowder to be spe- cified, and pay a higher rate of premium. The insurer neither gave permission nor had notice that the building was used for keeping groceries and gunpowder.^ Prohibition when a warranty. 8. Insurance upon a "one-story frame build- ing," and upon a " stock of groceries and provi- sions," with a condition that the policy shall be ' Kelly v. Worcester Mut. Fire 2 Casey, 196 ; Worcester v. Wor- Ins. Co., 97 Mass. 284 ; Koonts t. cester Ins. Co., 9 Gray, 27; Mead Hannibal Sayings and Ins. Co., v. Northwestern Ins. Co.; 3 Sel- 43 Mo. 126. den, 533. But see ante, p. 331. 2 Fire Association «. Williams, HAZARDOUS AETICLES AND TRADES. 353 void if, among other articles, saltpetre is kept on the premises without written consent of the insurers being endorsed on the policy, is defeated by keeping saltpetre in the building contrary to the terms of the policy. The agreement being that the assured should not keep it, although it might be customary in meat houses to keep and use it for the preservation of meat, yet this would afford no justification for his keeping it on sale as an article of merchandise.^ Camphene being prohibited in the insured pre- mises, imless by special permission in writing, and by payment of an extra premium, the insur- ance is avoided by its use as a light, whether it affects the risk or is connected with the loss or not. The agreement to indemnify the assured against loss is dependent upon the performance of his stipulation that he would not use the pro- hibited article.^ In Westfall v. The Hudson River Fire Insur- ' Commercial Ins. Co. v. Mehl- be liable, notwithstanding a print- man, 48 111. 313. ed prohibition against its use. We apprehend that if it is cus- Keeping it for another purpose tomary to use saltpetre in meat- would, of course, as stated in the houses for the preservation of text, vitiate the insurance, meats, the insurers must be pre- ' Mead ». Northwestern Ins. sumed to issue their policies with Co., 3 Selden, 530. reference to that fact, and would 23 354 PIEE INSURANCE. ance Company/ there was this clause in the po- licy : " Camphene, spirit gas, or burning fluid, when used in stores or warehouses as a light, subjects the goods therein to an additional charge of ten cents per one hundred dollars, and permis- sion for such use must be indorsed in writing on the policy." On the authority of Mead v. The Northwestern Insurance Company, supra, it was held, that using camphene for a light without permission being indorsed on the policy, and an additional premium being paid, avoided the po- licy. '*The clause under consideration," said Denio, J., " declares that the use of camphene as a light subjects the insured to a certain extra premium, and that the indorsement of the pay- ment of the premium must be made on the policy. But it does not say, except by implication, that camphene may not be used without such pay- ment or without an indorsement ; but the impli- cation is nearly as strong as though the language had been express and positive. I do not think we are at liberty to read it as though the use of the article was permitted." Insurance on goods Jcept in violation of law. 9. Upon the question whether goods kept in violation of law, as spirituous liquors illegally ' 13 New York, 289. HAZAEDOTJS AETICLES AND TRADES, 355 kept for sale, may be the subject of a valid in- surance, has been decided by the Supreme Court of Michigan, and by the Supreme Court of Mas- sachusetts, under the respective statutes of those States ; the former holding, and we think with the stronger reason, that they may, and the latter that they may not. In Kelly v.- Home and Croton Insurance Company,^ Chapman, J., thus stated the- grounds of the one decision: " The same principle upon which it is held that' goods which are carried for an illegal purpose, or in an illegal manner, cannot be the subject of a valid insurance against the perils of the sea, ap- plies with at least equal force to an insurance against fire upon goods which are so unlawfully kept in a store that the owner is liable to fine and imprisonment, the store made a nuisance, and the goods subject to seizure and forfeiture. In the present case the insured was the guilty party ; and his direct purpose in taking the poli- cies was that he might continue his offence with the greater safety. His contract was in contra- vention of law, and void as to him, because he entered into it in order to protect himself in his illegal acts." In i^Tiagara Fire Insurance Company v. De ' 97 Massachusetts, 288. 356 FIRE INSURANCE. Graff/ Campbell, J., thus stated the grounds of the opposite decision : " It was claimed on behalf of the plaintiffs in error, that if these liquors can be allowed to be included in a policy, the policy will be to all intents and purposes insuring an illegal traffic ; and several cases were cited in- volving marine policies on unlawful voyages, and lottery insurances, which have been held void on that ground. These cases are not at all parallel, because they rest upon the fact, that in each instance it is made a necessary condition of the policy that the illegal act shall be done. The ship being insured for a certain voyage, that voyage is the only one upon which the insurance would apply, and the underwriter becomes thus directly a party to an illegal act. So insuring a lottery ticket requires the lottery to be drawn in order to attach the insurance to the risk. If this policy were in express terms a policy insuring the party selling liquors against loss by fine or forfeiture, it would be quite analogous. But this insurance attaches bnly to property, and the risks insured against are not the consequences of illegal acts, but of accident. Our statute does not in any way destroy or affect the right of pro- ' 13 Mich. 134 ; Jones v. Fire- man's Fund Ins. Co., 51 N. T. 318. HAZARDOUS ARTICLES AND TRADES. 357 perty in spirituous liquors, or prevent title being ti-ansmitted, but renders sales unprofitable by preventing the vendor from availing himself of the ordinary advantages of a sale, and also affixes certain penalties. If the owner sees fit to retain his property without selling it, or to transmit it into another State or country, he can do so. By insuring his property, the insurance company have no concern with the use he may make of it, and as it is susceptible of lawful uses, no one can be held to contract concerning it in an illegal manner, unless the contract itself is for a directly illegal purpose." Stipulation as to illegal articles. 10. Although the written part of a policy pre- vails over that which is printed, where they are repugnant, yet the written provision in a policy insuring a stock of fireworks upon the premises, is not repugnant to the printed provision which declares that the policy shall be null and void whenever any article shall be kept on the pre- mises in quantities greater than the law allows, or in a manner different from that prescribed by law, unless said use or keeping is specially pro- vided for in the policy. Hence where a munici- pal ordinance forbids the keeping of a certain description of fireworks, a policy covering the 358 FIRE INSUEANOB. insured's stock of fii'eworks will not be held to embrace such fireworks as are forbidden to be kept by the municipal laws. The insurers having provided in the policy that it should be void if any articles subject to legal restriction should be kept, unless specially provided for, a violation of the policy in this regard vitiates it.^ Stipulation as to hazardous articles may he waived. 11. A condition prohibiting the use of certain articles may be waived, and it is held to be waived if the agent taking the insurance knew the prohibited articles were kept or to be kept on the premises.^ Where the policy is issued by the duly authorized agents of the underwriters (by. the president and secretary, the former being vested with the general supervision of the affairs of the company), and upon a full knowledge of all the facts material to the risk, the insurance cannot be resisted upon the ground that a by- law inhibits special risks, unless approved by ^ committee of their directors.* 11a. In Reynolds v. Commerce Fire Insurance ' Jones o. The Fireman's Fund v. Hall, 13 Mich. 302 ; Kathhone Ins. Co., 3 Daly (N. Y.), 307 ; v. City Fire Ins. Co., 31 Conn. S. C. , 51 N. T. 318 ; Niagara Fire 193. Ins, Co. n. De Graft; 13 Mich. 134. 3 Merchants' & Manufacturers' 2 l^eoria Mar. and Fire Ins. Co. Ins. Co. o. Curran, 45 Mo. 142. HAZAEDOUS ARTICLES AND TRADES. 359 Company/ the agent of the assured informed the insurer, at the time he applied for a renewal of the policy, that he thought that a change had occurred in the business carried on in the pre- mises, and referred him to another insurance company for information on the subject. Held, to be equally effective as a notice of the very change that had been made. When a person has sufficient information to lead him to a fact, he shall be deemed conversant with it. And as the language of the policy was ambiguous, and might apply to the one business or the other, the insuter's knowledge or ignorance of the fact stated in the notice was competent to determine what he meant by the language used. ' 47 N. T. 597. CHAPTEE XL MISREPEESEKTATION, AND CONCEALMENT. 1. What is misrepresentation. 8. Effect of concealment. 2. What is concealment. 9. Character of concealment 3. Effect of misrepresentation, that avoids a policy. 4. False answers and omissions. 10. Insurance on presumed 5. Distinction between marine knowledge of insurer. and fire insurance. 11. What facts must be dis- 6. Insurance on the faith of as- closed. sured's representations. 13. What facts need not be dis- 7. Insurance on the faith of ex- closed. amination by insurer. 13. Waiver of forfeiture.. Misrepresentation. 1. Misrepresentation, according to the law of insurance, is the statement of something, as fact, which is untrue, and which the assured knows to be untrue, and with the intent to deceive ; or which he states positively as true, not knowing it to be true, and which has a tendency to mis- lead; such fact in either case being material to the risk.^ Concealment. 2. Concealment is the designed and intentional withholding of , any fact, material to the risk, ' Locke v. North American Ins. Clark v. Ins. Co., 40 N. H. 333; Co., 13 Mass. 97; Houghton ii. Daniels «. Hudson River Fire Ins. Manuf. Ins. Co., 8 Met. 114; Co., 12 Cush. 416. MISEEPEE8ENTATION AND CONCEALMENT. 361 which the assured in honesty and good faith ought to communicate ; and any fact is material, the knowledge or ignorance of which would mate- rially influence an insurer in making the contract at all, or in estimating the degree and character of the risk, or in fixing the rate of insurance.^ IJffect of misrepresentation. 3. Any material misrepresentation, therefore, or any failure to comply with the conditions of the insurance on the part of the assured, will avoid the policy ; such as misrepresentation of the construction, nature, character, value, and situation of the premises or goods to be insured, or any other misrepresentation that induces the insurer to take a risk which he otherwise might have rejected, or to take it at a less premium.^ But opinions are not misrepresentations, how- ever erroneous they may prove to be, as the opinion of the assured that adjoining buildings would not endanger the assured's premises.' ' See foregoing authorities; also ^ Newcastle F. Ins. Co. «. Mac- Lexington Ins. Co. V. Paver, 16 Moran, 3 Dow R. 255 ; Duncan v. Ohio, 334 ; Protection Ins. Co. a. Sun Fire Ins. Co., 6 Wend. 488; Banner, 32 Ohio, 453 ; The Mer. Lindeman «. Desborough, 8 B. & and Man. Mut. Ins. Co. ■». The Cress. 586. Washington Mutual Ins. Co., 1 ' Dennison «. Mutual Ins. Co., Handy, 408 ; Girard Fire & Mar. 30 Me. 135. Ins. Co. V. Stephenson, 1 Wr. 393. 362 riEE iisrsuEAKCB. False answers and omissions. 4. It is observable in all eases that where there is a false answer to a direct inquiry as to a fact, the, courts with reference to mutual insurancie companies are inclined to hold the assured very strictly/ while with reference to omissions to state fully as to matters not the subject of par- ticular interrogatories, greater latitude has been allowed in permitting the party to show that the omissions or misstatements were not material to « the risk.^ • ' See BurrittB. Saratoga CouDty ries in respect to particular facts, Mutual Fire Ins. Co., 5 Hill, 188 ; deems all others to be immaterial 3 Comst. 122. to the risk to be taken, or that he * Bowditch Mut. F. Ins. Co. v. takes upon himself the knowledge, Winslow, 3 Gray, 415 ; Hardy v. or waives information of them. Union Mutual Fire Ins. Co., 4 Gates v. Madison Co. Mut. Ins. Allen, 217. to., 1 Seld. 469. See also Bur- in Gates B. Madison Co. Mut. ritt a. Saratoga Co. F. Ins. Co., 5 Ins. Co., 1 Seld. 469, it was said Hill, 193 ; Protection Ins. Co. v. that it is enough, if the applicant Harmer, 22 Ohio, 472 ; Boggs v. for insurance make a true and full American Ins. Co., 30 Mo. 63; answer to the questions put to Clark v. Manufacturers' Ins. Co., him by the insurer, in respect to 8 How. 235. the subject of insurance. He is The insurer who makes no in- not answerable for an omission to quiry respecting the subject of in- mention other facts, about which surance, cannot complain that the no inquiry is made, though they risk is greater than he anticipated, may turn out to be material for unless the insured is chargeable the insurer to know in taking the with some misrepresentation as ,to risk. He has a right to suppose the nature or extent of the risk, that the insurer in making inqui- Ibid. MISEEPEESENTATION AKD CONCEALMEjSrT. 363 Disiinction between marine and fire insurance. 5. In marine insurance the assured is bound, although no inquiry be made, to disclose every fact within his knowledge which is material to the risk. But this doctrine is not applicable in its full extent to policies against fire. A more liberal rule is applied in the construction of the latter, as there is more equality between the parties, the means of knowledge as to the sub- ject of insurance being more within the power of each.^ ' The Mer. & Man. Mut. Ins. sured in all cases to disclose all Co. ■». The Washington Mut. Ins. material facts within their knowl- Co., 1 Handy, 408 ; Burritt ®. Sa- edge." ratoga Mut. Fire Ins. Co., 5 Hill, Said Burnside, J., in Satter- 188 ; Gates v. Madison Co. Mut. thwait v. Mutual Beneficial Insur- Ins. Co., 1 Selden, 469. But see ance Association, 3 Harris, 393, Lindenau v. Desborough, 8 B. & " Mutual insurance associations C. 586. are of modern growth. They In the latter case, Bagley, J., were originally intended for the said: "I think that in all cases safety of the vicinity and county of insurance, whether on ships, in which they were located. In houses, or lives, the undetwriter some instances they have endea- should be informed of every ma- vored to grasp the State, and ex- terial circumstance within the tend their operations into every knowledge of the assured ; and country. For one, I will never that the proper question is, Whe- agree to extend to them the law as ther any particular circumstance it has been settled in cases of ma- was in fact material ? and not rine insurance. They shall have whether the party believed it to the law fairly administered to be so." them, in accordance with their Litfledale, 3 . " I am of the same charters." opinion. It is the duty of the as- 364 PIKE IKSUKAHrCE. Insurance on the faith of assured' s representations. ■ 6. "When a risk is taken on the faith of repre- sentations made by the insured, the law requires that his representations shall truly and fully ex- press his knowledge of the dangers to which the property is exposed, and if they do not, the in- surer is not liable.^ Yet where, in answer to an interrogatory whether a watch was kept upbn the premises during the night, it was said a "good watch" was kept ; " men usually at work ;" and where, too, a negative answer was given to the further interrogatory whether the building was left alone at any time after the watchman went off duty in the morning, till he returned to his charge in the evening, it was held (notwith- standing no watch was ever kept on the premises after twelve o'clock on Saturday night, or at all on Sunday, except the workmen sleeping there, who were instructed to and habitually did exa- mine the mill with reference to fire before going to bed ; and notwithstanding on the Sunday night when the fire occurred, no one was on the pre- mises) that " good watch" meant " suitable" or "proper watch," and that it was a question for the jury whether the watch kept was a good and ' Cumberland Valley Mut. Protection Co. v. Schell, 5 Casey, 31. MISREPRESENTATION" AND CONCEALMENT. 365 suitable one, and whether the risk was affected by the watch actually kept.^ Insurance on the faith of examinat'ion hy insurer. 7. When the insurer makes an insurance on his own knowledge of the risk, on the faith of an examination and description by his own agent, then the qiiestion as to representations does not arise; unless, indeed, there has been a withhold- ing of information under circumstances incom- patible with good faith, and that information is material in forming a judgment as to the risk.^ Hence, when the written survey was the act of the agent of a stock company, and he omitted to set down facts communicated by the assured be- cause he deemed them immaterial (and this may be shown by parol), the company was held to be liable.^ On the other hand, where the assured • Parkers. Bridgeport Ins. Co., akill, in similar departments, em- 10 Gray, 303 ; Crocker v. People's ploy in managing their own affairs Mut. Fire Ins. Co., 8 Cusli. 79. of like kind. Crocker «. People's See Malleable Iron Works*. Phoe- Mut. Fire Ins. Co., 8 Cush. 79. nix Ins. Co., 35 Conn. 465. * Cumberland Valley Mut. Pro- Where insurance was effected tection Co. v. Schell, 5 Casey, 31 i by the assured " |3000 on his Satterthwait «■. Mut. Benefic. Ins. machine-shop, a watchman kept Asso., 3 Harris, 393; Clark v. on the premises," etc., this was Manufacturers' Ins. Co., 8 How. held not to be a stipulation for a 335 ; Emery «. Piscataqua Fire & constant watch, but only for such M. Ins. Co., 53 M. 833. a watch as is common and usual, ' Howard Fire Ins. Co. v. Bru- such as men of ordinary care and ner, 11 Harris, 50. 366 PIRE INSURANCE. colludes with the agent in making a false repre- sentation, the insurer is not liable.^ Effect of concealment. 8. The representations made by the insured must not only be fair, but he must conceal or omit nothing which it is material for the under- writers to know. There are, however, many matters as to which either party may be inno- cently silent, namely, matters open tp hoth, to exercise their judgment upon. The insured need not mention what the underwriter already knows, or is bound to know, and he is bound to know everything that is open to his inquiry, and no- thing need be disclosed which he waives being informed of.** If he is content to insure my house without taking the trouble to inquire of what materials it is constructed, how it is situated in reference to other buildings, or to what uses it is applied, he has no ground of complaint that the hazard proves greater than he anticipated, unless I am chargeable with some misrepresentation concerning the nature or extent of the risk.^ To conceal is one thing; to be silent another. ' Smith B. Ins. Co., 13 Harris, » Burritt v. Saratoga Co. Mut. 320. p. Ins. Co., 5 Hill, 188. " Carter t). Boehm, 3 Burr. 1905. MISREPEESENTATIOK AKD CONCEALMENT. 367 Character of the concealment that avoids a policy. 9. Hence, It is only such facts and circum- stances as are particularly within his own knowl- edge, and which are not of a public and general nature, that the assured is under obligations to disclose. If these are material and are concealed, although the concealment was merely the result of accident, inadvertence, or mistake, it will avoid the policy. The question whether the facts concealed were or were not material, is a question for the jury.^ But where the constitu- tion and by-laws of an insurance company im- pose no duty upon the assured but to make his application, and the company reserve all subse- quent duties of survey and examination to them- selves and their oflBLcers, the policy is not ren- dered void or voidable because the insured did not state a fact material to the risk where no in- quiry was made of him on the subject. Of course it would be otherwise if a false statement had been made in answer to an inquiry.^ Insurance on presumed knowledge of insurer. 10. When representations are not asked nor given, and the insurer, on his presumed general ' Cumberland Valley Mut. Pro- ' Satterthwait v. Mut. Beneflc. tection Co. «. Mitchell, 12 Wr. Asso., 2 Harris, 393. 374. 368 FIRE INSTJEANCE. knowledge of what is material in the course of any particular trade, its usages at home and abroad, and of those transactions which are pub- lic and equally open to the knowledge of both parties, chooses to assume the risk, he must be deemed to do so at his peril. But extraordinary risks are not undertaken by the underwriter un- less the same are expressly brought -to his notice, and accepted and insured against at the time the policy is effected.^ What facts must he disclosed. 11. The insurer is supposed to take the risk on the hypothesis that nothing unusual exists en- hancing it ; one of the implied conditions being that at the time the insurance is effected the pro- perty is not already on fire or in probable danger of fire from the fact that fire is Sfaging at an adja- cent spot.^ So, too, the fact that the buildings of the insured had been on fire a number of times shortly before the insurance was effected was a, very material circumstance, which, if not dis- closed, would avoid the policy. Silence on such a subject would amount to concealment — would operate^as a fraud upon the insurer, and render ' Addison on Contracts, 541. » Bufe v. Turner, 6 Taunt. 338. MISREPRESENTATION AND CONCEALMENT. 369 the policy void.^ "Where, too, threats have been made to bui'n a building, and insurance is ob- tained without informing the insurer of such threats, and the jury are of opinion that the threats are material to the risk, the policy is avoided.^ But where the application makes inquiries as to incendiary attempts to burn the property, and the truthfulness of the answers is made a con- dition of the policy, it is not competent to sub- mit to a jury the question of materiality, and allow them to find that it is unimportant. A fact thus specifically inquired about, and gene- rally of such vital importance, is considered ma- terial as matter of law,^ ' Beebe v. Hartford Mutual Ins. stored, and that this fact should Co., 25 Conn. 51 ; .Curry v. Com. have been disclosed to the com- Ins. Co., 10 Pick. 535 ; New York pany when the application was Bowery Ins. Co. v. New York P. made. But it was held that while Ins. Co., 17 Wend. 359 ; 1 Marsh, the insured, if interrogated, must 471. answer truly, as to all matters s Curry n. Commonwealth Ins. connected with the hazard of the Co., 10 Pick. 585 ; Walden «. policy, he is not otherwise bound Louisiana Ins. Co., 13 La. 134. to disclose the fact of his being at . In Keith v. Globe Ins. Co., 53 variance with his neighbors, or 111. 518, it was contended that the whether he is popular or unpopu- assured was obnoxious to the lar in the community, people in the vicinity of the place ' The North Am. P. Ins. Co. v. where the insured property was Throop, 23 Mich. 146. 24 370 FIRE INSURANCE. What facts need not he disclosed. 12. So, too, evidence is inadmissible to prove that after the execution of the policy incendiary attempts were made to destroy the insured pre- mises, notwithstanding the by-laws provide that if there is any change of the circumstances dis- closed in the application increasing the risk, the policy shall be void, unless confirmed by the directors in writing. The object of insurance is protection against loss by fire — fires kindled by incendiaries included.' And in an insurance on a factory, if no repre- sentations were made or asked as to the use of lamps in the picker-room, although by their use the risk was enhanced, it would not be the duty of the insured to disclose the fact, unless the use of them in the particular manner was unusual and unaccustomed.^ It was rumored that an attempt had been made to set fire to a rope-walk, which was so contigu- ous to the house of the assured that the destruc- tion of the one would necessarily have involved the other in the same calamity. This rumor excited the alarm of the insured, and thereupon ' Clark V. Hamilton Mut. Ins. How. 235. See also Howard F. Co., 9 Gray, 148. Ins. Co. v. Bruner, 11 Harris, 50. ' Clark 0. Man. Ins. Co., 8 MISREPEESENTATIOSr AND CONCEALMENT. 371 he procured an insurance on his house, but did not communicate the circumstance that induced him to insure. It was held that he could not recover. Said Martin, J., " The underwriter has an undoubted right to be informed of every cir- cumstance, which, creating or increasing the risk against which insurance is sought, may induce him to decline the insurance, or demand a higher premium. It appears, from the defendant's own confession, that the attempt which had been made to set on fire a building which could not have been consumed without materially endan- gering his h6use, created in him an alarm, which prompted him to guard against the danger. It is true he evidently acted in good faith," but " his ignorance of his duty cannot protect him against his omission to give information of a material fact, which the defendants had a right to know, in order to establish the proper rate of insurance.'" Where premises are partly occupied by gam- Uers, and the insurer objects or expresses an un- willingness to insure property in the neighbor- hood of gambling establishments, it is a question for the jury whether the assured knew that the premises were so occupied, and whether the dan- ' Walden v. Louisiana Ins. Co., 12 La. 134. 372 PIBE INSURANCE. ger of fire was thereby greatly enhanced. In other words, whethdr he had knowledge of the fact, and whether its concealment or misrepre- sentation was material to the risk.^ There is no material concealment unless the fact concealed was such that if known to the insurer the risk would have been declined, or a higher rate of premium would have been charged. Hence a failure to disclose the fact, no inquiry being made, that portions of the building (a store) in which were the insured goods, were occupied as a dwelling-house, does not invalidate the insurance. The materiality or immateriality of the fact, as already observed, is always for the jury.^ And if it be material, a suppression or misrepresentation of it, whether arising from mistake, ignorance, or negligence, has the same effect as if such suppression or misrepresentation were wilful.^ A policy cannot be avoided for encumbrances, unless upon the applicant's false and fraudulent answers to interrogatories, and much less as to ' Lyona. Com. Ins. Co., 3 Ro- 1 Handy (Ohio), 408; Murgatroyd binson's R. 366. v. Crawford, 3 Dallas, 491. ' Boggs V. American Ins. Co., ^ Miller v. Western Farmers' 80 Mo. 63. See also Carter v. Mutual Ins. Co., 1 Hand. (Ohio) Boehm, 3 Burr. 1911 ; Merchants' 308. & Manufacturers' Mut. Ins. Co. , MISEBPEESEJiTTATIOlS" AND CONCEALMESTT. 373 • his assignee, who is not called upon to answer interrogatories.^ But when the applicant for in- surance, in answer to an interrogatory, states that there is no encumbrance, when in fact there is, this is a misrepresentation; and where the application is made part of the contract, and pro- vides that any concealment of the condition or character of the property will make the policy void, such answer is material, and a breadti of the warranty.^ On the other hand, where notice of en- cumbrances and other insurance is required, no- tice to the agent, who endorses on the policy that loss, if any, would be paid to the persons holding the encumbrances, is a compliance with the con- dition, and the failure of the agent to notify the company, and afford it an opportunity to cancel the policies, cannot be visited upon the insured.^ An intention on the part of the insured, and. actual preparations, to erect a new building near the one proposed to be insured, is not such a concealment as avoids the policy, in the absence of inquiry on the subject/ !N^or is the insured under obligations to disclose, in the absence of ' Cumberland Valley Mut. Pro- ' Ins. Co. of N. A. v. McDo- tection Co. b. Mitchell, 12 Wr. win, 50 111. 120. 374. * Gates v. Madison Co. Mutual 2 Gould V. York Co. Mut. Fire Ins. Co., 1 Seld. 469. Ins. Co., 47 Me. 403. 374 PIEE IN8TJEANCE. inquiry, that there was an arrangement between him as mortgagee and the mortgagor that he should keep the premises insured, and that the mortgagor should pay the premiums. If he prac- tises no fraud,, by way of misrepresentations or evasions in relation to such arrangement, the in- surer has no ground of complaint.^ A pending litigation respecting the subject of insurance, not voluntarily disclosed by the as- sured, does not avoid the risk. And the under- writers are not competent witnesses in such a case to prove that the fact concealed was mate- rial. It is not a question of science or skill with respect to which they might be experts.^ Where the insured states in his application that a neighboring building is a shop for a carpenter, not much used, it is not a material concealment that he omits to state that it is heated by stoves.^ And, if he substitutes a ' Kemochan «. The New York might have been his duty to com- Bowery Fire Ins. Co., 17 N. Y. municate it speciflcally. But what 438. is usual, what, in the language of 2 Hill V. Lafayette Ina. Co., 2 the court below, is customary in Mich. 476. such buildings, was communi- " Girard Fire & M. Ins. Co. ■». cated by the representation of the Stephenson, 1 Wr. 293. existence of the shop. In general "If there had been anything the use even of the building in- extraordinary in the manner of its sured, and how it is heated, need being used or heated, anything not be represented except in reply which increased the risk of Are, it to inquiries." — Strong, 3. MISEEPRESENTATION AND OONCEALMEIirT. 375 steam-engine for the stoves, it is a question for the jury whether such substitution enhances the risk. If it does, he cannot recover.' Waiver of forfeiture. 13. The forfeiture, by reason of misrepresenta- tion or concealment, may be waived by the in- surers ; as by receiving a new premium on a fire policy after the misrepresentation is known.^ ' Girard Fire & M. Insurance England F. & M. Ins. Co., 52 Co. V. Stephenson, 1 Wr. 293. Me. 336. 2 North Berwick Co. ■». New CHAPTER XII. INSURABLE INTEREST. 1. Insurable interest. 11. Payment of premiums by 2. What is included in the term mortgagor on mortgagee's policy, insurable interest. 12. Payment of mortgage debt 3. Particular persons who may before loss. insure. 13. General and special insur- 4. Insurable interest in rents ance by mortgagee. and profits. 14. Insurance by mortgagor. 5. Insurable interest of husband 15. When insurance by mort- in estate of the wife. gagor enures to mortgagee. 6. Insurance by executors and 16. Mortgagee insuring at ex- administrators, pense of mortgagor. 7. Insurance by railroad cor- 17. Loss payable to mortgagee, poration. 18. Transfer of policy to pur- 8. Insurance by a partner. chaser of the property. 9. Mortgagor and mortgagee 19. Transfer of policy to pur- may both insure. chaser under executory agree- 10. Insurance by mortgagee. ment. Insurable interest. 1. The insured must have some interest in the subject of insurance, otherwise the policy is nothing more than a wager or bet, and therefore void. If any person might insure, whether he has any interest or not, it would be a tempta- tion to burn houses to receive the benefit of the policy.^ In the absence, however, of any specific ' Reese ■». Mut. Benefit Life Ins. Dalzell, 4 Bro. P. C. 431 ; Sad- Co., 23 N. Y. 516; Lynch v. dler's Co. a. Budcock, 3 Atk. 557 ; INSURABLE INTEREST. 377 inquiry by the insurers, or express stipulation in the policy, no particular description of the-nature of the insurable intei'est is necessary.^ What is. included in the term insurable interest. 2. But an insurable interest does not rigor- ously mean that the assured must have an abso- lute right of property in the thing insured.^ If he has a special, limited interest, or if he would suffer any disadvantage by the destruction of the premises, or any reasonable expectation of profit would be thereby defeated, he may protect or in- demnify himself by insurance; and this whether he has or has not any title in, or lien upon, or possession of the property itself.^ In a word, if the party insured has any interest that would be injured in the event that the peril insured against should happen, the courts will maintain Howard v. The Albany Ins. Co., = De Forest ». The Fulton Fire 3 Denio, 301; And the interest Ins. Co., 1 Hall, 84. must be averred as existing at the " See Putnam «. Mercantile Ma- time of the loss, unless the claim rine Ins. Co., 5 Met. 886 ; Eastern was assigned to the plaintiff after Railroad Co. ■». Relief Fire Ins. the loss. Fowler v. The N. T. Co., 98 Mass. 420, 423 ; Coursin v. Indemnity Ins. Co., 26 N. Y. 432. Pa. Ins. Co., 10 Wr. 333 ; De For- ' King V. State Ins. Co., 7 Cush. est v. The Pulton Fire Ins. Co., 1 1, 13 ; Springfield Ins. Co. ■». Hall, 84. Springfield Ins. Co. ■». Brown, 43 N. Y. 389. AnU, p. Brown, 43 N. Y. 389. 305. 378 PIEE INSURANCE. his policy.^ Thus a mortgagee who assigns his mortgage, and at the same time endorses the mortgage notes, still retains an insurable interest in the mortgaged premises. The mortgage stand- ing as security for the payment of the mortgage notes, the liability of the mortgagee as endorser of those notes to the assignee of the mortgage, gives him an equitable, right and an insurable interest. And that interest is adequately de- scribed by calling him mortgagee when the pro- vision of the policy requires that a less interest than the entire, unconditional, and sole ownership of the property shall be so represented to the company and expressed in the policy.^ Particular persons who may insure. 3. A general owner, a reversioner, a mortgagee, a creditor having a lien, a consignee, factor, or agent having a lien on goods for advances, an insolvent who has acquired property after he has obtained his discharge, notwithstanding subse- quently the discharge is revoked,^ a mechanic having a lien on a building for labor and ma- ' See Insurance Co. ■». Chase, 5 2 Williams v. Roger Williams Wallace, 509, 513 ; Insurance Co. Ins. Co., 107 Mass. 377. v. WoodrufiF, 2 Dutch. (N. J.) 541. » Marks v. Hamilton, 7 Exch. See also Allen ®. Mut. Fire Ins. 222 ; Gordon v. P. and M. Ins. Co., Co., 2 Md. 111. 2 Pick. 249; 19 Id. 31. ESrSUEABLE INTEREST. 379 terials,^ a commission merchant entitled to com- missions on sales, or any other person, having possession under a contract that may afford him a profit or emolument, has an insurable interest, and each to the amount of his particular interest in, or profit which he might make from the pro- perty.^ ■ A mechanic has an insurable interest in work already done upon a house, payment of which, however, is to be made on com- pletion of the house. Franklin Ins. Co. ■». Coats, 14 Md. 285. 2 Siter r. Morrs, 1 Harris, 218 ; Robinson v. X. Y. Ins. Co., 2 Gaines, 357 ; Jackson & Co. v. ^tua Ins. Co., 16 B. Monroe, 243 ; Hewitt D. Franklin Ins. Co., 3 B. Monroe, 231 ; Seamans v. Loring, 1 Mason, 127 ; Russell v. Marine Ins. Co., 1 "Wash. C. C. R. 409 ; Putnam v. Mercantile Marine Ins. Co., 5 Met. 386; Franklin Fire Ins. Co. B. Coats, 14:Md. 285 ; Lu- cena v. Crawford, 3 Bos. & Pull. 75 ; Carter v. Humboldt Fire Ins. Co., 12 Iowa, 287 ; Longhurst o. Star Ins. Co., 19 Iowa, 364. In Siter D. Morrs, supra, the policy was on ^^merchandise generally, and without exception, their own, or held in trust, or on assignment, contained in the back building and shed adjoining." It was held that the term "merchandise gene- rally" included books and sta- tionary in packages. The policy covered goods, wares, and mer- chandise, as well as goods in trust or on commission. Hence the in- sured, a commission and forward- ing house, having received per railroad certain goods, in boxes and loose, said to be furniture, wearing apparel, and books, on account of Siter, were held en- titled to recover on their policy, and were liable, out of the sum so recovered, to Siter for the amount of his loss. At the time of the fire they held his goods on deposit, and subject to his order. In Longhurst o. The Star Ins. Co. the interest of the insured was described as the interest of a mort- gagee, whereas it was a mechanic's lien. The agent of the insurer, when his attention was called to the matter, told the insured that a mortgage and a mechanic's lien were the same thing in the law of 380 FIRE INSUEASrOE. A warehouseman, wharfinger, common carrier, or bailee of goods may insure the goods which come into their hands from time to time in the course of trade, and may keep up a floating policy for the protection of the goods of their customers deposited in their warehouse, or upon their wharf, or in their boats, barges, or wagons.^ A landlord, too, has an insurable interest on goods liable to a distress if rent is not paid.^ A sheriff, by a seizure or attachment, acquires such a special property in the goods as gives him an insurable interest in them,^ Should those persons having a qualified interest in property — a carrier or commission merchant, for example — insure for the full amount of the property, and after a loss receive such amount, they are bound, after satisfying their demand upon the property, to pay over the excess to the real owner/ And it is no defence for the insurer inBurance. Upon this the insured and Northwestern Railroad Co. «. accepted the policy. It was held Glyn, 1 Ellis & Ellis, 651 ; Crow- that the contract was reformable ley v. Cohen, 3 B. & Ad. 478. in equity so as to make it express ' Columbia Ins. Co. v. Cooper, the real intent of the parties. See 14 Wr. 331. also Drew v. Clarke, Cooke, 874 ; ' White v. Madison, 26 N. Y. Evants v. Strode's Adm'r, 11 Ohio, 117. 480. * See Miltenberger ». Beacom, ' Steele v. Franklin Fire Ins. 9 Barr, 198. Co., 5 Harris, 390 ; The London INSURABLE INTEREST. 381 that the insui'ed was not the absolute owner, or was liable to account to his principal.^ In a case where commission merchants obtained a policy upon goods " sold, but not delivered," it was held that the intention of the contract was to affix its indemnity to the property in the ownership of the vendee of the original owner named in the policy, and that the insurance was made and continued in the name of the original owner for the benefit of his undesignated vendee.^ ' De Forest v. The Fulton Fire on their own policy in their own Ins. Co., 1 Hall, 84. "A con- names, as a convenient mode of signee, as such, has no insurable indemnifying themselves against ' interest in goods consigned to such damage as they might suffer him for sale on commission, unless in not insuring in the names of it be to the extent of the commis- their principals. I think they sions or profits he expects to de- had the right to thus protect rive from such sales. This he themselves, and to this end they has a right to insure regardless of ought to be considered as interested any instructions from the con- to the full value of the ice. After signor. But if he accepts a con- being ordered to insure, the con- signment with instructions from signees might have considered his principals to insure for their themselves trustees for the con- beneflt, it becomes his duty to in- signers and insured in their own sure; and if he neglects to do so names for them. . . . In such case and a loss occurs, he is liable to the policy ought to enure to the them for the amount. The con- benefit of the principal. . . ." signees, in the case under con- Adams, J. Shaw v. Mina, Ins. sideration, instead of taking out a Co., 49 Md. 578. new policy in the names of their ' Waring v. The Indemnity F. principals, had the risk entered Ins. Co., 45 N. Y. 606. 382 PIEE INSURANCE. Insurable interest in rents and profits. 4. A policy on a house does not cover any part of the rent, which is distinct from the subject- matter of the insurance, and constitutes of itself an insurable interest. Hence rent, in the absence of an express stipulation, is not recoverable, as part of the insured's indemnity, during the re- building or repairing of a house, l^o rent having been stipulated for during that time, none can be exacted.^ !N^or can the assured recover for his loss occasioned by the interruption or destruction of his business carried on in the insured building, nor for any gains or profits which were morally certain to have enured to him if it had remained uninjured during the life of the policy.^ Profits, it is true, may be insured, but they must be insured as such, so that the underwriters may know with what subject they are dealing.^ But a bare possibility that a right to property may hereafter arise cannot be treated as an in- surable interest; in order to that there must be something at risk in which the insured is actually ' Baroness of Pontalba v. The Co., 1 Sandf. (N. T.) 551 ; 1 A. & Phoenix Assurance Co. of Lon- E. 621. don, 3 Eob. (La.) 131. ' Niblos. North American Fire ' NlbloD. North American Ins. Ins. Co., 1 Sandf. 551. IN8UEABLB INTEREST. 383 interested, and for which, in case of loss, he can claim indemnity.^ In&iiralile interest of the Jiushand in the estate of the wife. 5. A tenant by the curtesy has in general an insurable interest, and a right to effect insurance in his own name.^ When, too, the husband erects a house upon land in which the wife has an estate for years, he has an insurable interest in such house.^ "When he has effected an insurance on ' Macarty v. Com. Ins. Co., 17 built by him, and he had absolute La. 365. dominion over it ; he might re- * Franklin Ins. Co. v. Drake, 2 move it when and where he B. Monroe, 47; Clark ». Firemen's pleased, without being account- Ins. Co., 18 La. 431 ; Harris v. able therefor to any one. He Tork Mutual Ins. Co., 14 Wr. 341. might elect, therefore, to treat it ' Abbott V. Hampden Mut. Ins. as personal property, and to repre- Co., 30 Me. 414. In Curry v. Com- sent it as such. But if the house monwealth Ins. Co., 10 Pick. 535, was not a chattel, still, we think, the assured represented the house, it was the plaintifl''s property. He the subject of insurance, as his had a freehold estate in the land, property, whereas it was con- and the exclusive right of occupa- tended that he had no property in tion . . . The plaintiff had an in- it, except in right of his wife, and defeasible title to the land, which in common with her sister. "It no one could defeat or disturb is not denied," said Wilde, J., during his life ; and he might re- "that if the house was a chattel, move and sell the house at any it was the plaintifTs property, time. Holding the property by And it was a chattel if it be true such a title, he might well repre- that the plaintiff had no property sent himself as the lawful owner, in the land. The house Was partly And, moreover, if the representa- 384 riEE INSURANCE, houses in their joint possession, but which be- long to her, the law will presume her ratification of his act, if not her precedent authority to per- form it, and will support the insurance for her benefit.'" And a husband, as we have elsewhere seen,^ has an insurable interest in goods settled to his wife's separate use, they residing together and sharing in the use of the property. An insolvent, too, retains an insurable interest in goods concealed from his creditors.^ Where the insured, as stated in a previous chapter,* has a life estate, in right of his wife, with a right to the pernancy of the product and profits of the land during the coverture, and a contingent curtesy right in the event of his surviving his wife, he has an insurable interest. And in the case of a stock company, he may insure such interest as Ms property; and his omission to state the nature and extent of his interest, where no inquiry is made, will not avoid the policy. But in the case of a mutual insurance company having a lien on the property insured, his representation that the property is Ms would tion were defective or inacQurate, * Ante, p. 830, note. it does not appear to be so sub- ' Goulstone o. The Royal Ins. stantially. Co., 1 Foster .& Finlason's N. P. ' Woodward, J., in Harris v. Cases, 376. York Mut. Ins. Co., supra. « Ante, p. 331. INSUEABLB INTEREST. 385 be a misrepresentation or concealment of the true nature and extent of his interest, and, upon a jury finding such misrepresentation or conceal- ment material, the policy would be avoided,^ Insurance Tyy executors and administrators. 6. Executors and administrators have an in- surable interest in the personal chattels of the deceased whom they represent ; and creditors, too, may effect an insurance on buildings standing ' Mut. Ins. Co. in Bait. Co. s. not render her absolute estate con- Deale, 18 Md. 26. tingent ; and that if it were other- In Com. Ins. Co. n. Spankneble, wise the company was estopped, 53 HI. 53, a provision of the policy because their agent knew the fact was, that if the interest of the as- of the marriage when he filled up sured was not an absolute owner- the policy, and if it were import- ship, it should be so stated in ant or deemed important, he writing, with the true title of the should have stated it. assured. The assured was a mar- A person in possession of pro- ried woman, and it was urged perty, claiming and occupying it that her estate in the premises was as owner, is prima facie presumed not absolute, because by the mar- to be seized in fee ; and in the ab- riage and the birth of a child the sence of proof of an outstanding husband had become entitled at title in others, or any encumbrance her death, to hold as a tenant by upon it, this p«nja/ascje presump- the curtesy, and entitled to a joint tion of a seizin in fee, growing occupancy. Held, that her title out of the occupation by the in- or estate was not contingent but sured as owner, is sufficient to in fee simple absolute ; that al- show an insurable interest therein, though the husband had the right Franklin F. Ins. Co. «. Chicago during marriage to occupy the Ice Co., 36 Md. 103. property jointly with her, this did 25 386 PIEB ITS-SURANCE. upon the land of their deceased debtor. Execu- tors, merely as such, have no interest in the real estate owned by the testator at the time of his decease ; but where they are made by will trustees of the real estate, with a power to dispose of it, they may insure it. Executors and administra- tors, too, of an insolvent estate may insure ; the right they possess to resort to the necessary proceedings in order to obtain a sale of the real estate for the payment of the decedent's debts gives them an insurable interest.' If the per- sonal estate, however, of the intestate is adequate to the payment of his debts, the executors and administrators have, in such case, no interest in the real estate to support a contract of insur- ance." A policy of insurance being a mere per- sonal contract, in no way attached to or running with the real property insured, it does not pass with it, either to the grantee or the heir. The executor or administrator is the only one who can take it and enforce it.^ But where the in- surance was procured by the intestate for his own benefit, and the loss occurred after his ' Herkimer v. Rice, 37 N. Y. » Wyman v. Prosser, 36 Barb. 163 ; Phelps v. Gebbhard Fire 368 ; Lynch n. Dalzell, 8 Br. P. C. Ins. Co., 9 Bosw. 404. 503 ; Mildmay v. Folgham, 3 Ve- ' Clinton v. The Hope Ins.. Co., sey, Jr., 471. 45 N. T. 454. INSURABLE INTEREST. 387 death, it was held that the interest in the in- surance followed the subject insured, and passed to the heirs.^ But although the insurance money is to be treated as proceeds of real es- tate, it is nevertheless subject, as is the real estate itself under our laws, to the payment of the debts of the ancestor. A court having control of such funds should not allow them to pass into the hands of irresponsible and infant heirs, leaving the creditors of the deceased to pursue them by the dilatory remedy of a new and distinct proceeding. Having possession of the fund, it is proper to retain it for the purposes of a just administration among the parties en- titled to it ; and the widow is entitled to her dower interest prior to the rights of creditors.^ "Where the policy runs to the assured, his execu- tors or administrators, the right of action be- comes vested in his personal representatives for the protection of the interest of his heirs. Such ' Wymano. Wyman, 26 N. Y. executrix. As executrix the de- 253. fondant renewed the policy. Held, In Parry «. Ashley, 3 Simons, that ^rma/aae she renewed it as oh. 97, the testator had created a executrix, and that the proceeds general charge, by way of annu- of the policy were affected with a ity, in favor of his widow, upon trust for the benefit of the parties all his real and personal property, interested in the real estate, subject to which it was given to * Wyman v. Wyman, 26 N. Y. the defendant, who was also made 353. 388 I'IBE INSURANCE. representatives become trustees for those having the beneficial interest in the premises, to wit, the widow and the heirs.^ When the land vests in the heirs by the death of the ancestor, they do not owe any duty to the creditors to insure the buildings against acci- dental injury from the elements ; but if they do procure insurance, in case of loss, the promised indemnity belongs to them, and not to the cre- ditors, who are strangers to the contract,^ When an executor is charged by the will of the testator with the duty of providing comfort- able house-room for M., and a house is procured for that purpose, the executor may procure in- surance thereon. Such insurance is for the benefit of the estate, which is directly interested in the preservation of the house insured, for its destruc- tion would subject the estate to the expense of providing for M. elsewhere.^ Insurance was efifected on the "estate of Daniel Ross ;" a loss occurring, it was contended by the insurers that they were not liable, inasmuch as the term " estate of Daniel Ross" meant in law "Mary Ross, administratrix of Daniel Ross;" ' Wyman v. Wyman, 26 N. Y. s Herkimer v. Rice, 37 N, Y. 253; Wy maim. Prosser, 36 Barb. 163. 308. ' Colburn v. Lansing, 46 Barb. 37. IK8UEABLE INTEREST. 389 and that she, as such administratrix, had no in- surable interest in the real estate. Parol evi- dence was held to be admissible to show that the insurance was effected for the benefit of the widow, heirs-at-law, and next of kin of the de- ceased. " The expression ' estate of Ddniel Ross' is indefinite," said Boardman, J., speaking for the court, "uncertain, and without any specific legal significance. But its significance may be shown by parol, or by any circumstances sur- rounding the case and tending to elucidate the purpose of the parties.'" 6a. Where the party was insured under the designation of "Mrs. E. "W. Boyle, Executrix," it was held that extrinsic evidence was admissible to show the extent or character of the interest insured. Without such evidence it could not be known of whose estate Mrs. Boyle was execu- trix, nor whether her interest in the real estate of the testator, as executrix, was only such as creditors had in its preservation, or an interest of a definite kind created by the will of the testa- tor.^ From the extrinsic evidence it was obvious ■ Clinton ». Hope Ins. Co., 51 insured property were covered by Barb. 647 ; 8. C, 45 N. Y. 454. the policy. The latter court was of opinion ^ The Globe Ins. Co. «. Boyle, that the interests of both the ad- 21 Ohio 8t. Eep. 119. ministratrix and the heirs in the 390 riEE INSUBANCB. that the parties used the term (executrix) and understood its meaning to be equivalent to the phrase, " for the benefit of the parties entitled to the estate of Stephen S. Boyle." The insurance was on real estate, and the terms used showed that the object of the policy was to insure the executrix in a capacity as trustee, but without expressing the extent or character of the trust, or its beneficiaries.^ A policy insuring against loss " the heirs of A. Kirk, deceased," is valid in favor of the tes- tamentary trustee of the real estate of the de- ceased, in whom the title to the premises insured was vested at the time of the insurance. Al- though not specially named, he is entitled to the benefit of the policy, in trust, for the benefici- aries under the will.^ Insurance hy railroad corporations. 7. The nature of the interest of a railroad corporation in property of which it is made by statute an insurer against loss by fire communi- cated from its engines is analogous to that of a common carrier, who is an insurer by the com- mon law, or to that of an underwriter, who is an ' The Globe Ins. Co. v. Boyle, 2 Savages. Howard Ins. Co., 53 21 Ohio St. Rep. 119. N. T.. 602. INSURABLE INTEREST. 391 insurer by his own contract. In either case the insurer against certain risks may in turn protect himself by insuring the property for the loss of which he may be held responsible.^ Insurance iy a partner. 8. Each partner has an insurable interest in the entire stock, and on receipt of a loss on insurance must account therefor to the partnership.^ It has been held, however, that if the individual partner insure in his own name only, the policy will cover his undivided interest, and no more, unless it should appear that the insurance was really intended for the benefit of the firm, that the pre- mium was paid from the partnership fund, and ' Eastern Railroad Co. v. Relief does not import into the contract Fire Insurance Co., 98 Mass. 430, any condition not set forth on the 434. In this case it was held that face of the policy, the statute requiring all insurance By the statute of Massachusetts, companies chartered or doing busi- as well as of several other States, ness in Massachusetts to state in any railroad corporation is de- the body of the policies they issue clared to have an insurable inter- the conditions of the insurance is est in the property along its route not complied with by a statement for which it is held responsible, that the " policy is made and ac- ^ Manhattan Ins. Co. «. Web- cepted in reference to the terms ster, 9 P. F. Smith, 327; Graves v. and conditions herein contained TheBostonM. Ins. Co., SCranch, and hereto aimexed, which are 419 ; Page v. Fry, 3 B. & P. 200 ; hereby declared to be a part of Murray v. The Columbian Ins. this contract." Such statement Co., 11 Johns. 303. 392 FIRE INSURANCE. that the transaction was subsequently ratified by the other partners or part owners.^ ' Peoria M. and F. Ins. Co., 13 Mich. 203; Ins. Co. v. Chase, 5 Wallace, S09 ; see ante, pp. 307, 309. In Manhattan Ins. Co. v. Webster, supra, the policy was in the name of one partner, whereas the property belonged to the firm. The insurance agent was informed as to the ownership of the pro- perty, and the insurance was re- quested to be effected on such ownership. But the agent said it was not necessary to put the names of both partners in the po- licy. The policy was accordingly made out in the name of the indi- vidual partner, but the premium was proportionate to the interest of both, and was paid out of the partnership funds. It was held that the whole interest might be recovered in a suit in the name of the partner to whom the policy had been issued. Shdrswood, J., " It is contended that the evidence contained in the bill of exceptions admitted by the court and submitted to the jury tended to contradict, vary, or alter the policy of insurance, which was the written contract between the parties, without evidence of fraud, accident, or mistake. But was this so ? Did not the evidence, if believed, clearly show a mistake by the agent of the insurance com- pany in drawing up the policy ? If so, then beyond a question it was admissible on all the authori- ties in this State, from Hurst's Lessee v. Kirkbride, in 1773, cited in 1 Yates, 139, 1 Binn. 616, down to Fisher v. Deibert's- Adm'rs, 4 P. F. Smith, 460, in 1867. Indeed, it results of necessity from the fact that equity always was part of the law of Pennsylvania. During the larger part of our juridical history we had no separate court which could by an appropriate decree order an instrument which had been drawn by mistake to be re- formed so as to express truly the real understanding and intention of the parties. There was no other mode of reaching a result so essential to justice, except by the admission of parol evidence, though it might contradict, alter, or vary the legal effect of the deed or contract. . . . The only ques- tion as to which the authorities do not seem to be perfectly in accord is as to whether the names of all the partners must be inserted in the policy, or it must expressly INSURABLE INTEREST. 393 Where A. and B. unite in a written applica- tion for insurance upon a building and the stock insure the entire interest of the In Davis «. Boardman, 13 Mass. partnership. 1 Phillips on Ins. 80, a policy was made to the plain- 160-1; 2 Duer on Ins. 74 tiff "or his agent," the vessel Assuming it to have been neces- being in fact owned by the plain- sary that the names of both the tiff and one Richardson, and the partners should have been inserted insurance being in fact for the in the policy, it is difficult to per- benefit of both, the plaintiff was ceive how the evidence of a mis- permitted to recover the whole take in drawing the instrument sum for the use of himself and could have been more distinct and Richardson, unequivocal than that here offered Keith v. Globe Ins. Co., 53 111. to be given. [The partner stated 518. In this case one of the part- to the insurance agent that the ners applied for insurance in the property was owned jointly, and name of the firm, and seeing the he wanted to insure the interest entryinthe book inhis own name, of both owners. The agent said asked whether it would not make the joint interest could as well be a difference if it was not in the insured in the name of one as of name of the firm, stating at the both.] The testimony adduced same time that the property be- fully sustained the offer, so that a longed to the firm. The agfent chancellor would have considered said he thought not, but would it amply sufficient on which to make it right. Meld, that there found a decree for the reformation was a mistake in executing the of the contract." But see Peoria policy, and that the policy should M. and F. Ins. Co., supra. be reformed so as to conform to Where the policy, at the time it the intention at the time the in - issued, covered the interest of one surance was effected, namely, to partner only, it is not extended to cover the interest of the firm, the remaining interest by such In The Atlantic Ins. Co. b. partner subsequently becoming Wright, 32 111. 462, it was held the owner of the whole. Peoria that if an agent of an insurance Marine and Fire Ins. Co. v. Hall, company is informed of all the 13 Mich. 303. facts connected with the interest 394 riEE INSUEANCE. therein, A. being the sole owner of the building, which is exclusively occupied by B., who is sole owner of the stock, and where the agent of the insurer, knowing the precise interests of the ap- plicants in the property, draws up their applica- tion, and, at his own suggestion, fills up a policy which purports to insure the applicants as the joint owners of the building and stock, the in- surance is not void in consequence of the want of interest of one of the insured in the real estate and of the other in the personal estate, notwith- standing the charter of the insurers, to which the contract was subject, provides that "no insurance on any property -shall be valid to the insured un- less he has a good and perfect and unencumbered title thereto at the time of efiecting such insur- ance, and unless the true title of the assured to the same, and the encumbrances, if any, be fully disclosed and expressed in the proposals for insurance, and be also specified in the policy.'" of the assured in the property de- ' Peck «. The New London Mu- scribed in the policy, and does not tual Ins. Co., 33 Conn. 575. " No require a statement of the same, doubt," said Hinman, J., in de- the cqmpany will be bound by his livering the opinion of the court, acts and cannot avoid the policy " from the nature of the contract, because the true interest was not to indemnify the plaintiffs against stated, but will be estopped by the loss, they must both have an in- acts of their agents. terest in the subject-matter of the ISrSUEABLB INTEREST. 395 Where a building is purchased out of partner- ship funds, and removed on to the land belonging to one of the partners, the other partner has an insurable interest in such building, and will be entitled to recover one-half of its insurable value.^ A surviving partner may maintain an action on a policy issued to the firm on a house owned by them as " tenants in common."^ insurance. Besides, a want of owned by -him severally ; and as interest would render the policy a he had a right to recoTer, in his mere wager. We, however, know own name, for his own several of no rule that requires that the loss, they therefore became jointly interest of a party insured should interested in the whole loss ; and be in his own right. He may in- for the pyrpose of showing this sure as trustee for another. We joint interest of the plaintiffs in believe it is the common practice the whole property, and to rebut of commission merchants to in- any presumption that it 'was a sure in their own names the goods wagering policy, parol evidence of their various employers, and to is admissible to show what took cover the whole in a single policy ; place at the time the policy issued, and in such cases it is not neces- between the agent of the insurer sary even to name the persons and the insured." who are interested in the policy. Under the circumstances of this Now, the plaintiffs, in fact, own- case, the insurers were estopped ing the property severally, but to deny the joint title of the in- both together taking a joint in- sured, and it was so ruled by the surance of the whole, each one court. by this act became, after the loss, ' Converse v. Citizens' Mut. Ins. a trustee for the other, with a Co., 10 Gush. 37. right to recover, as such trustee, ^ Oakmau v. Dorchester Mutual the value of the property not Fire Ins. Co.-, 98 Mass. 57. 396 FIRE INSURANCE. Mortgagor and mortgagee may both insure. 9. Both the mortgagor and mortgagee may insure the same property. If it is destroyed, each may recover to the extent of his interest ; the mortgagee to the amount of his debt, and the mortgagor to the value of the property. But neither can claim the benefit of a policy under- written for the other, on the mortgaged property, in case of a loss by fire. This is not the nature or character of the contract of insurance. It is, as we have before seen, a mere personal indemnity against loss to the person with whom it is made.' Hence a mortgagee may insure his interest in the property without regard to the mortgagor. And, in case of loss, he may recover the amount, without any liability to account to the mortgagor therefor. So different mortgagees of the same property have independent interests, which each may insure for his own benefit to the full amount." Where the policy insuring the interest of the mortgagee contains a provision against other in- ' Lucena v. Crawford, 5 Bos. & Co. v. Woodbury, 45 Me. 447 ; Pull. 294 ; Traders' Ins. Co. v. Ro- Nicholas ». Baxter, 5 R. I. 491 ; berts, 9 Wend. 404; McDonald v. Wash. F. Ins. Co. v. Kelley, 32 Admr. of Black, 20 Ohio, 185 ; Co- Md. 421. lumbia Ins. Co. o. Lawrence, 10 ' Fox v. Phoenix Fire Ins. Co., Peters, 512 ; Wilson v. Hill, 3 Met. 52 Me. 333. 68 ; Concord Union Mut. F. Ins. DfSUEABLE IISTTEEEST. 397 suranee without notice, and also provides, in case of other insurance on the same property, for an apportionment of any loss, these provisions refer to other insurance by the same person, or to other insurance of his interest. Their object is to guard against double insurance, which is an insurance of the same interest. Hence, where a mortgagee insures his interest, and a subsequent mortgagee insures his, the first mortgagee, in case of loss, is r»ot liable to be apportioned with such subsequent mortgagee, but may recover the whole amount insured, provide^ it is less than the loss or dam- age to the property,^ In equity, a conveyance of property, by way of security for a debt, is treated as a mortgage, whatever form the parties may have adopted to . effect that object.^ Hence a conditional sale, with a right of re-purchase, the only considera- tion being a debt due from the grantors to the grantees, operates only as a mortgage between the parties. The debt is not extinguished, and the object of the parties is merely to give and take security for it. The grantors consequently have the same insurable interest as before; for the property standing as security only for their ' Fox «. Phcenix Ins. Co., 52 Safety Ins. Co. v. Howe, 2 Comst. Me. 333. S^e also iEtna Ins. Co. 235. Ante, pp. 47, 56. V. Tyler, 12 Wend. 507 ; Mutual ^ Taintor v. Keys, 43 111. 332. 398 PIEE INSURANCE. debt, the loss to them by its destruction would be the same as if no such mortgage interest had been created.^ Insurance hy mortgagee. 10. A mortgagee in possession for breach of condition cannot effect insurance upon the pre- mises at the expense of the mortgagor, unless he is entitled to do so by special agreement.^ But if the insurance is effected at the request of the mortgagor, the premiums thus paid by the mort- gagee are a charge upon the premises in addition to the original debt.^ And where the mortgagor is bound by contract to keep the estate insured, and fails to do so, the mortgagiee is entitled to get it insured at the expense of the mortgagor, and charge him with the premiums. If in such a case the mortgagee obtains a policy " for whom it may concern," and payable to the mortgagee, it does not affect his right to charge the mortgagor with the premiums ; and in case of loss, the ' Holbrook v. Amer. Ins. Co., 1 ^ Sanders a. Winskip, 5 Pick. Curtis, 193 ; Russell «. Southard, 260 ; Dobson o. Laud, 8 Hare 13 How. 139; Swift v. Vermont (Eng. Ch.), 216 ; Whites. Brown, Mut. F. Ins. Co., 20 Vt. 546 ; Laza- 2 Cush. 416 ; Fame v. Wjnans, 1 rus «. Com. Ins. Co., 13 Pick. 81 ; Hopkins' Ch. (N. Y.) 283. Gilbert ». North Am. F. Ins. Co., ' Mix v. Hotchkiss, 14 Conn. 23 Wend. 43 ; Ins. Co. v. Wood- . 32 ; Dobson v. Laud, 4 De 6ex ruff, 3 Dutch. 541. and Smale, 575. rsrSURABLE EN"TEKEST. 399 mortgagee must account for the insurance money towards the,payment of his mortgage debt.^ As between the mortgagor and the mortgagee, the latter has the legal estate in the mortgaged premises ; but so far as the rights of the mort- gagor with third persons are concerned, the estate remains in the mortgagor until the mortgagee asserts his right by entry under his deed.^ Hence, where a mortgagee applies for insurance, and, in answer to interrogatories, represents that he owns the buildings the subject of insurance, and that the property is unencumbered, the policy issued thereupon is void for misrepresentation.^ He is insured as owner of the entire interest, when in fact he has only a defeasible interest. He could not charge the property with a lien, nor would it be the subject of attachment by his creditors.* Therefore, where the condition of the insurance requires that if the interest of the insured in the ' Fowler v. Palmer, 5 Gray, make a true representation of the 549. property on which he requests * Jenkins v. Quincy Mut. Fire insurance, and of his title and Ins. Co., 7 Gray, 370 ; Eaton v. interest therein, and also all en- Whiting, 3 Pick. 488. cumbrances, and the amount and » This in a case where the by- nature thereof, the policy shall be laws annexed to the policy, and void." constituting a part of it, contained * Jenkins v. Quincy Mut. Fire the following provision : "Unless las. Co., supra. the applicant for insurance shall 400 FIRE INSURANCE. property be any other than the entire, uncondi- tional, and sole ownership, it shall be so repre- sented and so expressed in the policy, the mort- gagee must truly express his interest in the contract. The mortgagee may insure generally or spe- cially — generally when he says nothing about his mortgage, and insures as the entire owner, and specially when the nature of his interest is spe- cified in a memorandum ; but in either case it is not the specific property that is insured, but its capacity to pay the mortgaged debt.^ And in case of loss, the insurer, having paid to the mort- gagee the amount of his debt, is subrogated to the rights of the mortgagee, and may recover back from the mortgagor the amount thus paid. For the payment of the insurance by the under- writers does not, in such a case, discharge the ' Smith B. Ins. Co., 5 Harris representations of his application (Pa.), 353 ; Holbrook ». Am. Ins. are true." When the mortgagee Co., 1 Curtis, C. C. R. 197 ; Lucena assigns the mortgage, and, at the V. Crawford, 2 Bos. & Pull. 325 ; same time, endorses the mortgage CarrutLers v. Sheddon, 6 Taunt, notes, for which the niortgage 17. In Norwich Fire Ins. Co. v. stands as security, he still retains Boomer, 53 111. 443, Walker, J., an equitable right and insurable in delivering, the opinion of the interest in the mortgaged pro- court, said: "All that he (the perty. And he may insure such mortgagee) was bound to dis- interest as a mortgagee's interest, close, unless interrogated, was, Williams «. Roger Williams Ins. that he had an insurable interest, Co., 117 Mass. 377. and this he did, and in that the INSURABLE INTEREST. 401 mortgagor from the debt, but only changes the creditor.^ ' Carpenter «. The Providence both to the insurance money and Washington Ins. Co., 16 Peters, to the mortgage debt ; that there 495 ; Insurance Co. ■». Woodruff, 3 is no subrogation in such a case, Dutch. (N. J.) 541; The ^tna either before or after payment, in Fire Ins. Co. v. Tyler, 16 Wend, favor of the company. But this 385. See also Kemochan v. The view is seemingly opposed to the New York Bowery Fire Ins. Co., whole current of authority, and 17 N. T. 428 ; Rex v. Ins. Com- to the fundamental axiom of in- panies, 2 Phila. Rep. 357. Oontra surance that it is purely a contract as to right of subrogation. King of indemnity. If a mortgagee, V. State Mutual Ins. Co., 7 Cush. who is already secured by his 1 ; Suffold Fire Ins. Co. v. Boy- mortgage, insures his interest as den, 9 Allen, 123. In Kings. The mortgagee, and, in case of fii-e. State Mut. Fire Ins. Co., 7 Cush. may recover the insurance, and 1 (see to same effect 9 Allen, 123), also the mortgage debt, then his the decision proceeded on the as- policy becomes a mere wager. It sumption that the plaintiff made was a bargain, not for indemnity, the insurance, which was of his but for a certain sum to be paid interest, in his own name and for in case of loss ultra his interest his own benefit, not describing in the premises. See Kemochan himself as mortgagee, and paid the v. The New York Bowery F. Ins. premium out ofhis own funds, and Co., 17 N. Y. 428; Honore v. that his interest, in fact, was that Lamar Fire Ins. Co., 51 Ills. 409 ; of a mortgagee. The company. Concord Mut. Ins. Co. v. Wood- as a eondition, insisted upon an bury,, 45 Me. 452. assignment of the mortgage, and In Honore®. Lamar F. Ins. Co., this being refused, declined to pay supra, Mr. Justice Lawrence said the loss. Judgment was rendered the doctrine of King v. The State against them. His Honor Chief M. F. Ins. Co. would sanction Justice Shaw, in delivering the wager policies, and furnish a opinion of the court, contended dangerous temptation to incen- that where the mortgagee himself diarism. Wash. F. Ins. Co. v. pays the premium, he has a right Kelley, 32 Md. 421. The Spring- 26 402 MEE INSURAITCE. It is well settled that the underwriters in equity are entitled to all the rights and remedies of the assured if they pay the amount of his. loss. This principle of equitable subrogation or substitution of the underwriters in the place of the assured is recognized by every writer on the subject of in- surance, and is constantly acted upon in courts of law as well as of equity.^ Hence, where a vendor, under a subsisting contract of sale, insures to protect his lien for unpaid purchase-monisy, and in case of loss recovers of the underwriters, the unpaid purchase-money may be collected in the name of such vendor for the benefit of the under- writers.^ Payment of premiums hy mortgagor on mortgagee's policy. 11. But where the mortgagor pays the pre- miums on the policy of the mortgagee, as we field F. and M. Ins. Co. ®. Allen, If the assured has any claim to 43 N. Y. 389. indemnity for his loss against a ' Hall «. Railroad Companies, third person who is primarily 13 Wallace, p. 367 ; Gales v. Hail- liable for the same, and he dis- man, 11 Penn. St. Rep. 515 ; Hart charges such third person from ». Western R. R. Co., 18 Met. 99 ; his liability, he at the same time Clark 1). Blything, 3 Bar. and discharges his claim against the Cross. 354. underwriters ^ro tojiio. .lEtnaF. 2 The ^tna Fire Ins. Co. ». Ins. Co. «. Tyler, supra. Tyler, 16 Wend. 385, and authori- ties cited in previous note. INSTJEABLE INTEREST. 403 shall presently see, he is entitled to have the insurance money applied upon the bond and mortgage. And in such a case there is no sub- rogation. For the mortgagor paying the pre- miums has the benefit of the insurance ; and the insurance money, so far as it goes, pays the bond and mortgage, and as they are extinguished j)ro tanto the insurers cannot derive any benefit from those securities. And the agreement that the mortgagee should keep the premises insured, and the mortgagor pay the premiums, may be shown by parol.^ And the result is the same — that is, the insurance is for the benefit of both parties— if the premiums are paid by the mortgagee, at the request and cost and for the benefit of the mortgagor as well as his own; and the premiums so paid are a charge upon the premises, in addi- tion to the original debt.*^ Payment of mortgage deht before loss. 12. If the mortgage debt is paid and the mortgage discharged before the loss by fire, the mortgagee cannot recover of the insurer; not merely because the debt is paid, but because the ' Kemochan v. The New York ' Mix o. Hotchkiss, 14 Conn. Bowery Fire Ins. Co., 17 N. Y. 33 ; Concord Union Mut. F. Ins. 438 ; Concord Union Miit. F. Ins. Co. v. Woodbury, 45 Me. 447. Co. V. Woodbury, 45 Me. 447. 404 FIRE INSUEANCE. mortgage is thereby redeemed, and revested in the mortgagor, and the proprietary interest of the assured in the property insured, in respect to which alone he had any insurable interest, is de- termined.^ The payment of his debt terminates his interest as much as the alienation of the property terminates the owner's interest.^ On the other hand, where the property is destroyed before payment of his debt, it is not competent for the insurers to show, in a suit by the mort- gagee on his policy of insurance, that, notwith- standing the loss, the mortgaged premises are still adequate as security for the mortgaged debt. They will not be permitted thus to defeat or diminish the recovery of the assured on his policy.^ Oeneral and special insurance on mortgagee. 13. "Where the mortgagee insures generally — that is, covers by insurance not only his own interest, but that of the mortgagor — he may re- cover the whole amount of the insurance, under a trust, as to the surplus, to hold it for the mort- • King 4). The State M. F. Ins. F. Ins. Co. of Brooklyn, 17 N. Y. Co., 7 Gush. 1. 391. 2 See Grosvenor v. The Atlantic ' Kernochan ». N. T. Bowery Fire Ins. Co., 17 N. Y. 438. INSURABLE INTEREST. 405 gagor.* Where the mortgagee insures as such — that is, covers only his own interest — he must, it seems, even without inquiry, accurately describe his interest. Hence, if he holds prior encum- brances on the same property, and he does not disclose them, he cannot recover. And the reason assigned is that the prior mortgages would lessen or destroy the security which the insurer would otherwise have derived from the assignment of the mortgaged debt.^ In other "words, when the ' Carruthers • v. Sheddon, 6 gaged debt, they were entitled to Taunt. 17 ; Ins. Co. v. Updegraff, require an assignment of the 9 Harris, 513. See also Fox v. mortgage. Phcenix Ins. Co., 52 Me. 333. ' Smith o. Columbia Ins. Co., 5 In Ins. Co. V. Updegraff, the Harris, 253. In this case no in- insurer was "to make good to the quiry was made with reference to assured all such loss or damage, the two prior encumbrances wliich not exceeding in amount the sum constituted the ground of defence insured, as shall happen by fire to the policy, and which were not to the property described." In disclosed. With reference to this Thorton v. Enterprise Ins. Co., failure to disclose the prior en- 21 P. F. Smith (Pa.) 234, the cumbrances, . Ins. Co., 25 N. of his interest, an assignment of H. 169, where a subsequent agree- it, with the assent of the insurer, ment, that the policy should cover does not place the assignee in a other property, was held good ; better situation than that occupied Sanders v. Hillsborough Ins. Co., by the assignor, unless the assent 44 N. H. 238 ; Sherman v. The of the insurer is given under cir- Nlagara Fire Ins. Co., 46 N. T. cumstances that would amount to 526. The rule is different when a waiver of the forfeiture. See the insured retains the insured Citizens' F. Ins. Co. ». Doll, 35 property, and merely assigns the Md. 98. policy. 414 riRE INSURANCE. and after, too, the power to convey to him was obtained from the court, but before a deed was executed and dehvered, the property was burnt, it was held that C. was in no sense the owner of the property destroyed. He had no equities, no insurable interest, nothing at risk, and conse- quently suffered no loss. The estate of the dece- dent, by the destruction of the property, acquired a right of action to recover the amount insured, up to the value of such property.^ After the destruction of the property, C. was unwilling to perform the conditions of his agreement by tak- ing what was left, and paying the price originally agreed upon. And thereupon a new contract was made, by which O. took what was left of the property, and an assignment of the rights of action on the policies of insurance, in lieu of the real estate and personal property described in the agreement. This was held to be not a perform- 'ance of the old, but the making and executing of a sxibstituted contract, and that the principle of subrogation was not applicable to the case, in the interest of the insurers." ' Clinton v. Hope Ins. Co., 51 2 Ibid. ; S. C, 45 N. Y. 454. Barb. 647 ; affirmed in Court of Appeals, 45 N. Y. 454. CHAPTEE XIIL INSURABLE INTEREST (continued). 1. Equity of redemption in per- 7. Insurable interest of vendor, sonal property. 8. Effect of verbal contract for 2. Insurance for the benefit of sale and purchase, ■whom it may concern. 9. Other interests. 3. Insurance for the benefit of 10. Insurance by trustees. another. 11. Effect of encumbrances on 4. Insurance by assignor of insurable interest. personal property. 13. Subsequent encumbrances. 5. Insurance by a lessee. 13. Whether bond to convey 6. Insurance by a vendee under insured premises an encum- - executory agreement. brance. Equity of redemption in personal property. 1. A mortgage of personal property conveys the ownership of the goods or merchandise which are the subject of it, conditionally to the mort- gagee.^ Where the condition is forfeited, the mortgagee acquires an absolute interest in the thing mortgaged, subject, nevertheless, to the mortgagor's equity of redemption. This equity of redemption constitutes an insurable interest.^ ' U. 8. 0. Hove, 3 Cranch, 73 ; Buffalo Steam Engine Works v. U.' S. V. Fisher, 2 Cranch, 358 ; The Sun Mut. Ins. Co., 17 N. Y. Conrad b. The Atlantic Ins. Co., 401 ; Rogers v. The Traders' Ins. 1 Peters, 886, 441. Co., 6 Paige Ch. R. 583 ; Gordon « Allen s. The Franklin F. Ins. v. Mass. F. and M. Ins. Co., Co., 9 How. (N. Y.) 501 ; The Pick. 249, 258. 416 FIRE INStlRANCE. And although the mortgagor dispose of the equity of redemption absolutely, yet, so long as he is personally liable for the payment of the mortgage debt, he retains an interest in the mortgaged property. That property is the pri- mary fund for the payment of such debt, and its loss would be a direct loss to the mortgagor, because of his personal liability for the payment of the debt/ - Insurance for the benefit of whom it may concern. 2. Where insurance is effected for the " benefit of whom it may concern," the intention of the party effecting such insurance, at the time of effecting it, ought to lead and govern the future use of it, and no one, by any subsequent act, can entitle himself to the benefit of it without show- ing that his interest was intended to be embraced by it when it was made.* " This rule," said Lewis, J., in Steele v. Insurance Company,' " has especial application to insurances made fjr account of whom it may concern , and where these terms are used in the policy, it is not suflScient for the party who claims the benefit of the insurance ' The Buffalo Steam Engine 200; Mayor of New York v. Ham- Works V. The Sun Mut. Ins. Co., ilton F. Ins. Co., 10 Bosw. 537; supra, Pratt, J. 1 Phillips, sec. 383, 389. ' Steele v. Ins. Co., 5 Harris, ' Supra. rsrSUEABLE INTEREST. 417 to show merely that he is the owner of, or has an insurable interest in, the goods. He must show that he caused the insurance to be effected for his benefit, or that it was intended, at the time, for his security. These terms in the policy will not, in general, dispense with this evidence. And where the paxty claiming the benefit cannot show that he caused or directed the insurance to be effected, it will not serve him to rest upon some supposed secret intention, not maniiested by a single word or act, at the time of the transaction, to mark its character and indicate the person or interest intended to be insured. That which is not manifested by evidence is to be treated as having no existence. The nature of the trans- action must be fixed at the time of insurance, and cannot be changed by subsequent consent of the insured, without the authority of the un- derwriters. If this were not the law, all the mischiefs arising from gambling policies might ensue."^ Where insurance was effected on a steamboat, for the benefit and account of whomsoever it might concern at the time of loss, the underwriters obviously contemplated that a change in the ownership of the boat might take place during ' See also Finney «. New Bed- ford Ins Co., 8 Met. 348; City Bank v. Adams, 45 Me. 455. 27 418 PIRE INSUEANCE. the continuance of the risk, and intended to in- sure whoever might be the owners from time to time, so that those who should be interested, as such owners, at the time when any loss should occur, should have the benefit of the insurance. Consequently the mortgagee of one of the part- owners, the mortgage having become forfeited by failure to perform the condition, was held en- titled to the mortgagor's portion of the insurance money to the extent of the debt secured by the mortgage.^ ' Rogers v. The Traders' Ins. In Miltenberger «. Beacom, 9 Co., supra. In Turner v. Bur- Barr, 198, the lessor on ground- rows, 8 Wend. 144, the policy was rent entered for arrears by virtue in blank, and it was the opinion of the covenants of his lease. As of the chancellor that the holders the destruction of the premises of the policy could fill it up with would involve not only the means the names of the persons intended of paying present arrears, but to be insured, or with the words future rents, he had an insurable wliQin it may concern, and that interest. If he insured only his extrinsic evidence may be given own interest, he alone would be of the persons so intended to be entitled to the insurance money in insured. But evidence that a case of a loss ; but if he intended policy thus executed in blank is his policy to cover the interest of deemed by insurance companies the lessee, and this could be shown and the commercial community by extrinsic evidence, he would equivalent to a policy /or account be bound to account to the lessee of whom it may concern, is inad- for the amount received, dednct- missible. Tou cannot prove what ing the premium, the law is by the opinions of com- mercial men. IlSrSUEABLB INTEREST. 419 Insurance for the 'benefit of another. 3. "Where one, without any previous authority, insures the property of another, intending, at the time of obtaining the insurance, to insure for the benefit of the latter, and the latter adopts his act, either before or after a loss has occurred, he will be entitled to recover the insurance. In other words, a person having no insurable interest, but insuring in his own name for the benefit of the owner of the property, gives to the latter the right to claim the benefit of the insurance.^ ' Turner v. Burrows, 8 Wend, there was at that time no such 144; Lucena «. Crawford, 1 Taunt, firm, the partnership having heen 325 ; Roath v. Thompson, 13 East, dissolved by the death of Frenclh, 274 ; Hagerdon s. Oliverson, 2 the only other partner. If, then, Maule & Sel. 485 ; Durand v. any one's property was legally Thouron, 1 Porter's Ala. R. 238 ; insured, it was the property of Batre o. Durand, Ibid. 251 ; Mil- J. E. P. Austin, which was only tenberger v. Beacom, 9 Barr. 198. an undivided moiety of the pre- In Work ®. Merchants' and Farm- mises insured. It does not appear, ers' Mut. Fire Ins. Co., 11 Cush. nor is it a legal presumption, that 271, Metealf, J., in delivering the those premises were partnership opinion of the court, said: "When property, or that J. E. P. Austin this poliey was made, the insured had, as surviving partner or other- premises were the property of J. wise, any lien ' on his deceased E. P. Austin and Mrs. Work, as partner's moiety, or any insurable tenants in common. But the pre- interest in it. There has been no mises were represented in the ap- assignment of the policy to Mrs. plication for insurance, and they Work ; and as French, her father, were insured as the property of J. had no interest in it, she cannot E. P. Austin & Company, though have any, as his heir As- 420 riEE INSUKASrCE. Insurance hy assignor of jpersonal property. 4. An assignment for benefit of creditors does not divest the insurable interest of the assignor. His title to the property is good against all the world, excepting the assignee, and he still re- tains, notwithstanding the assignment, an insur- able interest. "He wanted to make a provision for the payment of his debts," said the court in Lazarus v. Commonwealth Insurance Company.' "His property consisted in a great measure of ships and merchandise, exposed to marine perils. If they arrived in safety, they would be appro- priated for the general object ; if they should be lost, the loss would fall upon the plaintiff, unless , he secured himself by getting insurance against the perils to which they were exposed."^ ■Insiicrance hy a lessee. 5. A lessee has an insurable interest in the buildings covered by his lease, but this does not extend to their value, only to the value of his 8uming (without expressing an N. Y. 606 ; Helrkimer v. Rice, 27 opinion) that J. E. P. Austin's N. T. 163-181. moiety was legally insured, and ' See also GoiAo'a. v. Mass. F. that John Austin has acquired, by and M. Ins. Co. , 2 Picl£..249, 258 ; the assignment, a right to main- Loclse n. N. Amerfcaii Ins. Co., tain an action on the policy, yet 13 Mass. 61. he must sue alone." Waring ». » 19 Piclt. 81. The Indemnity F. Ins. Co., 45 INSURABLE INTEREST. 421 right to possess and occupy them for the unex- pired term ; in other words, he is not entitled to recover the value of the building, but only the value of his lease/ A lessee, in effecting insur- ance, may properly describe the premises as his, but, upon a loss occurring, his recovery will be restricted to the amount of his qualified interest.^ In ascertaining that interest, one mode would be to submit to the jury this inquiry : How much would a stranger, having no contracts or en- gagements pending, have given for the unex- pired lease when the fire occurred ?^ A lessee of land for a term of years, with the ' Laurent B. The Chatham Fire $200. The insurance was for $800. Ins. Co., t Hall, 41 ; Niblo «. N. " What sum," said the court, "it American Ins. Co., 1 Sandf. 551. would have produced on a sale of In Laurent b. The Chatham Fire it, cannot now be known ; but as Ins. Co., SMpra, the assured owned the fair value of it to himself, if the building entire. The landlord he had continued in the tenure of had no interest whatever in the the premises, or to the tenant who property insured. There was a might succeed him, or to the land- condition of renewal in the lease, lord, exceeded the amount of the or removal of the building. Fif- insurance, he has a just claim, teen days before the expiration upon that principle, to a full re- of the lease the building was de- covery." , Stroyed by fire, the lease not ^ Niblo v. North American Fire having been then renewed. The Ins. Co:, «Mpra; Fletcher «. Com. evidence showed that the build- Ins. Co., 18 Pick. 419. ing was worth $1000, as it stood ; ' Niblo v. North American Fire but if it were necessary to remove Ins. Co., supra. it, it would not be worth over 422 PIEE INSURANCE. privilege to remove the buildings to be erected by him upon the premises, at the expiration of the lease, may insure such buildings as owner, not- withstanding a condition of the policy that " if the interest in the property to be insured be a leasehold interest, or other interest not absolute, it must be so represented to the company, and expressed in the policy in writing, otherwise the insurance shall be void."^ " If this were a case of mutual insurance," said Lowrie, C J., " whereby the insured becomes a member of the company, and pledges his property to secure that of others, there would be some reason for holding it to mean that a house, insured as a house, is real estate ; and we suppose that the clause out of which this controversy arises was intended for such a case. But this was a common insurance, and we must presume that it was taken in the ordinary way, and justice does not require us to strain the de- fendants' language in their policy for their benefit. A house may be and often is personal property f and so is machinery in a mill f and so was the house insured here, and the insured was the absolute owner of it. The condition relied on does not require that he should give notice that 1 Hope Mutual Ins. Co. v. Bro- « 5 Pick. 487 ; 8 Id. 383 ; 1 HaU, laskey, 11 Casey, 283. 41 ; 3 Casey, 391. s 8 Harris, 308. INSURABLE INTEREST. 423 he was not the owner of the land on which it stood, and we do not think that justice requires us to force this meaning into it." Where A. erects a building on the land of B., without any contract that A. should hold it as personal property, or any express or implied consent that it might be removed, but with a conditional bond from B. for a conveyance of the land to A., and A. fails to comply with the condition of the bond, the building becomes a part of the realty. B. has an insurable interest in such a building, erected under such circum- stances, and his insurable interest is not forfeited by his consent that the building might be sold as the personal property of A., he having revoked such consent before the sale took place.^ Where a lease is made upon the condition that the lessee should erect on the demised premises a certain kind of building, and at the expiration of the term quit and surrender the premises in as good state and condition as reasonable use and wear thereof would permit, such lease would operate as a grant of the building so to be erected, the grant to take effect at the end of the term. And, upon its taking effect, the lessor would have an insurable interest in the building.^ ' Oakman v. Dorchester Mutual ' The Mayor of New York v. Fire Ins. Co., 98 Mass. 57. Brooklyn Fire Ins. Co., 41 Barb. 424 PIEB INSUEANOB. The lessee, by the terms of his lease, agreed to keep the property insured for the benefit of the lessors ; he effected insurance on Ms building, the loss, if any, payable to the lessor. It was held that his agreement to insure, inasmuch as he was liable for a breach of that agreement, gave him an insurable interest to that extent. Moreover, his description of the property as his was not a warranty of title to the property ; the property was Ms for the purpose of indemnity, to the amount of his insurable interest. Besides, the contract of insurance was nothing more than an agreement by which, in consideration of the premium paid by the lessee, the underwriters undertook to insure a certain building, and pay the loss to the owner.^ Insurance by vendee under executory agreement. 6. An interest held under an executory con- tract is insurable. "While the contract subsists, the person claiming under it has undoubtedly a substantial interest in the property. If it be destroyed, the loss, in contemplation of law, is his. If the purchase-money be paid, it is his in fact. If he owes the purchase-money, the pro- 231 ; Same v. The Exctiange Fire ' Lawrence v. St. Mark's Fire Ins. Co., 9 Bosw. 434; S. C, 40 Ins. Co., 43 Barb. 479. N. Y. 446. INSUEABLE INTEREST. 425 perty is its equivalent, and is still valuable to him.^ Hence, a vendee, in possession under a subsisting agreement to purchase, has an in- surable interest, and may insure as owner, and recover to the full extent of any loss sustained by fire, although the purchase-money may have remained, for the greater part, due and unpaid.^ He is not bound to disclose his interest on the application for insurance, unless particularly in- quired of by the underwriter, except in the case of mutual insurance companies, whose charters gi,ve them a lien, where the true state of the title is material, to enable the insurer to judge of the security which the insured premises will afford for the payment of the premium* note, if an assessment should become necessary.* ' Columbian Ins. Co. v. Law- Co., 8 Cusli. 127; Reynolds ». The rence, 2 Peters, 25; Hough o. City State Mutual Ins. Co., 2 Grant's F. Ins. Co., 29 Conn. 13 ; McGiv- Cases, 326. In this latter (!ase it neyu. Phoenix Ins. Co., 1 Wend, was held that a yendee in pos- 85. session under an article of agree- ' See foregoing authorities ; also ment to purchase, and who had JEtna Fire Ins. Co. v. Tyler, 16 built three dwelling-houses on the Wend. 385 ; Ayres a. The Hart- property, and expended a con- ford Fire Ins. Co., 17 Iowa, 176; siderable sum in repairing the Acer«. The Merchants' Ins. Co., premises, and had also made a 57 Barb. 68 ; Lorillard Fire Ins. payment on account of his pur- Co. V. McCuUoch, 31 Ohio St. R. chase, could not insure the pro- 176. perty on his own account for a ' Ibid. Ante, p. 318. See also larger sum than the purchase- Lowell V. Middlesex M. F. Ins. money he had actually paid at the 426 FIKE INSURANCE. Insurable interest of vendor. 7. A contract of sale, the vendor retaining the title as his security for the unpaid purchase- money, does not diyest his insurable interest. The vendor, before payment of the purchase- money and delivery of the conveyance, is, to all intents and purposes, the owner of the estate.^ And although his bond to convey upon the performance of certain conditions creates an equitable interest in favor of the obligee in the bond, it does not create an encumbrance upon the estate, within the meaning of the contract of insurance, by which the lien of a mutual com- pany could be defeated.^ An executory sale of property, with a proviso that the purchaser shall keep the property in- sured for the benefit of the seller, and the title time of the insurance, wliere it is but a mere equity, to be clianged provided, in a condition annexed into a fee simple only on payment to the policy, that if the interest of the purchase-money. But see of the insured in the property is Hough j). City F. Ins. Co., supra; not absolute, the fact must be and ante, p. 311 and note 1. stated in the policy, otherwise the ' Hill v. Cumberland Valley insurance to be void ; and where. Mutual Protection Co., 9 P. F. too, it is further provided that the Smith, 474 ; Trumbull v. The applicant for insurance shall state Portage Co. Mut. Ins. Co., 12 the true value of the property, Ohio, 305. and also the encumbrances on the * Newhall «. Union Mut. Fire same. In such a case it was held Ins. Co., 52 Me. 180. that there was no absolute estate. IlfSUiiABLE INTEREST. 427 to remain in the latter until the property is paid for, does not divest the seller of his insurable interest. If the insurance, in form, is upon the property of the purchaser, it is, in fact, upon the property of the seller, and, being made payable to him, he can, in case of loss, recover.^ But an insurable interest acquired by a vendee under an executory agreement is lost upon his failure to comply with the conditions ; his rights thereby become forfeited.^ 7a. In Wood v. The !N"orthwestern Insurance Company,^ the policy contained this condition; " A claim against this company by the assignee or mortgagee, or other person or persons holding this policy as collateral security, shall not be payable until payment of such portion of the debt shall have been enforced, as can be collected out of the original security to which this policy may be held as collateral, and this company shall then only be held liable to pay such sum ; not exceeding the sum insured, as cannot be collected out of such primary security." By the contract of sale, the vendor agreed to pay the premiums for insurance. A conveyance was to be made when the stipulated purchase-money was all paid. ' Talmann v. Atlantic Ins. Co., ' Birmingham ®. Empire Ins. 40 N. T. 87. Co., 43 Barb. 457. 3 46 N. Y. 431. 428 riRB INSUKANCE. The policy was in the name of the vendor; the premiums were paid by the vendee. Held that the insurance was for the benefit of the vendee; that it was upon the property, and not upon the debt against him, and hence not held as collateral security within the meaning of the foregoing condition ; that the insurer had no right of sub- rogation, even if he issued the policy, without notice of the contract of sale; that, while the vendor's especial insurable interest arose out of his holding an equitable lien on the property for the security of the purchase-money, yet he held also the legal title, and this made it competent.for him to cover, not only his especial interest in the property, but the property itself. Where articles of agreement are entered into for the sale and purchase of land, the purchaser is considered, as between the parties to the con- tract, the owner in equity of the land, subject to the payment of the purchase-money.^ I^everthe- less, at law, the vendor, before payment of the purchase-money and delivery of the conveyance, is the owner, and an insurance effected by him is prima facie an insurance upon the whole legal and equitable estate, and not upon the balance of the purchase-money. Where the form of the ' Paine v. Miller, 6 Vesey, 353. nsrSUKABLE INTEREST. 429 policy shows it to be upon the house, and not upon the debt secured by it, the burthen of showing that it was upon the latter rests on the underwriters, but the rate of insurance is gene- rally decisive of the question/ ' Ins. Co. V. Updegraff, 9 Har- Shotwell v. The Jefferson Ins. ris, 513; Perry Co. Ins. Co. v. Co., 5 Bosw. 247. Stewart, 7 Harris, 45 ; The Fire In Powers v. The Ocean Ins. and Marine Ins. Co. of Wheeling, Co. , 19 La. 28, under a policy con- 11 Leigh, 354 ; Siter, James & taining the usual clause against Co.'s Appeal, 2 Casey, 178 ; Reed alienation, it was held that where V. Lukens, 8 Wr. 200 ; Irving v. there was a sale and possession, Richardson, 2 B. & A. 193. It is and the property reverted by rea- a question of fact for the jury son of unpaid purchase-money, whether the policy issued to the the policy was suspended during mortgagee — and the same prin- the possession of the intended ciple is applicable to a vendor — purchaser, and revived on the was intended to cover the mort- property reverting to the vendor, gagor's interest as well as that and possession held by him at the secured by the mortgage. Irving time of the loss. But in Shotwell V. Richardson, 3 B. & A. 133. In v. The Jefferson Ins. Co., 5 Bosw. other words, the mortgagee may 347, the purchaser under an exe- insure the property, as trustee for cutory agreement at once entered the mortgagor as well as for the upon possession, and was in pos- protection of his own interest, session at the time of the fire, and But prima facie insurance by a it was held that such change of mortgagee, it would seem, is lim- possession did not affect a policy ited to his interest as such ; and of insurance issued to the vendor, to cover the whole property, there the benefit of which, however, by must be proof that he intended agreement between the parties, to insure it. White v. Brown, 8 was to inure to the vendee. It Cush. 412 ; Smith v. Columbian was also held that, although the Ins. Co., 5 Harris, 353. See also vendor remained vested with the 430 FIEE IlSrSUEANCE. Where the vendor insures the whole estate, he may recover the whole amount of the insurance. Because, as between him and the insurance com- pany and all third persons, the vendor is still regarded as the owner of the property, they being in nowise privy to the contract of sale. But, subject to the Vendor's claim for the unpaid purchase-money, he holds the insurance under a trust ffor the vendee, and must account to him therefor.^ "While a vendor under an executory agreement and a mortgagee may insure, and limit the in- surance, in the one case, to the unpaid purchase- money, and in the other, to the amount of the mortgage debt, a vendor who, having insured, afterwards sells and gives possession to the vendee, and takes a judgment for the unpaid balance of the purchase-money, cannot recover on his policy for a loss subsequent to his con- veyance. His judgment lien is not a specific pledge of the land, as in the case of a mortgage, but a general lien to be first satisfied out of the personal property of the debtor.^ legal title, he retained no insurable payments on account of the pur- interest in the property, exrcept chase-money, for the unpaid purchase-money. ' Ins. Co. ■». Updegraflf, supra; The insurable interest was dimin- Reed ®. Lukens, supra. ished pro ianto by the successive 2 Grevemeyer v. Southern Mut. Ins. Co., 13 P. F. Smith, 340. INSURABLE INTEREST. 431 Effect of verbal contract for sale and purchase. 8. A mere verbal contract to purchase an estate gives no insurable interest; in order to that, some act must be done which shall constitute such a part fulfilment of the contract as would entitle the purchaser- to a specific performance in a court of equity. Oilier interests. 9. A lessor on ground-rent, who has entered for arrears, under a covenant that he may hold until arrears are paid, and states an account with the sub-lessees of the rents received, in which he charges them with the premium, has an insurable interest, and it is a question for the jury whether he intended the insurance to cover the interest of the sub-lessees, though they have objected to the account generally. The lessor's relation to the property is, in principle, similar to that of the possessor of a qualified interest in the premises, subject to defeasance — as, for instance, a dis- seisor.^ And a person seized of land under a title by disseisin, it has been said, may be con- sidered as the owner, notwithstanding his title may be defeasible.^ But we are inclined to doubt 1 Miltenberger «. Beacom, 9 ^ See Curry «. Com. Ins. Co., Barr, 196 ; Angell on Ins., p. 10 Pick. 535. 106. 432 PLRE INSURANCE. this, and in Pennsylvania it has been held that one has no insurable interest in a house erected on land of another without license or shadow of title. A mere intruder's title is not insurable.^ But it is otherwise if a house is placed on an- other's land with the owner's consent.^ A policy issued to the stockholders, the sole stockholders, of an incorporated company, who represented themselves to be the owners in fee * simple of the buildings sought to be insured and of the land upon which they were situated, is void, upon the ground that they have no insur- able interest. The fee was in the corporation. If they had any insurable interest, it was the stock which they held in the company,. and this they did not attempt to insure.^ ' Sweeney v. Franklin Fire Ins. The case of Sweeney v. Franklin Co., 8 Harris, 337. Fire Ins. Co., supra, is wholly dif- 2 Fletcher o. Com. Ins Co., 18 ferent. There the company was Pick. 419. unincorporated, and the bnilding » Philips et al. v. The Knox Co. was erected upon land not be- Mut. Ins. Co., 30 Ohio, 174. By longing to the company, but, in the charter of this company the fact, belonging to the State of insurers were entitled to a lien on Delaware. The assured was a the property, and, moreover, the stockholder and a creditor of the charter provided that the insur- company. Most of the other ance should not be binding un- stockholders, not being able to less the insured was owner in fee pay the assured, transferred to simple of the premises, and unless him and other creditors all their the true title was expressed in the right and title in the building, policy and in the application. More than three years after this INSURABLE INTEREST. 433 Insurance hy trustees. 10. There is no obligation on a trustee to in- sure the trust estate, in the absence of express instructions ; but he may insure, if he chooses, to the full value of the property, and recover the amount of any loss for the benefit of the cestui que trust — that is, for the benefit of the party really interested. The latter may also insure.^ Where there is more than one trustee, all may direct one of their number to transact business which it may be inconvenient for the others to perform, and the acts of the one thus authorized are the acts of all and binding on all. The trustee thus acting is to be considered the agent transfer, and while having entire and that there was a condition in control of the building, the assured the policy requiring goods held in procured a policy of insurance on trust to be insured as such, other- it, which contained no statement wise the policy not to cover them. whatever in regard to the title. The court, however, treated the It was a policy on " a two-story feet of the building being erected frame building, known and occu- upon land belonging to the State pied as the Atlantic Hotel, situate of Delaware, without license, as on the beach in front of the town giving the owners only " a mere of Lewes, Sussex County, Dela- intruder's title." "This is not ware." It will be observed that such an interest as the law recog- not all the stockholders united in nizes as a sufficient foundation for the transfer of the property to the the contract of insurance." assured and other creditors ; that ' Lewin's Law of Trusts and the other creditors had an interest Trustees, 383 ; Craufurd v. Hun- in the building as well as himself; ter, 8 T. K. 13. 28 434 PIKE LKTSUEANCE. of all the trustees, and not as an individual trustee. If, within the scope of hi^ agency, he procures an insurance, it is for the other trustees as well as himself. If he does it without autho- rity, it is still a valid contract if his co-trustees subsequently ratify it. In fact, so liberal is the rule on this subject, that where a part-owner of property effects an insurance for himself and others, without previous authority, the act is sufficiently ratified where suit is brought on the policy in their names.^ And it does not affect the right to recover that the policy is in the individual name of the trustee, and that the money is ultimately to pay a debt owing from the trust estate to himself. What private arrangement or understanding ex- isted between the insuring trustee and his co- trustees, as to the disposition of the money that might arise from the insurance, is wholly imma- terial to the insurers.^ ■ Ins. Co. «. Chase, Banis, J., last case it was held that where 5 Wall. 509 ; Blanchard ». Waite, A. owns an estate in his own 28 Mb. 59 ; Finney s. The Fair- right, and assigns it in trust to B. haven Ins. Co., 5 Met. 192. See tosellandpay the creditors of A., also Miltenberger v. Beacom, 9 of whom B. is one, and B. insures Barr, 199. the property as his, he may re- 2 Ins. Co. 1. Chase, supra ; cover on his policy, notwithstand- White '6. The Hudson River Ins. ing it contains a condition that Co., 7 How. (N. T.) 341. In the "property held in trust or on ESrSUKABLE INTEREST. 435 Effect of encumbrances on insurable interest. 11. Though an estate may be deeply encum- bered, the party having a right to redeem has an insurable interest to the full value of such estate.^ And, in eflfecting an insurance, he is not bound to disclose such encumbrances, unless inquired of, or unless such disclosure is required by a con- commission must be insured as the Tvliole insurance, he is on that such, otherwise the policy will ground entitled to recover in this not cover such property," etc. case, and the demurrer must he "A person insured," said the overruled, with costs. It may he court, " having two interests in that equity will require the plain- the same property, may recover tiff to apply the amount to be according to both or either, as if recovered for the benefit of all, as he be part-owner of the goods, if he had insured as trustee ; that and has made advances and has a question need not now be con- lien on the other shares of them ; sidered." so if he were owner of one share As the beneficial interest in this and mortgagee of another ; and if, case was derived from the trust, for any reason, he could not re- and as clearly, under the circum- cover in the one capacity, that stances, the insurance was void would not prevent his recovery as to the trust estate, from its no- in the other. So here the plaintiff being so described in the policy, is insured. The policy is broad as required by the condition, it is enough to cover his interest both difficult to concur in the judg- as trustee and beneficiary ; and if ment of the court that another he cannot recover as trustee, on interest, arising out of the trust, account of not being so described, could be protected by the policy although he may have intended when it was vitiated as to the to insure as such, that is not to trust itself. prevent his recovery as benefi- ' Strong v. Manuf Ins. Co., 10 ciary. As the b;neficial interest Pick. 40. of the plaintiff is enough to cover 436 FIEE INSTTEANCE. dition of the policy.^ But if inquired of, and his answer is untrue, or if required by a condi- tion of the policy to disclose, and his disclosure is false, the insurance is avoided.^ Hence, a stipulation in the policy that it should ' Qeeanie,p.2in et seg.; Locke contract, and a warranty by the «. North Am. Ins. Co., 13 Mass. insured. 61, 68 ; Cumberland Valley Mut. " Even against the party origi- Prot. Co. V. Mitchell, 12 Wr. 374. nally insured the policy cannot be As a general principle, a misrep- avoided for encumbrances, unless resentation by one party of a fact upon his false and fraudulent specifically inquired about by the answers • to interrogatories (the other, though not material, will application contained interroga- have the same effect in exone- tories aS to encumbrances), and rating the latter from the contract much less can it be as to his as- as if the fact had been material, signee, who is not called upon to since, by making the inquiry, he respond to any interrogatories." implies that he considers it to be Agnew,J., in Cumberland Valley so. And this because, in making Mut. Prot. Ins. Co. v. Mitchell. a contract, he has a right to his ' Draper v. Charter Oak Ins. own judgment as to what is ma- Co., 2 Allen, 569 ; Davenport a. terial, and to prescribe the terms N. E. Mut. Fire Ins. Co., 6 Cush. upon which only he will treat. 340 ; Bowditch Mut. F. Ins. Co. v. 1 Phil, on Ins. 543. And a spe- "Winslow, 8 Gray, 44 ; Cumber- ciflc inquiry shows that the un- land Valley Mut. Prot. Co. v. derwriter seeks for information Mitchell, supra; The Penn. Ins. by which his judgment shall be Co. v. Gottsman's Admrs., 12 Wr. guided, or at least affected and in- 151 ; Browns. Com. Mut. Ins. Co., fluenced, in determining whether 5 Wr. 187 ; Cooper v. The Farm- he will issue a policy. Strong v. ers' Mut. Fire Ins. Co., 14 Wr. Manuf. Ins. Co., 10 Pick. 40; Dra- 299 ; Hayward v. N. E. Mut. Fire per V. Charter Oak Ins. Co., 2 Ins. Co., 10 Cush. 444; Lowell Allen, 569. v. Middlesex Mut. F. Ins. Co., 8 In the latter case the application Cush. 127. and statements were a part of the INSTTKABLE INTEREST. 437 be void and of no effect if the assured should neglect to disclose the amount and nature of all encumbrances, or fail to obtain the consent of the underwriters to any encumbrances that should be executed upon the property insured, or any levy of execution upon it, during the life of the policy, is a substantive and material part of the contract ; in other words, a warranty,^ There- fore, where, in answer to an interrogatory, the amount of the liens on the property was misrep- resented, and where levies, too, were made on it and were in force at the time of the fire, no notice having been given to the insurers, the right of the assured to recover for a loss was held to be forfeited.* But if the insurers, after becoming aware of the misrepresentations of the insured, or of his failure to comply with the conditions of the contract, go on demanding and receiving payment of assessments, they waive the right to avoid.* ' Brown v. Com. Mut. Ins. Co., Ins. Co., 5 Denio, 154. After a supra ; The Penn. Ins. Co. v. policy was forfeited by a violation Gottsman's Admrs., supra. of one of its conditions, the com- " Penn. Ins. Co. v. Gottsman's pany received and accepted as- Admrs., 13 Wr. 151. sessments on the premium note. » Cumberland Valley Mut. Prot. Held to be a waiver. Viall v. Co. D. Mitchell, ««pray Tayloes. Genesee Mut. Ins. Co., 19 Barb. The Merchants' Fire Ins. Co., 9 440. How. 390 ; Frost v. Saratoga Mut. In the case of false warranty as 438 I'lEE INSURANCE. Where the insured, prior to eflfecting insurance, had encumbered his property, and then conveyed his remaining interest by an absolute deed, and yet represented the property as his, and encum- bered only to a certain amount when it was en- cumbered to a much larger amount, the policy was held to be avoided, notwithstanding the conveyance and the encumbrances beyond the amount specified by the insured were without consideration, and only intended as a cover. As between the parties, the conveyance and the en- cumbrances were valid, and none but creditors and 'bond fide purchasers could avoid them. The insured had no right to the property which he could enforce, either in equity or at law.^ Subsequent encumbrances. 12. If the assured states his title to the pro- perty truly when he makes his application for to adjacent buildings, the com- from the assured. Held, that this pany, with a knowledge of the was proper evidence of waiver for fact, made and received assess- a jury. See Ins. Co. ». Stocls- ments. Held to be an estoppel, bower, 2 Casey, 199 ; Tayloe o. Frost V. Saratoga Mut. Ins. Co., Merchants' Fire Ins. Co., supra; 5 Denio, 154. McMasters v. Westchester Co. The secretary of a company was Mut. Ins. Co., 35 Wend. 379 ; In- informed of a second insurance land Ins. and Deposit Co. v. Stauf- which conflicted with the terms fer, 9 Casey, 397. of the policy. Afterwards assess- ' Treadway v. Hamilton Mut. ments were made and collected Ins. Co., 29 Conn. 68. INSURABLE INTEREST. 439 insurance, that is all that is incumbent on him, unless the charter-party or by-laws of the com- pany require notice of subsequent encumbrances. Hence, a mortgage upon the property, executed after the making of the application, and on the same day the policy issued, but whether before or after the issuing of the policy did not appear, the date of both instruments being the same, will not, in the absence of fraud, make void the policy.^ Whether hond to convey insured premises an encumbrance. 13. "Where the insured, having the legal title, gives a bond to convey the estate upon certain conditions, this, although perhaps creating an equitable interest in favor of the obligee in the bond, does not constitute an encumbrance upon the estate, within the meaning of the contract of insurance. Such a bond does not purport to convey the estate, and is, at most, a personal contract that, in certain contingencies, upon the performance of certain conditions, the obligor will convey, 2 ' Dntton D. N. B. Mut. F. Ins. and Marine Ins. Co. v. Morrison, Co., 9 Fo3t. 153 ; Howard F. Ins. 11 Leigh, 354. Co. ®, Bruner, 11 Harris, 50 ; Fire * W ewhall v. Union Mut. Fire 440 FIEE INSUKANCE. Ins. Co., 53 Me. 180 ; Smith «. Bowditch M. F. Ins. Co., 6 Cush. 44 ; Lowell v. Essex M. F. Ins. Co., 8 Cush. 137 ; Brown «. Wil- liams, 38 Me. 353. See Ayres v. The Hartford F. Ins. Co. , 17 Iowa, 176. In Chase v. Hamilton M. F. Ins. Co., 33 Barb. 537, it was objected that the insured could not recover because he had made a false war- ranty of his title to the property to be insured. In his application he had represented the property to be his. The evidence showed that at the time of the application he held a bond for the conveyance of the land on which the buildings insured had been erected by him- self, the conditions of which had been fully performed. "Under these circumstances," said Mar- vin, J., "it is insisted that the representation as to the title to the property was false. In my opinion, this objection is not well taken. The plaintiff was the owner of the house and premises. True, he had not the legal title, but he was entitled to it. He was not a purchaser in possession, bound to pay the purchase-money before he could demand a convey- ance. He had paid the entire con- sideration-money for the purchase, and was in possession, and could maintain that possession even against those in whom the tech- nical legal title was vested." CHAPTER XIY. ALIEISTATION. 1 . Effect of alienation of the in- sured premises. whole amount of insurance. 2. Executory contract of sale. 11. Conveyance and re.convey- 3. Conveyance and deed held ance back. in escrow. 13. Effect of equitable mort- 4. A mortgage not alienation. gage. 5. A mortgage when alteration 13. Effect of sheriff's levy on of title. insurance. 6. Foreclosure of mortgage in- 14. Whether lease is alienation, validates insurance. 15. Sale of insured goods. 7. Assignment of equity of re- 16. Alienation of one of several demption. estates. 8. Alienation by mortgagor 17. Jlortgage of chattels. avoids insurance payable to mort- 18. Sale by partner or co-ten- gagee. ant. 9. Prior assignment of mort- 19. Conveyance to trustee?, gage debt. Effect of alienation of the insured premises. 1. Where the insured parts with his whole in- terest in the property insured, and such property is afterwards burnt, the underwriters incur no obligation to pay anybody.^ Their contract was to indemnify the assured, not the vendee. If, however, they had assented to the assignment of ■ Miaa. Ins. Co. v. Taylor, 16 Wend. 385. 442 riRE INSUEANCB. the policy to the purchaser, they would be bound in like manner to indemnify him.^ But no trans- fer of real estate short of the conveyance of the title releases the insurer from his liability, unless the policy, by-laws, or charter of the company discharge him on the conveyance of a less inte- rest than the title.^ And if the insured conveys the insured property, but retains an interest in it, the policy, unless there is an express stipula- tion to the contrary, will cover and protect that interest.^ And when the insured, without the consent of the insurer, conveys the whole estate, and subsequent to the conveyance obtains a renewal of the policy, and subsequent to the renewal, transfers the policy to the vendee, and the insurer, through his agent, consents to such transfer, in the required mode, such consent ' Wilson V. Hill, 3 Met. 66. See plea was lield bad on demurrer, • Grevemeyero. Southern Mut. Ins. as it failed to aver (1) that the Co., 12 P. F. Smith, 340 ; Mound sale was made before the loss City Ins. Co. ■». Curran, 43 Mo. occurred, and (3) it failed to aver 374. In the case of the Illinois that the directors did not, after Fire Ins. Co. ii. Stanton, 57 M. the alienation, confirm the same 354, the plea averred that the to the actual owner prior to the mortgagor, to whom the policy loss. was issued, sold the premises ' Masters v. Madison Co. Mut. without consent or confirmation Ins. Co., 11 Barb. 634. of the directors, contrary to the ' Ayres v. Hartford F. Ins. Co., provisions of the contract. The 17 Iowa, 176. ALIENATION. 443 •waives the forfeiture that had occurred, and re- vives the policy.^ ■ ^Executory contract of sale. 2. A contract by the assured to convey the assured premises at a future day, upon payment of the purchase-money, is not such an alienation as defeats the policy. The insured has an in- surable interest and the legal title and an equity equal to the purchase-money, or the whole value of the premises, and, being in possession, he is entitled, if a loss occurs between the date of the contract and the day of payment, to recover upon the policy.^ • Spearman v. Niagara F. Ins. insured without the consent of the Co., 46 N. Y. 526. See also insurer in ■writing, and notwith- Hooper v. Hudson River F. Ins. standing the contract of insurance Co., 17 N. T. 454; Wolfe v. The declared that in the event of such Security F. Ins. Co., 39 N. Y. transfer " this policy shall thence- 49. forth be void and of no effect," » Ayresa. Hartford F. Ins. Co., Hogeboom, J., in Hyatt v. Wait, supra ; Trumbull a. The Portage 37 Barb. 29, while conceding that Co. Mut. Ins. Co., 12 Ohio, 305 ; this language is very strong and Perry Co. Ins. Co. v. Stewart, explicit, said "Nevertheless, I 7 Harris, 45 ; Hill v. The Cumber- regard it as a provision merely land Valley 3Iut. Prot. Co., 9 P. for the exclusive benefit of the P. Smith, 474. See also Lazarus company, and to be practically ». The Com. Ins. Co., 19 Pick. 81 ; exercised by them or not, at their Tallman B. Atlantic Ins. Co., 40 option. (See Potter ». Ontario and N. Y. 87. Notwithstanding a LivingstonM. Ins. Co.,5Hill,147; transfer of the insured's interest Canfield v. Westcott, 5 Cowen, in the policy and in the property 270 ; Mancius a. Sergeant, Id. 271 ; 444 FIRE INSURANCE. So where the conditions of the policy stipu- lated that if the insured property should "be alienated by sale or otherwise," or should "be transferred by any contract or any change of partnership or ownership," the policy should be void, a contract to sell such property, part of the purchase-money being unpaid, and no con- veyance having been made, is not a transfer of the property within the meaning of the condition; and not a change of ownership which, being un- assented to by the company, renders the policy void. " It was an executory contract," said the court, "and was dependent on the payment of the purchase-money for a transfer of the legal title." The vendee had an interest in the pro- perty, but not title or ownership.^ An executory contract of sale and purchase. Church D. Ayres, Id. 372.) There 5 Denio, 154. In the latter case seems to be no good reason why there was a false warranty, yet the policy should be absolutely the insurer, with knowledge of void if the company choose to it, made assessments upon the ratify the transfer, and, notwith- assured's premium note, and this standing the transfer, to continue was held to be a waiver, and that the insurance. And I think if the policy could not be avoided they subsequently treated the de- by reason of the false warranty, fendaut as a member of the com- Wash. F. Ins. Co. v. Kelley, 32 pany, they would be estopped to Md. 421. deny such ratification and ap- ' Hill v. The Cumberland Val- provaL" Frost v. Mut. Ins. Co., ley Mut. Prot. Co., supra. ALIENATIOJf. 445 although it creates an equitable title, and the vendee is let into possession, does not amount to a breach of the condition against alienation without consent.^ Hence, where the insured entered into a contract to sell and convey the insured premises for a certain sum, and the pay- ments had been made in pursuance of the con- tract, only one instalment remaining unpaid at the time of the fire ; and where, too, it was a part of the contract that the vendor should keep the premises insured for the benefit of the vendee, who was ultimately to return the premiums paid by the vendor; and where the vendee at once entered into possession, and no notice of the contract between the insured and the vendee was given to the insurers — ^it was held, upon a loss occurring, that the insured, notwithstanding the clause against alienation, was entitled to recover to the extent of the principal and interest of the unpaid purchase-money. And the insurers are not discharged from their liability from the fact that, after suit was brought upon the policy, the vendee paid the purchase-money in full and received a deed of the premises. By force of the contract between the insured and the vendee, the latter is entitled to the benefit of the sum ' Shot-well V. The Jefferson Ins. Co., 5 Bosw. 247. 446 PIEE INSURANCE. recovered, he having paid the premium thereon to the insured.^ Conveyance and deed held in escrow. 3. In Gilbert v. North iltforth American Insur- ance Company,' the insured premises were con- veyed in fee, and a mortgage taken back to secure a portion of the purchase-money. The residue of the purchase-money was left open, to await the result of a controversy between the vendor and a third person, respecting encum- brances on the property ; the deed and mortgage, although both recorded, to remain in the hands of a third party until such controversy was settled. Meanwhile the premises were destroyed by fire; and it was held that the deed did not take effect as an operative instrument until the happening of the contingency provided for, and that the fact of its having been recorded was only primoi facie evidence of a delivery and i^ight consequfently be rebutted ; and that, therefore, the grantor was not divested of his insurable interest in the pre- mises. • Shotwell «. The Jefferson Ins. s 23 Wend. 43. Co. , 5 Bosw. 247. ALIENATIOK. 447 -4 mortgage not alienation. 4. A mortgage of insured premises is not an alienation of them, unless there is something in the policy, charter, or by-laws which makes the mortgage work an alienation.^ Mortgage is alteration of title. 5. But a condition in the policy that " all alien- ation and alterations in the ownership, situation, or state of the property insured by this com- pany, in any material particular, shall make void any policy covering such property, unless con- sented to or approved by the directors, in writing, within thirty days," relates to and includes an alteration by a mortgage upon the insured pre- mises. It is an alteration in the ownership. It alters it from a legal to an equitable ownership. ' Rollins B. Columbian Ins. Co., Aurora Fire Ins. Co. ». Eddy, 55 5 Foster, 300 ; Folsom v. Belnap M. 213, the mortgagor procured Co. Mut. F. Ins. Co., 10 Fost. insurance on the mortgaged pre- 231 ; Conover v. The Mutual Ins. mises ; subsequently he executed Co. of Albany, 1 Comst. 290 ; another mortgage to a different Jackson «. The Mass. Mut. Fire person, and for a different amount, Ins. Co., 23 Pick. 418 ; Pollard and with the proceeds paid the v. Somerset Mut. Fire Ins. Co. , first mortgage. Held that this 42 Me. 231 ; and authorities there was not a transfer or change of cited ; Com. Ins. Co. n. Spankne- title such as was prohibited by ble, 52 111. 53 ; Ayres v. Hartford the policy. See also Com. Ins. Fire Ins. Co., 17 Iowa, 180. In Co. «. Spankneble, 52 111. 53. 448 riRE INSURANCE. It introduces a new owner, to the extent of the sum secured by the mortgage, and to the same extent it takes away the direct interest of the assured.^ And if the condition is that the policy shall be void if the insured property shall be alienated or encumbered by sale or mortgage, assignment, or otherwise, then a subsequent mortgage of the premises invalidates the insur- ance.^ So, too, if it is a condition of the policy that when any property insured shall be alienated or encumbered by sale, mortgage, assignment, bond, or otherwise, the policy shall thereupon be void, and the premises insured were at the time of their insurance subject to a mortgage, and while the insurance was in full force the equity of redemption was sold on an execution against the insured, this sale of the equity is deemed an encumbrance of the insured estate, and avoids the insurance.^ Foreclosure of mortgage invalidates insurance. 6. And where it is a provision of the insurance that if " the title of any property insured shall be changed by sale, mortgage, or otherwise,- the ' Edwards v. Mut., Safety Fire » Edes v. Hamilton Mutual Ins. Ins. Co., 1 Allen, 311. Hutchins Co., 3 Allen, 363. • ■». Cleveland Mut. Ins. Co., 11 » Campbell v. Hamilton Mutual Ohio St. 477. Ins. Co., 51 Me. 69. ALIENATIOlSr. 449 policy shall thereupon be void," the mere execu- tion of a mortgage does not change the title. That does not take place until foreclosure. A mortgage is a lien, or encumbrance ; but the mortgagor is regarded as owner until entry of the mortgagee or foreclosure.' Where the mortgagor insures, and assigns the policy to the mortgagee, with the consent of the company, and, before a loss occurs, the premises are sold under a decree of foreclosure, and part of the purchase-money paid by the purchaser, though no deed was executed at the time of sale, nor until after the fire, this is a change of title within the meaning of the condition against any transfer or change of title, and avoids the policy.^ And where insured property was sold under a decree of the court, and, after a loss had occurred, the sale was set aside, it was held that the in- sured could not recover. If no loss had occurred between the sale and its being set aside, the policy would doubtless have revived, and there- ' Shepherd v. Union Mut. Fire of the parties — that is to say, the Ins. Co., 38 N. H. 333. right, title, and interest of the " McLaren v. Hartford Fire Ins. mortgagor and mortgagee— to the Co., 1 Seld. 151. By the practice purchaser on the sale under the and decisions in New York, a decree, master's sale passes the interest 29 450 FIRE nsrSTJKANCE. after the insurers would have been liable for any loss under the terms of their contract.^ Assignment of equity of redemption. 7. A mortgagor assigning his policy of in- surance to the mortgagee, with the assent of the insurers, avoids the policy by subseqaiently assigning his remaining interest for the benefit ■ ' Mt. Vernon Manuf. Co. o. The to avoid the sale and rescind the Summit Co. Mut. Fire Ins. Co., 10 whole bargain. The delivery of Ohio St. R. 347 ; Power «. Ocean the bill of sale passed a title only- Ins. Co., 19 La. 28; Dadmun Man. at the election of the vendee. But Co. ■». Worcester Mut. F. Ins. Co., his insurable interest, at best, was 11 Met. 429. If a mortgagor of a only suspended during the time vessel sells his remaining interest that the title to the vessel was therein, with a stipulation that he vested in the vendee, and was re- will pay off the mortgage, and vived again on the reconveyance fails to comply with this stipula- of the insured during the term tion, and the bargain is accord- specified in the policy. The in- ingly given up, and the title re- surance was for one year. There conveyed to him, a policy of in- was no stipulation or condition in surance issued to him before his the policy that the insured should agreement of sale will be valid to not convey or assign his interest eover a loss of the vessel after in the vessel during this period, the reconveyance of title to him. The transfer of the vessel rendered Worthington a. Bearse, 13 Allpn, the policy inoperative, and not 383. The sale of the vessel was void. It could have no effect not complete and absolute ; it while the insured had no interest was only conditional on a com- in the subject insured. But on pliance with the terms of the the reconveyance it revived, and bargain. Until the mortgagee the policy again became valid, was paid, and a release obtained Ibid, from him, the vendee had a right ALIENATIOK. 451 of creditors ; the policy providing that " if the said property shall be sold or conveyed in whole or any part, then this insurance shall be void and of no eflFect."^ But insurance upon a mortgage interest is not affected by the mortgagee subsequently acquir- ing the equity of redemption, where the mortgage is pledged as secui'ity for the debts of the mort- gagee. The effect of it being thus pledged is to keep it distinct from the equity released to the mortgagee, and prevents it merging in the equity. The clause against alienation is not applicable to such a state of facts, because it does not refer to a sale or conveyance to the insured, increasing his insurable interest, but to a sale by him, and which determines his interest in the subject of insurance.^ • In Fish V. Cottenet,' the mortgagee, whose in- terest was covered as such, by oral insurance, became owner of the property, and applied to have the policy changed, so that his interest should be thus expressed. He was told by the agent that it should be done. 'So policy of in^ surance, however, was ever delivered by the com- ' Hazard v. The Franklin Mut. ^ Heatonu. Manhattan Ins. Co., F. Ins. Co., 7 R. I. 429. See also 7 R. I. 502. Hoxsie v. The Providence Mut. F. ' 44 N. Y. 538. Ins. Co., 6 R. I. 517. 452 riBB IN8UBANCE. pany, nor was any premium ever demanded or paid. Held, that the insurance was valid; that changing the character of the interest, from that of mortgagee to that of owner, with the assent of the insurer through his agent, was a renewal of the indemnity to the owner ; that no new con- sideration, nor repetition of the terms of the original agreement, was required — they all re- mained in force except so far as specifically changed. In Bragg v. !N"ew England Mutual Fire In- surance Company,^ it was held, that, where insur- ance was effected by the mortgagor, insurance made payable to the mortgagee, who signed the premium note and paid assessments thereon, and where, prior to the loss, the insured premises, by foreclosure of the mortgage, became vested in the mortgagee, the mortgagee is entitled to sUe and recover for the loss in the name of the mort- gagor ; and the fact that by the foreclosure the mortgagor, to whom the policy was issued, lost his interest in the property,. does not defeat the policy. The right of redemption had expired in this case, and the premises had become the abso- lute property of the mortgagee. But the mort- gagor, said the court, " did nothing to alienate " 5 Fost. 289. ALIENATION". 453 the property ; and the perfection of the title was the mere operation of law, resulting from the situation of the property as it existed at the time of the insurance, and which the defendants might well have foreseen. We cannot, therefore, re- gard the foreclosure to be an alienation. The title and possession of the property remain in the same persons as when it was insured ; and the rights of the mortgagee, through the mort- gagor, still exist." 7a. In Pratt v. The l^ew York Central Insur- ance Company,^ the policy was in the name of the mortgagor, and the loss, if any, first payable to the mortgagee, as his interest may appear. The mortgage was foreclosed, and the mortgagee bid in the premises. He. notified the insurers' agents of the foreclosure and of his purchase at the sale; and asked their consent to let the policy stand in his favor as owner of the fee. Such consent was given, and he was informed that it was all right, and that the proper entry would be made in their books. It was held that by force of the proviso requiring payment of the loss to be first made to him, the policy was, in legal effect, assigned to him at the time it was issued, and, moreover, that the notification to the ' 64 Barb. 589. 454 riRB INSURANCE. agents of the fact that the mortgagee had he- come the owner of the fee, and their consent that the policy should stand in his favor, was an agreement equivalent to the issue of a new policy to him, upon the terms and conditions specified in such policy ; and that the unearned premium was a good consideration for such agreement. But where it is provided by the policy and by-laws that no mortgaged estate should be deemed to be alienated, so as to avoid the policy, until the mortgage should be foreclosed, and that any policy payable to a mortgagee, in case of loss, should jcontinue so payable, notwithstand- ing any subsequent alienation of the estate, yet a purchase by a third person of the equity of re- demption, who also takes an assignment of the mortgage and of the policy, merges the mortgage in the fee, and no action can be maintained on the policy for a loss subsequently occurring. The undertaking to pay the mortgagee, in case of loss, is collateral and derivative ; if, therefore, the mortgage is paid, foreclosed, or otherwise discharged and extinguished, such separate and collateral promise to pay the mortgagee is also discharged.^ If there had been any outstanding mortgage, attachment, or other real lien which • Macomber v. Cambridge Mut. F. Ins. Co., 8 Cush. 133. ALIEKATION. 455 might have intervened between the mortgage and the right of redemption, it might, upon com- mon principles, have prevented a merger, and the purchaser would have been entitled to stand upon both his rights. But there being no such intervening lien, the mortgage and the equity became merged, and this was a foreclosure, and prima facie a payment of the mortgage debt.^ So, too, if it is provided in the by-laws, which constitute a part of the contract of insurance, that " when any property shall be alienated by sale or otherwise, the policy thereupon shall be void," and the insured, after mortgaging the pro- perty and assigning the policy with the consent of the insurers, conveys the equity of redemption without such consent, the policy thereupon be- comes void.^ And where, too, it is provided that if the assured should alienate in whole or in part the insurance should be void, it has been held that a mortgage was an alienation in part.^ But in the case where this was held there was no assignment of the policy. Besides, we think the more obvious construction of the clause would be that it related to a conveyance of the title ■ Macomber v. Cambridge Mut. » Abbott v. Hampden Mut. Fire F. Ins. po., 8 Cush. 133. Ins. Co., 80 Me. 414. 2 Lawrence®. Holyokelns. Co., 11 Allen, 387. 456 FIRE INSURANCE. in part, rather than to an encumbrancer of the title. Alienation hy mortgagor avoids insurance payable to mortgagee. 8. In Loring v. Manufacturers' Insurance Com- pany,' the mortgagor obtained insurance upon his steam sawmill, " his interest being one-half," and indorsed on the policy, which was assented to by the secretary of the company, the follow- ing order : " In case of loss, pay the within to Josiah Q, Loring to secure his mortgage." It was held that this indorsement was not an assignment of the policy to the mortgagee, nor was it an insurance on his interest as mortgagee; he merely held a written order to pay such sum as should become payable to the mortgagor thereon. Consequently, a subsequent sale by the mort- gagor of all his remaining interest in the mill, avoided the policy, in accordance with the con- dition set forth on the face of it, "that if the property insured shall be sold or conveyed in whole or in part, the risk shall cease, and the policy shall become void." Previous to the sale the mortgagor obtained another insurance on "his interest, being three-tenths" of the same ■ 8 Gray, 38. ALIENATION. 457 mill, and one thousand dollars of this, in ease of loss, was made payable, by an indorsement on the policy, assented to by the secretary, to another mortgagee. Then the sale took place, and, with the assent of the secretary, the second policy was assigned to the purchaser ; and, under a provision of the policy, it continued for the benefit of the purchaser, with a reservation of the mortgagee's right to his thousand dollars. But the assent of the company to continue the second policy for the benefit of the purchaser did not have the effect to keep alive the first policy, which was on a distinct interest in the same mill. Prior assignment of mortgage debt. 9. Where a mortgagee, prior to effecting in- surance, assigns a part of his mortgage debt, and then insures his mortgage interest generally, the policy will only cover his remaining interest under a condition that "property held in trust or on commission must be insured as such, other- wise the policy will not covfer such property. >n Mortgagee may recover whole amount of insurance. 10. A mortgagee is not limited by the restric- tion that the recovery should not exceed two- 1 Kex «. Ins. Co., 3 Phil. R. 357. 458 FIRE INSTTEANOE. thirds of the value of the property, but is entitled to the whole sum insured, if it do not exceed his mortgage interest, nor two-thirds the actual value of the property.^ Conveyance and reconveyance hacJc. 11. A conveyance and simultaneous reconvey- ance back, or a transaction which amounts only to a conditional sale, is not such alienation as avoids a policy of insurance." In Savage v. Howard Insurance Company,^ the condition of the policy was that if the property be sold or transferred, or any change take place in the title or possession, whether by legal process or judicial decree or voluntary transfer or conveyance, etc., then, and in every such case, this policy shall be void. The court held that a conveyance of the fee, and taking back simultaneously a mortgage for the purchase- money, was a breach of the condition and avoided the policy. But a conveyance by the inured, and taking back eo instanti a mortgage to secure ' Sanders v. Hillsborougli Ins. Ins. Co., 4 Mass. 330. See Wor- Co., 44 N. H. 238. thington v. Bearse, 12 Allen, 382 ; 2 Tittemore v. Mutual Fire Ins. Phoenix Ins. Co. ■». Lawrence, 4 Co., 20 Vt. 546 ; Porter «. Nelson, Met. (Ky.) 14, 16. 4 N. H. 130 ; Page d. Foster, 7 ' 52 N. T. 503. N. H. 392 ; Stetson «. Maas.M. F. ALIENATION. 459 the purchase-money, does not defeat the insur- ance, when the condition is that the policy shall he void, " in case of transfer or termination of the interest of the assured in the property insured ;" and this because an insurable interest may exist independently of the title to the property.^ In the case of Morrison v. Tennessee Marine and Fire Insurance Company,^ the assured sold and conveyed the insured premises to B., who reconveyed the property to a trustee, to secure to the assured the payment of the purchase- money. It does not appear from the report of the case whether the policy contained the usual clause against alienation; but it was held that the transaction did not divest the assured of ' Stetsons. Mass. Mat. Ins. Co., Co., supra. But when the condi- 4 Mass. 339 ; Phelps v. The Geb- tion is, that " if the property be hard Fire Ins. Co., 9 Bosw. 404; sold or transferred, the policy Kitts t. Massasoit Ins. Co., 51 shall become void, then a sale of Barb. 177 ; Hitchcock v. The N. the property avoids the Insurance W. Ins. Co., 26 N. T. 68. See notwithstanding a mortgage was also Sanders «. Ins. Co., 44 N. H. taken back eo instanti to secure 338. the purchase-money. Savage v. As stated in the text, when the Howard Ins. Co., 53 N. T. 503 ; condition is that "in case of trans-^ Bates v. Commercial Ins. Co., 3 fer or termination of the interest Cincinnati 8. C. Rep. 195, is to of the assured in the property the effect, that a conveyance and insured" the insurance becomes mortgage back, is "change or Toid, so long as an insurable in- transfer," within the meaning of a terest remains the policy is not policy of Insurance, and avoids it; avoided. Hitchcock v. N. W. Ins. « 18 Mo. 363. 460 FIRE IN-SUEAirCE. his insurable interest. "The conveyance and reconveyance," said Scott, J., " must be regarded as one transaction, and it can make no differ- ence in principle whether the interest recon- veyed is a legal or equitable one. Whether it was made directly to the vendor, or to another in trust for him, in either event he has the same interest in value, and they are equally insurable." In Phelps V. The Gebhard Fire Insurance Com- pany the prohibition in the contract of insurance was against a transfer or" termination of the in- terest of the assured in the policy (so the court held) and did not refer to a change of interest in the property insured.^ ' Bosworth, C. J., ill delivering fested in writing, ' tliis policy shall the opinion of the court, said : from thenceforth be void and of "His (the assured's) death did no effect.' The provision in this not terminate the policy. If he policy, on this subject, is in the had conveyed the property in his words of that in Smith ». Saratoga lifetime, taking back, eo instanti, . Mut. Fire Ins. Co., 1 Hill, 497, and a mortgage to secure the pur- it was there construed to refer to chase-money, he would, notwith- a transfer of interest in the policy, standing, have had a continuous and not to a cha,nge of interest in interest in the property. That the property insured. Nor would fact would not have forfeited the a conveyance by the assured in policy, under the clause which de- liis lifetime, and taking back, eo Clares that ' in case of any transfer instanti, a mortgage to secure the or termination of the interest of purchase-money, have been a bar the assured' in this policy, ' either to a recovery, in case of a sub- by sale or otherwise,' without the sequent loss in his lifetime, and consent of the corporation mani- during the term for which the ALIENATION. 461 JEJffect of an equitable mm^gage. 12. The clause that "in ease of any transfer or termination of the interest of the insured" in the property was insured." Morrison condition is a sensible one as it V. Tennessee M. and F. Ins. Co., stands, I do not see how we can supra; Norcross v. Ins. Co., 17 substitute another word without Pa. St. 439. making a new agreement for the In Smith v. The Saratoga Mut. parties. . . . The case, then, comes Fire Ins. Co., referred to by Bos- to this : The parties have agreed worth, C. J., supra, the question that the contract is not assignable arose whether an assignment of without the consent of the com- the policy without the consent of pany, and that in case of a transfer the company rendered the con- without such consent the policy tract void. The clause of the ' shall thenceforth be void and of policy touching this question was no effect.' However strongly we as follows: " The interest of the may desire to get rid of this con- assured in this policy is not as- elusion, I do not see how it can signable without the consent of be done. The parties must abide the said company in writing ; and by the contract they have made." in case of any transfer or termina- When the same case came again tion of the interest of the assured, before the same court, Bronson, either by sale or otherwise, with- J., said: "I still adhere to the out such consent, this policy shall opinion already expressed, that it thenceforth be void and of no is the policy or contract of insur- effect." ance, and not the subject insured, Bronson, 3. " I have felt some which the parties have declared difficulty in the construction of not assignable. It is undoubt- this clause and have tried to read edly true that the ' interest of the it, as the plaintiffs counsel reads assured,' when the words are used it, so that it will apply to the without any qualification, usually plaintiff's interest in the subject means his interest in the property insured, and not to the contract, or thing insured. But here the But the language is that the ' pol- parties have explicitly declared icy is not assignable ;' and as the that they mean something else— 462 FIRE INSURANCE. policy, "either by sale or otherwise," without the consent of the insurer, the policy shall be void, was construed by Owrtis, J., in Hoi brook 15. The American Insurance Company,^ to pro- vide only for a termination of the interest of the assured in the estate; and as nothing shoi't of that avoids the policy, it follows that an equi- table mortgage, such as a conveyance of property by way of security for a debt, does not have that effect. Independently of such clause, it might be a question for a jury whether such a change 'the interest of the assured in this itself. ^ "The clause in the policy," policy is not assignable.' " 3 Hill, he said, "which declares the in- 508. terest of the insured therein not But in Carpenter «. The Provi- assignable, has no application to dence Washington Ins. Co., 16 this case, unless the assured, hy Peters, 495, where there was a making such a transfer of tlie clause in the policy identical with ■ property as deprived them of their that in the policy which was the insurable interest therein, have subject of discussion in 1 Hill, 497, worked ' a termination of the in- and 3 Hill, 501, Story, J., said: terest of the insured in this policy " The interest here last spoken of within the meaning of this clause, manifestly is the interest of the and the inquiry is, has there been owner in the premises insured, such a termination? The first and not merely his interest in the reason why their interest in the policy." policy is not terminated is found And Curtis, J., in Holbrook v. in the fact that only a part of the The American Ins. Co., 1 Curtis, property insured was conveyed to 198, treated a like clause as refer- S. W. & R. The policy continued" ring to the property covered by to cover so much as remained." the policy, and not to the policy ■ 1 Curtis, 193. ALIENATION. 463 in the title was material to and worked a change in the risk.^ Where the policy provides that " in case of any sale, transfer, or change of title in property insured by this company, or of any undivided interest therein, such insurance shall be void and cease," an assignment as collateral security is not a sale, transfer, or change of title within the meaning of the policy.^ And although such as- signment is absolute on its face, it may be shown by parol that it was in fact given for collateral security.^ A nominal conveyance of the insured property, without an actual change "of interest, as already stated, will not avoid a policy which contains a condition that the property shall not be sold or conveyed, or the interest of the parties therein changed. Hence the assignment of a title-bond held by the insured to a lienholder, to secure him for advancing the purchase-money stipulated to ' 1 Curtis, 193 ; Columbian Ins. defeat a policy of insurance to the Co. B. Lawrence, 3 Peters, 35. wife. A policy containing a clause 2 Ayres ■». The Hartford Ins. against alienation cannot be de- Co., 21 Iowa, 193. feated by a stranger to the trans- » Ibid. And where a husband action. "Nor should it be by a sold his wife's house, she not husband whose right to sue and having authorized the sale, and dispose of the wife's realty is not the sale being intended as a mere recognized." Com. Ins. Co. v. security, this does not operate to Spankneble, 53 111. 58. 464 PIRE I-N-StJEANOE. be paid to the obligor in the bond by the assured, and also to secure the payment of a judgment which was a lien upon the property older than the policy of insurance, if it does not increase the interest of such assignee and lienholder, and de- crease the interest of the party insuring, is not such a change of interest as defeats the policy of insurance.^ ' Ayres «. The Home Ins. Co., hold in secret trust for him, there 31 Iowa, 185 ; Ayres v. Hartford would be a transfer or change of F. Ins. Co., 17 Iowa, 176. Contra, titlefrom A. to B., but there would Western Mass. Ins. Co. v. Eiker, not be a sale of the property, or 10 Mich. 279. In the latter case an actual parting with it to B. for the condition of the policy was as a valuable consideration, although follows: "And in case of any sale, the conveyance on its face would transfer, or change of title in the import a sale of it by A. to B. property insured by this company, And if the trust, instead of being such insurance shall be void and secret, appeared on the face of the cease." conveyance, there would still be Manning, 3. "The words trans- a change of the title. The title fer or exchange of title are more would no longer be in A., but in comprehensive than the word sale, B., his grantee. We think such which immediately precedes them, a conveyance would clearly come A sale is a parting with one's in- within the condition of the policy, terest in a thing for a valuable and put an end to the insurance, consideration. This is what is And if such a conveyance would generally understood by the word, annul the policy, we see no reason and in every sale there is a trans- why the conveyance to Latourette fer or change of title from the should not have that eflFect. The vendor to the vendee. But there title of one-third of the mill was may be a transfer or change of in him, and not in the insured, title without a sale. Should A. when the Are occurred. There convey a piece of property to B. to can be no doubt that the deed, ALIEISTATION. 465 Effect of sheriff's levy on insurance. 13. A sheriff attaching goods has a special property in them, and such special property gives him an insurable interest.^ But the seizure of insured goods by the sheriff does not divest the assured of his general right of property in them. The most that the sheriff acquires by the seizure is a defeasible or special or qualified right of property.^ Hence the insurable interest of the owner of goods is not defeated by their being levied on by the sheriff by virtue of an execution, unless the contrary is provided for by the policy. A seizure of insured goods on execution without removing, or a levy of an execution on real estate, so long as the right of redemption remains in the debtor, is not an " alienation" in the sense of a policy of insurance, and does not avoid it.^ Under a clause like this, " The insurance by this policy shall cease at and from the time that being absolute on its face, and not ' Franklin F. Ins. Co. v. Find- in form a mortgage, placed tlie lay, 6 Whart. 483 ; Bice v. Tower, title in Latourette. He could have 1 Gray, 426. sold the property and conveyed a ' Rice v. Tower, 1 Gray, 436 ; good title to his vendee, if the Clark v. N. E. Mut. F. Ins. Co., latter was ignorant of the circum- 6 Cush. 342 ; Strong v. Manuf. Ins. stances under which he had ac- Co., 10 Pick. 40 ; Phoenix Ins. Co. quired the title." o. Lawrence, 4 Met. (Ky.) 9. ' White V. Madison, 26 N. Y. 117. 30 466 FIRE INSUBANCE. the property hereby insured shall be levied on or taken into possession or custody under any pro- ceeding in law or equity," it has been held that if the sheriff, with the goods in view and within his power, asserts that he makes a levy upon them, which in Pennsylvania is considered equivalent to an actual seizure of the goods, yet this is not such a taking into possession as will avoid the policy. To effect that, there must be an actual levy, and change of possession under it. l^or does such a clause apply to a wrongful levy, as where the property insured is seized as the pro- perty of another.^ If or does such a clause apply to a case where the property is under levy at the time of making the insurance. It is altogether prospective, and refers only to a taking in exe- cution after the insurance has been effected.^ Wliether lease of premises is alienation. 14, As " alienation" means an absolute transfer of title, it would seem necessarily to follow that no mere transfer of possession by a lease could affect an existing insurance. And so the courts hold.^ Insurance was effected on a store, and two " Com. Ins. Co. ■». Berger, 6 Wr. ' Lane v. Maine Mut. Fire Ins. 285 ; Phila. F. and L. Ins. Co. v. Co., 3 Me. (Fairfield) 44 ; West Mills, 8 Wr. 341. Branch Ins. Co. «. Helfenstein, 4 8 RexD. Ins. Co., 2 Phil. R. 357. Wr. 28d. ALIENATION". 467 hundred dollars on the stock of goods therein, for the period of six years, and during the existence of the policy the assured sold all the goods and leased the store by parol to the purchaser of the goods. The latter occupied the. premises about six months, meanwhile selling a portion of the goods. The assured then took back the store and what goods remained unsold. The question was whether this hiring and occupation of the store by the tenant was such an alienation of the pro- perty as avoided the policy under the clause against " alienation by sale or otherwise ;" and whether the policy attached to any goods the assured might have in the store at any time within the life of the policy, not exceeding the amount insured. It was held that the occupation of the store by the tenant was not an alienation within the true meaning and intent of the act of incorporation ; and that the policy covered such goods as the insured might have in the store during the life of the policy, and was not con- fined to such as were there at the time of as- suming the risk.^ ' Lane b. Maine Mut. Fire Ins. West brancli Ins. Co. v. Helfen- Co., supra. To the same effect, stein, supra. 468 PIEE INSURANCE. Sale of insured goods. . 15. It must necessarily be understood by the parties that where a policy is issued to a mer- chant on a stock of goods for a definite term, it is applicable to the goods successively in the store from time to time.^ The alienation clause, ' Hooper v. The Hudson. River Fire Ins. Co., 17 N. T. 424 ; Hoflf- mann v. ^tna Ins. Co., 33 N. Y. 405 ; West Branch Ins. Co. v. Hel- fenstein, supra. In Hooper ». The Hudson River Fire Ins. Co. the goods of the insured were sold upon execution, and purchased by Hooper, the plaintiff, who applied to the insurers and, without dis- closing the interest he had in the property, obtained from them a consent, indorsed on the policy, that the interest of the original insured be assigned to him. Sub- sequently a written assignment of the policy was made to Hooper, and afterwards a portion of the property was destroyed by Are. It was contended that the sheriffs sale of the insured goods rendered the policy void. The decision, however, was otherwise. " After the sale," said Pratt, J., "and previous to the assignment of the policy tp the purchasers, the effect of the policy as an indemnity was suspended, not from any vice in the policy, but from the absence of a subject for it to act upon. Had a fire occurred during this time, no recovery could have been had against the underwriters ; not because the policy had become void, but because the insured had suffered no loss. The owners of the goods would have had no claim, for the reason that, at the time, they had no interest in the policy ; yet the policy still con- tinued to be a valid subsisting contract in the hands of the in- sured, and had they subsequently purchased the same goods, or other goods, and brought them into the store, they would have been covered by it. And having b6en assigned to the plaintiff by consent of the company, he took the place of the insured, and the policy, therefore, reattached to the goods. The plaintiff, therefore, was clearly entitled to recover. It was insisted, upon the argu- ALIENATION. 469 therefore, in a policy of insurance, does not apply- to a stock of goods kept for sale. The assured may sell and replace his entire stock as often as his own interests may require, and the policy protects whatever goods may chance to be on hand when a fire occurs.^ This rule is applicable where the assured sold the goods, and the pur- chaser afterwards sold them to the wife of the assured, to whom the assured, with the consent of the company, subsequently transferred the policy. In a case like that, the insurer will not be allowed to object that the assignment from the assured to his wife was void, on the ground that husband and wife are incompetent directly to contract with each other. He should have discovered the invalidity of the assignment when his assent to it was asked, and made his objec- tion then. Insurance companies, in such matters, ment, that the company had no the business was conducted, and notice of the sale to Hooper. T^e that the policy remained unaffect- fact tliat he requested an assign- ed, notwithstanding one of the ment of the policy was sufficient partners had aZt«7ia<«£Z his interest notice that he had acquired or was to his co-partners. But on this about to acquire some interest in latter point we shall dwell more the goods." particularly in a subsequent part In Hoffman «. ^tna Ins. Co., of this chapter, under the title of supra, it was held that the policy "sale by partner or co-tenant." was intended to cover the goods ' Wolfe v. Security F. Ins. Co., that might from time to time be 39 N. f. 40. brought into the building in which 470 PIEE INSURANCE. must exerpise the most complete good faith, and the courts will not permit them to violate it.^ A condition that "in case of any transfer, partial transfer, or change of title in the property- insured, such insurance shall be void and of no effect," is not applicable to the case of a trades- man who effects insurance upon his storehouse and stock of goods therein, each for a certain sum, and afterwards sells a part of his stock, without notice to and without consent of the insurer, and leases the lower story to the pur- chaser, occupying himself the second story and the cellar with the residue of his stock, such residue at the time of loss exceeding in value the insurance obtained on his goods.^ Of course he loses in such a case all claim for indemnity ' Wolfe V. Security F. Ins. Co., never sold or transferred to them 39 N. Y. 49. or any one else. The policy was 2 West Branch Ins. Co. «. Hel- on a frame storehouse situate in fenstein, 4 Wr. 289. Woodward, thevillageofTiverton, andastock J., in delivering the opinion of of goods within the same. The the court in this case, said :" The storehouse was valued at $3000, fourth condition is said to have and the merchandise at $1000. been violated by liis sale of goods Some months after the date of the to Herb & Deppin. If he were policy Helfenstein sold to Herb & suing for the value of the goods Deppin all the goods on the lower transferred to those purchasers, floor of the store, and admitted the doctrine of Finley «. The Ly- them, on the first of October, 1856, coming Mut. Ins. Co., 6 Casey, to the possession of that part of 311, would be decisive against the storehouse, for the purpose of him ; but the goods in respect of making merchandise of the goods ; which he claims indemnity were but he retained all the goods on ALIENATIOK. 471 SO far as the goods sold are concerned ; but his claim for a loss, with respect to the goods re- tained, holds good. the upper floor, and these were proved to exceed in value the $1000 of insurance. The indem- nity he claims is for the building and the goods on the upper floor. The question is whether he has forfeited his right to indemnity by failing to give notice of the partial sale to Herb & Deppia. The language of the fourth con- dition cannot fairly be applied to forbid such a sale, because the policy was on merchandise, which is property not to be kept un- changed, but to be used for traffic and commerce. Assuredly the in- surance company did not expect the merchant they were insuring would stop his sales, or report to them every sale he made. If he lost a thousand dollars' worth of goods in that store by fire, he is entitled to indemnity, without re- gard to any transfer, partial trans- fer, or change of title 'in other goods' which he may have had in the store at the date of the policy. He cannot and does not claim for the goods transferred to Herb & Deppin. The transfer to them does not impair his right to in- demnity for the residue. Nor can the words of the fourth clause be so construed as to make the ad- mission of Herb & Deppin to a joint possession of the store build- ing a breach of covenant. Those words do not relate to the pos- session, but to the title. It is transfer or change of title in the property insured which is forbid- den. There was . no transfer or change of title of the storehouse or of the goods for which plaintiff now claims indemnity. If the company meant to prevent a change of occupancy or custody, they should have stipulated against it. We see no more violation of this condition by admitting Herb & Deppin to the possession of the lower floor of the store than we should have seen in a change of clerks, porters, or watchmen by Helfenstein. Policies do some- times forbid a change of tenants without notice, and for a very good reason ; but this policy does not. The language of the fourth condition, applicable alike to the real and personal property, relates exclusively to changes of title, and has no reference to the pos- session. We satisfy these words fully when we hold that in respect to the goods transferred to H. & 472 riEE INSURANCE. A Uenation of one of several estates. 16. It is a question left in doubt by the autho- rities whether the alienation of one of several estates, separately insured by the same policy, avoids the policy altogether, or only so far as the estate alienated is concerned. We have con- sidered it elsewhere.^ WTiether mortgag e of chattels is alienation. 17. "While, as before stated, a mortgage of real estate is not " alienation" in the sense of a policy of insurance, yet a mortgage of chattels, with transfer of possession, is such alienation; other- wise not.^ Even a sale of chattels, the vendor holding them as security for unpaid purchase - money, does not avoid a policy of insurance.' D., Helfenstein could set up no and specific amounts, it was held, claim ; biit that in respect to the that the sale of one would not untransferred portion of the goods affect the insurance on the other, and the storehouse his claim is ^ Phoenix Ins. Co. v. Lawrence, unimpaired." 4 Met. (Ky.)9; Rice ». Tower, 1 1 Ante, p. 331, note 3. Cray, 426. In Com. Ins. Co. ■». Spankneble, ' Mtna, Ins. Co. ■». Jackson, 16 52 111. 53, the policy covered a B. Monroe, 242. building, also, a boiler, etc., in the A fortiori an agreement to sell building. There was the usual is not enough to divest the ven- stipulation against sale or change dor's interest in the property. See of title. As the building and Pitney ■». Glens Falls Ins. Co., 61 boiler were insured in separate Barb. 335. , ALIENATION. 473 Thus, A., after insuring his goods in two com- panies, sold them to B., who paid a part of the purchase-money, and gave his judgment note for ^ the balance. By agreement of the parties, A. retained possession of the goods, and held the policies of insurance as collateral security for the residue of the purchase-money. A loss occurred, and the insurance companies contested A.'s right to recover, on the ground that he had parted with his insurable interest. It was held that he must be considered as owner to the ex- tent of the unpaid purchase-money.^ Hence a policy of insurance on goods is not discharged in consequence of an executory con- tract, and part payment on account thereof, where the property, possession, and risk remain with the vendor. The property being afterwards de- stroyed, the execution of the contract becomes impossible, and the vendor is entitled to recover the full amount of his insurance. But, at the same time, he is bound to refund what has been paid to him by the vendee as money received on a consideration which has failed.^ ' Norcross v. Ins. Co., 5 Harris, Co. v. Eoyal Ins. Co., Ibid. 381. 429 ; Vogel ts. People's Mut. Fire These cases are distinguishable Ins. Co., 9 Gray, 23. from Norcross v. Ins. Co., supra, 2 Weed V. Boston and Salem Ice in this, that there was no complete Co., 12 Allen, 377; Boston Ice sale; that it was in terms apart 474 FIRE INSURANCE. To constitute a breach of the condition of in- ' surance relating to alienation, there must be an actual sale or transfer of the subject of insurance, valid as between the parties. A change of title is necessary to invalidate the contract. Perhaps it is not material to prove that the transfer is absolute ; nor that it conveys the whole right of the plaintiff in the property; nor that it is a valid conveyance as to creditors. But it is essential that there should be at least the form of a trans- fer. Hence a mere agreement between the owner of property insured and another person, to repre- sent to the creditors of the owner, in order to prevent attachments, that it had been sold to such other person, does not avoid the policy, although the policy is upon condition that the insurance shall be void "in case of any S9,le, transfer, or change of title."^ On the other hand, of the agreement that the goods ' Orrell v. Hampden Fire Ins. were to remain the property of the Co., 13 Gray, 431. The words vendor until they were removed " change of title" mean some act from his premises and sold. In which diverts it absolutely. Other- Tallman «. Atlantic Ins. Co., 40 wise, if the property was mort- N. Y. 87, it was held that the gaged when insured, payment of veidor in an executory sale, with the mortgage before the loss a proviso that the title is to re- would work "a change of title." main in himself until the property Van Deusen v. Charter Oak P. is paid for, retains his insurable and M. Ins. Co., 1 Robt. 55. interest, although he parts with the possession. ALIENATION-. 475 •where the policy is made void if the title of the property is transferred or changed, and it is a condition of the contract that "the entry of a foreclosure of a mortgage" shall he deemed an alienation of the property, any act which of itself, and without any further formality or pro-' cess on the part of the mortgagee, will deprive the mortgagor of all right and title to the pro- perty, unless he pays the debt, is sufficient to terminate the insurance.^ Sale hy partnei' or co-tenant. 18. Where insurance is effected by partners or co-tenants, a sale of all his interest by one tenant in common to his co-tenant, or by one partner to another, is within the prohibition of a policy of insurance which declares that alienation " by sale or otherwise" shall forfeit the policy.^ ' Mclntire ®. Norwich Ins. Co., The New York courts hold di- 102 Mass. 230. rectly to the contrary. In a re- ' Finley t. Lycoming Co. Mut. cent case, Hoffman ». JEtna Ins. Ins. Co., 6 Casey, 311 ; Buckley Co., 32 N. Y. 405, it was decided V. Garrett, 11 Wr. 304 ; Hartford that a proviso against sales does Fire Ins. Co. v. Ross, 23 Ind. 179 ; not interdict sales of the owners Keeler'»..NiagaraFireIn3. Co.,16 as between themselves, but only Wis. 523 ; Dix v. Mercantile Ins. sales of proprietary interests by Co., 22 111. 272. I have followed the parties insured to third per- in the text the doctrine of the sons. Bee also Tillou v. Kingston cases cited above, but not with- Mut. Ins. Co., 7 Barb. 570; Wil- out doubt as to its correctness, sons. The Genesee Mut. Ins. Co., 476 riEB INSUBANCE. And under a clause against "a transfer or change of title in the property insured," a disso- lution of partnership and division of the part- nership property among the partners, so that the parties are to hold their shares separately and distinctly, is not strictly a sale of the goods, yet it operates a change of title in the goods, and discharges the insurers.^ A policy issues to A., and, during its continu- ance, A. sells to B. one-half of the subject of 16 Barb. 511 ; Buflfalo Steam En- where two partners in trade took gine Works v. The Sun Mut. Ins. an insurance on their stock of Co., 17 N. Y. 412. goods, and during the continu- It was said by Robertson, J., in ance of the policy, and before the 19 Abbott's Practice R. 335, 340, loss, one of the partners sold and that the rule adopted in Pennsyl- assigned his interest in the stock vania and other States was the re- of goods to the other, but did not suit of " some misapprehension" assign the policy, which provided 'of Howard «. Albany Ins. Co. (3 "that it should become toid by Denio, 301), and Murdock v. Che- assignment without consent of the nango Ins. Co. (3 Comst. 310). underwriters," it was held that a Burnett «. Enfaula Home Ins. part only of the property being Co., 46 Ala. 11. In the latter case assigned, the risk continued upon the doctrine of the New York the insurers as to the residue, courts in Hoffman v. Mina Ins. That is, while there could be no Co. and Wilson v. Genesee Mut. recovery upon that portion of the Ins. Co., supra, is followed, and property assigned, because it had it is supported by the weight of been alienated, .yet the -assignee authority. could recover for his remaining I Dreher v. ^tna Ins. Co., 18 interest in the property, there Mo. 138. In Hobbs «. Memphis having been no transfer or assign- Insurance Company, 1 Sneed, 444, ment with respect to that. ALIENATION. 477 insurance, but with the knowledge of the in- surer's agent, and A. and B. then form a part- nership. Upon the expiration of the policy, a renewal certificate is issued by the insurer to A. & Co. The renewal certificate is not complete in itself, but refers to the policy, and makes it a part of the contract. The two papers, then, are but parts of the same transaction, and must be so construed as to make one contract, and, being in force at the time of the fire, must determine the rights of the parties. And the construction adopted in the case of Lancey v. Phoenix Insur- ance Company^ was that the insurer intended to continue the insurance on the same property and on the same terms and conditions as expressed in the policy, but to A. & Co., who paid the pre- mium. It is not of itself sulSScient evidence of waivei' by the insurer of notice and transfer of a policy, as required by its conditions, that he continued to receive assessments on the premium note of the copartners after the sale. "No one is held to have waived his rights until it be shown that he has done so with a knowledge of them, or where it is his bounden duty to know them.^ It would be otherwise if he knew of the aliena- > 56 Me. 563. ' Finley v. Lycoming Co. Mut. Ins. Co., supra. 478 PIRE IN-SUEANCE. tion, and, notwithstanding, continued to receive premiums.^ Conveyance to trustees. 19. Where the policy provides that the aliena- tion in any way of any property. insured by the company shall ipso facto make void the policy, unless notice of the alienation is given to the secretary, and an assignment made of the policy to the new owner of the property within sixty days after the alienation, it has been held that an assignment of the insured premises to trustees, to sell the same and to pay the debts secured by the assignment, is such an alienation of the pro- perty as avoids the insurance; there being no notice of the conveyance to the company, and no assignment of the policy, as required. And it is sufficient to effect this, even though the assign- ment might be fraudulent and void as against creditors.^ In the case where this was held, after the conveyance to trustees, other creditors came in, and the property was sold at auction by de- cree of the Circuit Court of the United' States, and this took away even any equitable interest which the assignors had in the estate.* ' Buckley «. Garrett, swpra; Worcester Mut. Fire Ina". Co., 11 Keeler v. Niagara Fire Ins. Co., Met. 439. supra. 3 Ibid. , 2 Dadman Manufacturing Co. ®. ALIENATIOir. 479 "Where the insured is decreed a hanhrupt, this divests him of his property and vests it in the assignee, and is "alienation, and defeats the policy.'" So is any material change in the title, • Adams v. Rockingham M. F. made by a company acting as a Ins. Co., 29 Me. 293 ; Perry v. mutual insurance company, and The Lorillard F. Ins. Co., 6 Lan- accepted 'under the conditions sing's R. 201. In Young v. and limitations expressed in said Eagle Fire Ins. Co., 14 Gray, by-laws,' as is declared on the 150, the case was thus stated by face of it. Looliing at the case in Dewey, J.: " By the twelfth article this aspect, we find, m the first of the by-laws of this insurance place, the terms of the by-law as company it is provided that to an alienation to be very general ' when any property insured by —if the property ' shall in any this company shall be taken pos- way be alienated.' That this pro- session of by a mortgagee, or in perty was in fact alienated, must any way be alienated, the policy be admitted. Such a deed to as- shall be void.' The question is signees, by the terms of the statute, whether the present case falls ' shall vest in the assignees all the within that provision. It appears property of the debtor, both real that the assured, upon his volun- and personal, which he could by tary application to the judge of any way or means have lawfully insolvency, procured the institu- sold, assigned, or conveyed.' The tion of proceedings against his legal estate is as eflFectually passed estate, and that the judge, by a from the debtor as if he had con- deed of assignment in the usual veyed the same by a deed of war- form, on the first of June, 1857, ranty to any third person. The assigned all the property of the only ground for maintaining any insolvent, including the property distinction is, that this was a se- insured, to assignees. This was questration of the property for more than five months before the the benefit of creditors under the loss by fire occurred The provisions of the statute. As re- rights of the plaintifife are to be sj)ects this policy, the difference settled by reference to this policy, is immaterial; The legal interest 480 PIEB INSURANCE. though not by alienation, sufficient to avoid a policy of insurance, as the change resulting from proceedings for partition.^ is gone ; the right of possession released from their obligation to is gone. Neither those who hold indemnify against loss by fire ; the estate, nor those for whom it otherwise there would be no mu- is held, are members of the com- tuality in the contract between the pany, or liable to be assessed for parties." Grason, J. future losses that may occur on ' Barnes «. The Union Mut. F. other policies. . .. The provision Ins. Co., 51 Me. 110. In this case that fifteen hundred dollars of the the plaintiff applied for insurance amount insured should be 'pay- on "one-half, in common and able, in case of loss, to Charles undivided," of certain buildings Marston,' who was a mortgagee and household furniture therein, of the premises, does not change In answer to the question, "Who the result. The policy was not owns and occupies the buildings?" on his interest as mortgagee, but he answered, "The applicant a policy in favor of the mortgagor owns and occupies the property." and on his interest ; and any for- " The title," said Davis, J., "in feiture, by reason of a breach of the case at bar, was materially the by-laws, that would defeat changed by the partition. The the policy as respects Worcester, eflfectwas equivalent to an aliena- the party for whom the policy was tion and a purchase. The plaintiff made, is equally fatal to Marston, no longer owned any interest in whose rights merely attach to a the entire property, while he did legal claim for a loss arising upon own the entire interest in a part of the interest of Worcester. Loring it. It was the same as if he had V. Manufacturers' Insurance Co., given his co-tenant a deed of his 8 Gray, 28." interest in a specific part, and had See also Reynolds v. Mut. F. received from such a deed of the Ins. Co., 34 Md. 280. other part. His title no longer "If the insured be discharged corresponded with the policy, in from their liability to pay, it fol- nature or quantity." lows that the insurers were also ■ CHAPTER XV- ASSIGNMENT OF POLICY. 1. Whether a fire policy is as- 9. Holding a policy as collateral signable. security. 2. Verbal assent to assignment. 10. Assignment of policy with- 3. Insnfla.cient assent. out transfer of insured property. 4. Assent of the secretary binds 11. Effect of assignor's acts after the company. assignment. 5. When assent of insurer ere- 12. New contract by assignee ates a new contract. with insurer. 6. Executory agreement by 13. Assignment after loss, vendor and mortgagor to insure. 14. Construction of particular 7. Loss payable to a third per- clauses. son. 15. Effect of a general assign- 8. Agreement by vendee to in- ment. sure for benefit of vendor. 16. Assignment of voidable po- licy. Whether a fire policy is assignable. 1. Policies against loss by fire, as we have elsewhere seen/ are not in their nature assign- able, nor can the interest in them be transferable from one to another without the express consent of the insurer. They are merely contracts to make good the loss which the contracting person himself should sustain.^ Accordingly, if A. purchases a house which is insured against fire, 1 Ante, p. 82. ^ Lynch v. Dalzell, 4 Brown's Pari. Cases, 431. 31 482 FIRE INSTJEANCB. and, without the' assent of the insurer, takes an assignment of the policy of insurance, he cannot recover in case of loss.^ Verhal assent to assignment. 2. It is usually provided in the policy that the assent of the insurer to an assignment shall be manifested in writing ; but, in the absence of such a condition, it must be shown that notice of the assignment was given to him, and that he assented to it. "What amounts to a sufficient notice is a question of fact, but it must be clear and distinct. What drops out in ordinary con- versation between an agent of the assignee, who goes to the office to pay the annual premium, and a clerk of the insurer, is altogether insufficient.^ Insufficient assent. 3. Where a mortgagee is authorized by a con- dition of the policy to receive an assignment of it, " on his signing the note for premium and ob- taining the consent of the company," and another condition prohibits any "assignment of the policy without the consent of the company in writing," ' Lynch v. Dalzell, 4 Brown's See also Fogg v. Middlesex Fire Pari. Cases, 431. See also Sadler's Ins. Co., 10 Cush. 337. Co. V. Badcock, 3 Atkyns, 554. ' Ex parte Carbis, 4 Dea. & Chitly, 854. ASSIGNMENT OF POLICY. 483 such consent cannot be inferred from the fact that in his written application for insurance the insured expressed the wish to assign, and from the further fact that the policy subsequently issued referred to the application. The most that can be inferred from the issuing of the policy with the knowledge that the insured wished to assign is that the insurers were ready to consent to an assignment to the mortgagee on the terms mentioned, to wit, on his signing the premium note, or giving security for the payment of the same.^ Assent of the secretary hinds the company. 4. If, by the charter of the insurers, the con- sent and approval of the directors are required to make effectual an assignment, the consent of the secretary to an assignment is the consent of the directors. A formal vote of the board is not necessary for this purpose. It is enough if their assent may fairly be presumed from the acts of their authorized, agent or from their own acqui- escence.^ ' Smith c. The Saratoga Mut. " Durar v. Ins. Co., 4 Zabris. Fire Ins. Co., 3 Hill, 508. See 171. also Ferree v. Oxford F. & L. Ins. Co., 17 P. F. Smith, 373. 484 riEE INSURANCE. When assent of insurer creates a new contract. 5. In general, at the common law, where one party assigns all his right and interest in the contract, and the assignee gives notice to the other party to the contract, and he agrees to it, this constitutes a new contract between one of the original parties and the assignee of the other, the terms of which ave regulated and fixed by those of the original contract. This rule applies to policies as well as other contracts, and it is often convenient and desirable to apply it. As, for example, where the insured property is alien- ated or sold by the assured. After such sale, if nothing more is done, no surrender or change of the policy, nobody could recover on it in case of loss ; not the original insured, because, having parted with the property, he sustained no loss ; not the purchaser, because he has no contract with the company. But, in case of such sale or alienation of the insured property, if the original assured assigns his policy to the purchaser, and the insurers assent to it, here is a new and origi- nal contract, embracing all the elements of the contract of insurance, between the assignee and the insurers. Accordingly, provision is usually made in the charter, and by-laws, and also by the terms of the policy, for an assignment of the ASSIGNMENT OF POLICY. 485 eonti'act. Upon the assignment being perfected, there is an entire change in the contract, in the party contracted with, in the insurable interest in the property at risk, and it becomes an insurance on the property of the assignee, and ceases to be a contract of insurance of the property of the assignor.^ In the case of the City Fire Insurance Com- pany of Hartford,^ a partner took a stock of goods on a debt due the firm. He did not mix this stock with that of the firm, but kept it separate, and finally sold it. Prior to the sale, , however, he had efiected insurance on the goods, and in his own name. When the goods were sold, the policy of insurance was assigned to the purchaser, with the written consent of the in- surers indorsed thereon. On a loss occurring, the insurers denied their liability, on the ground that the policy contained this clause: "Any in- terest in property insured, not absolute, or that is less than a perfect title, must be specifically represented to the company and expressed in this ' Fogg V. Middlesex Mut. Fire Works v. The Sun Mut. Ins. Co., Ins. Co., 10 Cusli. 337, 3?iaw, C. 17 N. T. 401 ; Hale v. Mechanics' J. ; Hooper v. Hudson River Fire Mut. Fire Ins. Co., 6 Gray, 169 ; Ins. Co., 17 K. T. 434, Pratt, J. ; Loring v. Manuf. Ins. Co., 8 Gray, Phillips on Ins., vol. 1, sec. 84. 28; ante, p. 413. See also the Buffalo Steam Engine ^ 45 m. 483. 486 PIRE INSURANCE. policy in writing, otherwise the insurance shall be void ," and as the interest of the assignor of the policy was only that of a partner, and yet was not so represented, the policy was void. "Without expressing any opinion as to whether the policy might have been avoided on this ground if the loss had occurred prior to the assignment, the court held that when the goods were sold, and the policy was assigned with the written consent of the company, the purchaser took an absolute and complete title in the goods, and it was im- material to the company what was the nature or degree of the interest the assignor had in the property, as between him and the firm of which he was a member. By the assignment with the consent of the company a new insurance in sub- stance, though not in form, was granted to the purchaser.^ Effect of mortgagor's and vendor'' s executory agreement to insure. 6. An executory agreement by the mortgagor to insure for the benefit of the mortgagee, whether express or implied, give's to the latter an equitable lien upon the money due upon a policy taken out by the former upon the mortgaged premises, to the. extent of the interest of the mortgagee therein, ' See ante, p. 413, note 1. ASSIGNMENT OF POLICY. 487 which a court of equity will enforce to the satis- faction of the amount due upon the mortgage.^ Where an agreement is made for the sale of the insured premises, and the purchaser is to execute a mortgage to secure the payment of the purchase-money, and where it is also agreed by parol that the vendor should assign to the vendee the policy of insurance and obtain the assent of the insurers thereto, and before the agreement is carried into execution the premises are destroyed, it is held that the vendor is entitled to recover the insurance money, notwithstanding that subse- quently to the loss the contract of sale is carried into effect, no assignment of the policy having taken place. But, nevertheless, he would be bound to apply it in reduction of the vendee's debt. In other words, the vendee would be en- titled to the benefit of the insurance.^ A. gives B. a bond for a deed, and lets him into possession of the premises. Subsequently A. applies for insurance, and informs the insurers that he had given such bond to B. A policy is ' See Nicholas v. Baxter, 5 R. I. contract to transfer the policy was 491 ; Thomas v. Van Kaff, 6 Gill treated in effect as a part of the & J. 373 ; Carter v. Rockett, 8 contract for the sale of the pro- Paige 437. perty, and as giving the vendee a 2 Wheeling Ins. Co. v. Morri- right to the benefit arising frdm son, 11 Leigh, 354. Under the cir- the insurance money, cumstances of this case, the parol 488 riEE INSUBAKCE. issued to him, and by indorsement thereon he assigns and transfers it to B., for his benefit in case of loss. The president of the company in- dorsed his assent to this assignment, and both were recorded by the secretary. A loss occur- ring, B. sought to recover the insurance. It was held that the clause about alienation and renewal of the policy was not applicable to the facts of the case. There was no alienation of the insured property. A. owned it at the time of the insur- ance and at the time of the loss. The only effect of the assignment of the policy to B. was to authorize the insurers to pay' to him instead of A. the amount of any loss for which they might be liable under the policy.^ Loss payable to a third person. 7. Where the policy provides that the loss, if any, is payable to another — to a mortgagee, for example — instead of the assured, it is merely a designation of the person to whom it is to be paid, and is not an assignment of the policy. Hence it is the damage sustained by the party insured, and not by the party appointed to receive payment, that is recoverable from the insurers.^ ' Phillips V. Merrimack Mut. F. Co., 17 N. Y. 391. See also Frink Ins. Co. , 10 Cush. 350. ». Hampden Ins. Co. , 45 Barb. 384 ; 2 Grosvenor «. The Atlantic Ins. Loring v. Manufacturers' Ins. Co., ASSIGNMENT OP POLICY. 489 The insurance being upon the interest of the in- sured, if he parts with that interest before the fire, no loss is sustained by him, and of course none is recoverable by his assignee or appointee,^ In other words, a policy made " payable to A. in case of loss" is an agreement on the part of the insurers that "A." shall recover whatever the person originally insured may be entitled to re- ceive in case of loss ; that is, it is a contingent order or assignment of what may become due under the contract, and not an absolute transfer by virtue of which the assignee acquires the full rights of an assignee of a chose in action.^ 8 Gray, 28 ; Macomber v. The ment collateral to and dependent Cambridge Mut. F. Ins. Co., 8 upon the original' undertaking Cush. 133. In Frink «. Hampden that after a loss had occurred, Ins. Co., supra, the policy set and not before, the money should forth that the "loss, if any, was be paid over to the appointee, payable to F., as collateral." F., and was not an assignment of prior to the insurance, loaned H., the policy prior to a loss, who afterwards insured as above, ' Carpenter v. The Providence his notes, which were in the hands Washington Ins. Co., 16 Peters, of bona fide holders, and at the 495. time of the loss F. was liable * Hale v. Mechanics' Mut. Fire upon said notes to an amount ex- Ins. Co., G Gray, 169. See also ceeding the insurance money. F. Fogg «. Middlesex Mut. Fire Ins. brought an action to recover the Co., 10 Cush. 346. It was said in sum due upon the policy ; and it Bidwello. St. Louis Floating Dock was held that it could be main- and Ins. Co., 40 Mo. 43, that a tained ; that the loss being pay- policy insuring a certain person, able to him was in effect an agree- and making the loss, if any, pay- 490 FIRE INSURANCE. The Massachusetts cases hold that if this con- tingent order or assignment is assented to by the insurer, and a loss occurs for which he is liable, the assignee may maintain an action in his own name, and this upon the ground thaft the insurer assenting to the assignment thereby agrees to pay the assignee instead of the assignor.^ Al- able to another person, may be while the pohcy is in the hands of regarded as having been assigned a bona fide holder entitled to the at Its inception, with the consent payment of the loss, if any. of the company. See also Nat. Marsh t>. Northwestern Ins. Co., Fire Ins. Co. ■». Crane, 16 Md. 260; 3 Bissel's R. 351. See also Xenos Brown o. Roger Williams Ins., 5 «. Wickham, Law Journal (C. P.), R. I. 394 ; but the assignee in such 13. case can have no greater or su- ' See Wilson s. Hill, 3 Met. 66 ; perior rights than the insured. Fogg v. Middlesex Mut. Fire Ins. Archer ■d. The Merchants' and Co., 10 Cush. 337; Hale a. Me- Manuf. Ins. Co.,43Mo. 434. And chanics'Mut. F. Ins. Co., 6 Gray, it was also held in the cases cited 169; Loring i;. Manuf. Ins. Co., below that an indorsement on the 8 Gray, 28. But notwithstanding policy by the insurers that the these cases maintain the right of loss,, if any, "payable to A.," is the assignee to sue in his own an admission by them that A. has name under the circumstances an interest in the contract and is stated in the text, they admit that to receive the benefit of it. The the original contract remains ; the policy thereby is at its inception assignment and assent to it form assigned to him with the assent of a new and derivative contract out the company. Franklin «. The of the original. But the contract National Ins. Co., 43 Mo. 491; remains as a contract of guaranty National Fire Ins. Co. ». Crane, to the original assured ; he must 16 Md. 360. Bates ». Equitable have an insurable interest in the Ins. Co., 10 Wallace, 33. The property, and the property must insurer has no authority to can- be his at the time of the loss. The eel, or give notice of cancellation, assignee has no insurable interest. ASSIGNMENT OF POLICY. 491 though there is evident force in this view, it has not received, as we shall see hereafter, universal assent. A.greement ip vendee to insure for benefit of vendor. 8. Where the vendee agrees to insure the pre- mises, and to make a due and valid assignment of the policy to the vendor, but, after procuring insurance, fails to make such assignment, the vendor, in ease of loss, has an equitable lien upon the insurance money by virtue of the original agreement. In enforcing such a lien, a court of equity proceeds on the ground that the acts of the parties, or the operation of the law, or both, effect an equitable assignment of the subject of the lien. Such equitable assignment of the fund due upon the. policy is not, however, an assign- ment of the policy itself, and does not violate priMiz/acje, in the property burnt, the latter case it was held that and does not recover as the party where the loss, if any, is made insured, but as the assignee of a payable to A., mortgagee, by party who has an insurable inte- words to that effect written across rest and a right to recover, which the policy by the insurer, an as- right he has transferred to the signment of the policy by the in- assignee with the consent of the sured to A. is not necessary. His insurers. SMw, C. J., in Fogg v. right then appears on the face of Middlesex Mut. F. Ins. Co., supra, the instrument, and he can sue on See also Frink v. Hampden Ins. the policy without showing any Co., 45Barb. 384; Keeler®. Nia- other assignment. Keeler D.Nia- gara F. Ins. Co., 16 Wis. 523. In gara Fire Ins. Co., 16 Wis. 533. 492 riRB INSURANCE. the condition which prohibits any assignment of tlie policy without consent of the insurer.^ ' Cromwell v. Brooklyn F. Ins. Co., 39 Barb. 237; S. C, 44 N. Y. 42. In this case, the vendee, at first, procured insurance in his own name, but payable to the vendor. When that policy ex- pired the company refused to re- new it. He then took out a policy in his own name, loss, if any, pay- able to himself. The premises were destroyed by fire and the in- surance company paid the insur- ance money to the vendee, with notice of the vendor's equity. neld, that the vendee effected the insurance in pursuance of his agreement for the benefit of the vendor, and that the .company in refusing to recognize the latter's right to charge them as trustee of the fund due upon the policy, as- sumed the hazard of resisting his equity, and in paying the vendee, they did not thereby discharge their liability to pay the vendor or his assignee. See also Carter V. Rockett, 8 Paige, 437 ; Dickin- son V. Phillips, 1 Barb. 454 In the case of Insurance Company of Pennsylvania v. Trask, Legal Intelligencer, Jan. 13, 1871, where the mortgagor of a ship, by a stipulation in the mortgage, agreed to keep the vessel insured for the benefit j>f the mortgagee, and, in pursuance of such agree- ment, he effected insurance, in- dorsed the policy in blank, and handed it over to the mortgagee, it was held by the District Court of Philadelphia that this did not amount to an assignment of the policy in the sense of one of its conditions, but created a lien on the avails of the policy. The opinion of the court was delivered by Sare, President Judge, as fol- lows : — " This case arises under the fol- lowing circumstances : It is an attachment execution issued by the plaintiffs for the amount due on a marine policy executed by the defendants in favor of Trask, the defendant in the judgment. The garnishees admitted the exe- cution of the policy and the loss, but contended that the demand had been assigned by Trask prior to the attachment, as collateral security for a mortgage of the vessel to Wm. Bull, who appeared and took defence under the gar- nishees. " The evidence on this point was as follows : Trask mortgaged ASSIGNMENT OP POLICY. 493 Holding a policy as collateral security. 9. So, too, where A. procures insurance upon his property, and then enters into an agreement the ship to Bull by an indenture, " The assignment of a policy of dated July 18, 1867, containing a insurance may be viewed in two covenant to keep the vessel in- different aspects. In one of them sured for the benefit of the mort- it passes the insurance, considered gagee. There was no formal or as such. In the other it is a mere written transfer of the policy, but equitable transfer of the right to it was indorsed in blank by Trask receive any sum that may be due and given to Bull in pursuance of in the event of a loss. A pur- the covenant. These facts were chaser who buys a vessel and not contested by the plaintiffs at takes an assignment of the policy the trial ; but it was contended is substituted in place of the ven- that the transfer was invalid, be- dor. He must, it is true, sue in cause the consent of the insurers the name of the latter, but the had not been given as required by recovery is in his own right, and the policy, which contained the the defendants cannot rely on the following condition : ' Provided, determination of the insurable Ln- that nq assignment of this policy terest of the nominal plaintiff as a shall be valid unless the premium bar. The liability of the insurers has been paid or the note given is, under these circumstances, for therefor is further secured by a all practical purposes, the same as previous indorsement of the per- if the insurance had been effected son or persons for whose benefit in the first instance by the as- said assignment is intended, or signee. It is a qualified negotia- unless the consent of the insurers tion of the instrument, which may be first obtained.' The question be likened to the passage of a therefore is, whether there was covenant of warranty with the a failure to comply with the estate to which it is made in- terms of this provision invalidat- cident by the deed. Such is also ing the transfer of the policy to the rule in the case of an in- Bull, surance against fire, except that 494 FIRE INSURANCE. with B. by which the latter is to hold the the consent of the insurers is requisite to give validity to the transfer. " On the other hand, an assign- ment of the policy to a stranger in interest can only operate as an equitable appropriation or transfer of the damages that are or may be payable for the destruction of the property by the perils for which the insurers have agreed to be an- swerable. The fund is assigned, and not the contract, nor the right to be indemnified under it in the event of loss. The assignee stands in the shoes of the assignor with- out acquiring a new or indepen- dent status, and cannot recover unless the assignor has an insur- able interest when the loss occurs. Such an instance is afforded by the transfer of a policy as collateral security to a creditor who has no estate or interest in the premises insured. Bibend v. Liverpool, 30 Cal. 78. "In the cases above supposed the distinction is plainly marked and may be readily applied ; but there is a third, where the assign- ment may have a twofold opera- tion, and it is not always easy to say which was designed.. This occurs when the policy is trans- ferred to a mortgagee of the pro- perty covered by the insurance. Here there are two insurable in- terests, each of which may subsist and be a ground of action not- withstanding the determination of the other. The mortgagor is entitled to indemnity as the owner of the equity of redemption ; the mortgagee, by virtue of his lien for the debt ; and as the extin- guishment of the mortgage will not affect the right of the mort- gagor, so a sale or alienation by the mortgagor will not preclude a recovery by the mortgagee. Such at least is the case when the con- sent of the insurers is obtained, or is not requisite to the validity of the transfer, and there is no condition against alienation. . When, however, the insurance is against Are, or contains a pro- viso that it shall not be assigned without the consent of the in- surers, a different question may be presented. If the property is conveyed under these circum- stances, and the policy transferred to the purchaser without the sanc- tion of the insurers, the insurance will be at an end, and there can be no liability under it for a sub- sequent loss. The assignor cannot recover, because his insurable in- terest has been determined by the ASSIG:!. Clinton and Essex Mu- tual Ins. Co., 16 Barb. 254), now conform to the doctrine of the text. In Grosvenor b. The Atlan- tic Ins. Co., supra, the majority of the court were of opinion that there was no just ground of dis- crimination between the loss being made payable to the mortgagee, and an assignment of the policy to a mortgagee, to be held by him as collateral security for his debt, with the consent of the insurer. In either case the insurance is upon the interest of the mort- gagor. And any act of the mort- gagor which would avoid the policy in his own hands equally avoids it in the hands of the as- signee. But the assignee takes the policy burdened with no other equities than those which existed at the time of the assignment and notice thereof. The stipulations of the policy, however, are not equities, but legal rights, which are not cut off by the transfer of the instrument. But subsequently accruing equities between the ori- ginal parties, and those which may arise otttside of the contract, cannot affect the assignee. State Mut. Fire Ins. Co. v. Roberts, 7 Casey, 438, Strong, 3. Citizens' F. Ins. Co. ®. Doll, 35 Md. 89 ; 111. Mut. Fire Ins. Co. «. Fix, 53 111. 151. In this case the court refer to and explain the prior cases of N. E. F. & M. Ins. Co. v. Wetmore, 33 111. 242, and City P. Ins. Co. «. Marks, 45 111. 482. 504 FIRE INSUEANCB. New contract hy assignee with insurer. 12. It has been held, however, that where the assignee has given a new deposit note, and a guaranty of the payment of the premiums and assessments on the policy, a new, substantive, and distinct contract of insurance arises, for a new and independent consideration, and the as- signee is no longer affected by the acts of the assignor.^ But in Edes v. Hamilton Mutual Insurance Company," Bigelow, C. J., referring to the case of Foster v. Equitable Insurance Com- pany,^ said that the decision, although fully war- ranted by the peculiar facts which were there shown to exist, was nevertheless going as far as the rules of law would permit in order to sustain a claim for loss under a policy which had been assigned by the original insured. Assignment after loss. 13. The restriction in fire policies against the assignment of the interest of the assured in the policy applies only to transfers made h^ore, and not to transfers made after the loss happens.^ If ' Foster v. Equitable Mut. Fire « Goit v. National Protec. Ins. Ins. Co., 2 Gray, 216. Co., 35 Barb. 189 ; Wilsons. Hill, 2 3 Allen, 362. 3 Met. 66 ; West Branch Ins. Co. s 3 Gray, 216. v. Helfenstein, 4 Wr. 389 ; Court- ASSIGNMENT OF POLICY. 505 it were applicable to a transfer after a loss, it would, it is said, be void, as being opposed to public policy.^ An assignment made after the loss occurs, stands on the same footing as the ney v. N. York In3. Co., 28 Barb, competent for the parties to make 116; Miller t). The Hamilton Fire a valid agreement that an as- Ins. Co., 17 N. Y. 609; Perry v. signment of any interest of the Merchants' Ins. Co., 25 Ala. 355. assured, after a loss, should avoid ' And a condition that neither the policy ? In my opinion, such the policy nor any claim thereun- an agreement is valid and lawful. der shall be assigned either prior I am unable to perceive that it or subsequent to a loss, without would violate any rule of public the consent of the insurer, mani- ' policy any more than the prohi- fested in writing, and if assigned bition of an assignment before a withont such consent, then the loss, which is confessedly lawful policy to become void, and any and binding." In Carroll ». Char- liability under it thenceforth to ter Oak Ins. Co., 40 Barb. 292, cease, is void so far as it relates there was a clause in the policy to an assignment after a loss. By prohibiting an assignment either reason of the loss, the insured be- before or after a loss, and it was comes entitled to receive a certain held that this related to an assign- sum of money from the insurers, ment of the policy, and did not That chose in action he may as- apply to transfers of claims for sign. And a restriction upon that loss. And this was regarded as right is opposed to the law of the an important difference between land, and is therefore null and this clause and the clause in Dey void. West Branch Ins. Co. ®. v. Poughkeepsie Mutual Ins. Co., Helfenstein, 4 Wr. 289. Such is where the prohibition was not the doctrine in Pennsylvania; but only against an assignment of the contrary was held in the case the policy, but against any claim of Dey V. Poughkeepsie Mut. Ins. thereunder. See also Manley d. Co., 23 Barb. 623. Welles, J., in de- Insurance Co. of North America, livering the opinion of the court, 1 Lansing, 20. said: "TBe question is, was it 506 riEE INSUEANCE. assignment of a debt, or right to recover a sum of money actually due, which, like the assign- ment of any other chose in action, gives the assignee an equitable interest and a right- to recover, subject, of course, to a set-off and all other equities, such as an assignment on the pre- mium note of the assignor.^ Construction of particular clauses. 14. A by-law of the company which provides that "any person selling or otherwise transferring the property (or any part thereof) insured in this company, his policy shall be void (so far as relates to the part so sold or transferred), unless the said policy be also transferred to the purchaser thereof, and the said transfer accepted by the president or secretary within twenty days after the said sale or transfer shall be fully concluded," etc., is not applicable to a case where the assured had already parted with his interest in the policy by an assignment approved by the company. In case of alienation of the premises, the assured had, by the assignment of the policy to another, with the assent of the company, put it out of his power to transfer it to the purchaser of the ' Archer v. Mercliants' and Manufacturers' Ins. Co., 43 Mo. 434. ASSIGNMENT OP POLICY. 507 insured premises.^ In this case, it will be ob- served, it was not provided that every alienation, unless assented to by the company, should avoid the policy, but that the policy should be void unless transferred to the purchaser; and the court held that this rule meant only that in all cases where the policy can be assigned to the purchaser it shall be assigned. But where it has been already assigned to another with the assent of the insurer, it is no longer possible to be done, A policy made payable to the mortgagee, and which provides that assessments not paid within thirty days after notice shall avoid the policy, and also that the mortgagee to whom a loss is made payable shall pay any and all assessments on the policy, provided the original assured shall not pay the same on demand, is not avoided by non-payment of assessments by the mortgagee within the stipulated time. It is held that by the latter clause he is absolutely made liable for assessments, but is not required to pay within the time limited for the assured, and his failure to pay does not discliarge the insurer.^ Through the mistake of the insurers, a policy was made out in the name of the husband instead ' Buckley «. Garrett, Jl Wr. ' Francis v. Butler Mut. F. Ins. 204. Co., 7 R. I. 159. 508 riRE INSUEANCE. of in the name of the wife, who was the owner of the premises. Subsequently, on discovery of the mistake, the insurers were again informed that the property was owned by the wife, and not by the husband, and were requested to make the loss, if any, payable to the mortgagee. Without making out a new policy in the name of the real owner, the secretary made an indorsement on the old one that the loss was payable, as requested, to the mortgagee. It was held that, under the circumstances, the effect of the indorsement was to make a new contract with the' wife, by which her property. was insured; the loss, if any, pay- able, as she had directed, to the mortgagse.^ Effect of a general assignment. 15. Where it was stipulated in the policy on a steamboat that it should " be void in case of its being assigned, transferred, or pledged without the previous consent in writing of the assurers," and where the insured, before the loss, made a general assignment of all his property, including the steamboat and other vessels, and, among va- rious choses in action, " all policies of insurance," in trust for the payment of his creditors, the in- surers not assenting to the assignment, it was > Sohns V. Rutgers Fire Ins. Co., 36 N. Y. (Transcript Appeals) 237. ASSIGNMENT OF POLICY. 509 held not to be the legal intent of the parties to include this particular policy in the assignment. " The plaintiff had a policy which was not assign- able, and he had one or more policies which were assignable, and he assigns all his policies. It seems to us that such policies only as the plaintiff could legally and effectually assign were intended to be included in the conveyance.'" Assignment of voidable policy . 16. A policy^ which has become voidable may be assigned ; and if the insurer, with a knowledge of that fact, consents to the assignment, he waives the right to avoid, and must stand by it.^ ' Lazarus v. Com. Ins. Co., 19 without consent of the insurers, Pick. 81. in writing, as required by the con- ' Cumberland Valley Mut. Prot. ditions of the insurance, yet, if Co. v. Mitchell, 12 Wr. 378. In the insurers choose to ratify the Hyatt B. Wait, 37 Barb. 29, it was transfer, they will be bound. And held thart after the assured had if they treat the assignee as a transferred his interest in the po- member of the company, they are licy and the property insured, estopped to deny such ratification. CHAPTER XYI. INCREASE or EISK. 1. Change of use. 8. Wlien insurance officers com- 2. Future use. petent witnesses. 3. Increase of risk fatal in case 9. Burden of proof. of warranty. 10. Express obligation to give 4. Increase of risk in the ab- notice of increased risk. sence of warranty. 11. When rate of premium the 5. When alterations increase the test of increased risk. risk. 13. Construction of particular 6. Erection of contiguous build- clauses. ings. 13. Effect of repairs. 7. When parol testimony ad- 14. Waiver of forfeiture, missible as to increase of risk. Change of use. 1. Where the stipulation of the policy is that a prohibited use or change of use shall, so long as such change or prohibited use continues, make the policy to cease and to be of no force or effect, the insurance is suspended during such use. When the use ceases, then the policy is again in full force. But, on the other hand, if the stipulation is simply that a prohibited use shall vitiate' the policy, suCh use renders the policy absolutely null and void. And this, although the loss happens in a mode not affected by the IITCREASE OF RISK. 511 false warranty.^ Thus, a stipulation in the policy that the carrying on of a trade included in the class of special risks should render the policy void, the carrying on of such trade vitiates the policy, notwithstanding the risk is not thereby increased. Parol evidence that the hazard is not increased in such a case would be directly contradictory of the express stipulation, and is inadmissible.^ ' Woolmer v. Muilman, 1 W. pany would recommence. But the Black. 437 ; S. C, 3 Burr, 1419 ; clause in the latter case expressly New England F. and M. Ins. Co. provided, not that the policy, in «. Wetmore, 33 111. 83 ; Cumber- case of a breach of its conditions, land Valley Mutual Protec. Co., 5 should be void and of no effect, Casey, 81 ; Joyce v. Maine Ins. but so long as the insured premises Co., 45 Me. 168 ; Lounsbury ■». should be appropriated, applied. Protection Ins. Co., 9 Conn. 456. or used in a manner forbidden by In Schmidt v. Peoria M. and F. the policy, " these presents shall Ins. Co., 41 111. 395, a clause in cease, and be of no force or effect." the policy declared that the in- The difference in the terms of the surance should be void and of no contract in these two cases is ob- effeet if the risk should be in- vious and material. U. S. F. & creased by any means, or occu- M. Ins. Co. of Bait. a. Kimberley, pied in any way so as to render 34 Md. 334 ; Ins. Co. of N. A. v. the risk more hazardous than at McDowell, 50 111. 130. the time of insuring. The court ' Diehl v. Adams Co. Mut. Ins. held, on the authority of New Co., 8 P. F. Smith, 443 ; Lee v. England Fire and M. Ins. Co. v. Howard F. Ins. Co. , 3 Gray, 583 ; Wetmore, supra, that the true Glen v. Lewis, 8 Wels., Hurlst. & construction of the clause was Gord. 607 ; Mead v. Northwestern that the policy became inoperative Ins. Co., 3 Seld. 530 ; Jennings v. only wliile the increased risk was The Chenango Mut. Ins. Co., 3 in existence ; and when it termi- Denio, 75 ; Murdock v. Chenango nated, the liability of the com- Mut. Ins. Co. , 3 Comst. 310. 512 FIRE INSURANCE. So, too, if insurance is elBfected in one class of risks, and the property is in another class, tTiis avoids the policy, without regard to the question of risk.^ But where the premises are described as a " shoe manufactory," the assured may occupy and use them for any other lawful business or purpose not restrained by any provision or condi- tion in the contract, and which does not increase the risk." Future use. 2. The statements of the insured as to use of the premises at the time the insurance is effected is a warranty of the present, but not of the future use.' And if such warranty of present use be broken in presenii, the policy becomes void. On general principles, however, a policy of insurance against fire is not avoided by a mere alteration in the use, immaterial to the risk, to which the premises are put after the execution of the policy. If an insurance company desire to protect them- selves by a warranty as to future or continued use in the same manner as when the property ' Newcastle F. Ins. Co. v. Mac- 123 ; Smith v. The Merchants' and morran, 3 Dow. 2-55. Traders' Fire Ins. Co., 33 N. T. * Boardman v. Merrimack Mut. 399 ; Hare v. People's Mut. Fire Fire Ins. Co., 8 Cush. 583. Ins. Co., 6 Gray, 185. U. S. F. ' Jennings v. The Chenango & M. Ins. Co. of Bait. v. Kim- Mut. Ins. Co., 3 Denio, 75 ; O'Neill berley, 34 Md. 324. V. Buffalo Fire Ins. Co., 3 Comst. IlfCEEASE OP RISK. 613 was insured, they may always do so by language the object and meaning of which will be under- stood by both parties, and courts should not construe words which are fully satisfied as a description of a present use or condition into a promissory warranty, unless the inference is natural and irresistible that such was the un- derstanding and design of both parties. WJiere there is such a warranty as to future use, the designated use must continue, or the warranty will be broken, for courts have no right to say that the insured may abandon the particular use or occupancy and allow the premises to lie idle and vacant ; for the very act of requiring such a warranty is conclusive that the insurer con- sidered the continuance of the designated use or occupancy material to the risk, and made the contract accordingly.^ Where there is a special rate of insurance on account of the use of the property insured, a change of the use (there being no warranty of continued use) which keeps within the same character of risk will not avoid the policy, unless the risk has been increased by such change, and this is for the jury.^ ' Smith v. Merchants' and Trad- ' Ibid. Vide Billings v. Tolland ers' Fire Ins. Co., supra. In hme Co. Mut. Fire Ins. Co., 30 Conn. verha. Schmidt v. Peoria M. and 139. F. Ins. Co., 41 111. 295. 33 514 FIRE IKSURANCE. Increase of risk fatal in case of warranty. 3. "Where there is a warranty against increase of risk by alteration of the premises or change of their circumstances or use, and it is determined that the liability and risk of the insurer have been thus increased, it is a matter of no con- sequence whether the loss should actually have been occasional by such alteration or change.^ • Glen B.Lewis, 8 Wels.,HurIst. strued according to its ordinary & Gord. 607 ; Lee v. Howard Fire meaning. Sbaw v. Eobberds, 6 Ins. Co., 3 Gray, 583 ; Girard P. Ad. & Ellis, 75. While tlie risk and M. Ins. Co. v. Stephenson, 1 is running, the assured can make Wr. 393 ; Grant v. Th^ Howard no substantial alteration which Ins. Co. of New York, 5 Hill, 10 ; enhances the liability of the in- Perry Ins. Co. ■». Stewart, 7 Har- surer. But what is a substantial ris, 45 ; Allen v. The Mut. F. Ins. alteration ? In fire insurance it Co., 2 Md. Ill ; Jones Mariuf. Co. would seem to be mainly an in- V. Manufacturers' Mut. Fire Ins. crease of the risk. Stetson v. Ins. Co., 8 Cush. 83; Jeffersonlns. Co. Co., 4 Mass. 830. It was one of B. Cotheal, 7 Wend. 73. In Girard the conditions" of the policy on F. and M. Ins. Co. v. Stephenson, which this suit was brought that supra, Strong, J., in delivering any alterations or repairs made in the opinion of the court, said : or about the premises (insured) " The representation, even though must be made at the risk of the it be made a warranty, does not insured ; not that they should bind the assured that there shall necessarily avoid the contract, but be no alteration, however imma- that the assured should assume terial to the risk, in the thing in- the hazard of their increasing the sured, or in its use. Although a liability of the insurer." See also strict and literal compliance with Stebbens v. Globe Ins. Co., 3 Hall, the terms of warranties be neces- 633 ; Jolly v. Baltimore Equitable sary, still the warranty is con- Society, 1 H. & Gill (Md.), 295; INCREASE OF RISE. 515 Increase of risk in the absence of warranty. 4. Independently of the stipulations of the policy, if there is such a change in the circum- stances of the property, by reason of alterations or change of use, as to increase the risk, and a fire is occasioned by the circumstances creating the increased risk, the insurer is not liable ; but if, notwithstanding the increased risk, the fire happened fi-om some independent cause, the policy is not affected.^ Billings V. Tolland County Mut. told him it would not, as the term F. Ins. Co., 20 Conn. 139 ; Grant flax factory was broad enough to •D. Howard Ins. Co., 5 Hill, 10 ; embrace it. The court thought Richards v. Protection Ins. Co., the agent was right in his defini- 30 Me. 273 ; Merriam v. Middlesex tion, but even if he were not, the Mut. Fire Ins. Co., 21 Pick. 162; company were estopped by his Perry County Ins. Co. v. Stewart, declaration. 7 Harris, 45 ; Claris v. Manuf. Ins. ■ Gates v. Madison Co. Mut. Co., 2 W. & M. 473. Ins. Co., 1 Seld. 469 ; Stokes v. See Aurora F. Ins. Co. v. Eddy, Cox, 1 Hurlst. & Norm. 531 ; Bar- 55 111. 213, where the subject of rett o. Jenny, 3 Exch. 535. See insurance was a flax factory, and Robinson v. Ins. Co., 3 Dutch, the alleged breach of the condi- N. J. 134 ; Sillem v. Thornton, 3 tion against increase of risk was Ellis & Black, 868 ; Girard F. and erecting and putting into opera- M. Ins. Co. v. Stephenson, 1 Wr. tion machinery for the manufac- 293. See also Stebbins v. Globe tureofrope. It appeared that at Ins. Co. , 2 Hall, 632 ; Washington the time the risk was taken the F. Ins. Co. ■». Davison, 30 Md. 91. assured notified the agent that he It was laid down in Sillem ii. intended to put in rope machinery, Thornton, 3 Ellis & Black, 868, and he inquired whether it would that there is an implied engage- affect the policy, and the agent ment the assured will not after- 516 riEE INSURANCE. When alterations increase the risk. 5. It may frequently occur that alterations, even of an extensive character, will not affect the wards alter the premises, or the business, as described in the pol- icy, so as therfeby to increase the risk and liability of the insurer. The construction and use of the premises insured, as described in the policy, constitute the basis of the insurance, and determine the amount of the premium. Hence no alteration in either must be made by the insured to enhance the liability of the insurer. "It seems strange," said Lord Campbell, C. J., in Sillem«. Thorn- ton, supra, ' ' that if a house be described in the policy as occu- pied by the owner carrying on the trade of a butcher, so that the premium is on the lowest scale, he may immediately afterwards, merely taking care that the walls and floors and roof remain, so that it is still the same identical house, convert it into a manufac- tory for fireworks, a trade trebly hazardous, for which the highest scale of premium would be no more than a reasonable considera- tion for the stipulated indemnity. We are told, however, that thi^ doctrine is established by decisions binding upon us. The first of these is Shaw v. Kobberds, 6 A. & E. 75. Plaintiff insured premises against fire by the description of ' a granary,' and a ' kiln for dry- ing com in use.' By the condi- tions of insurance the policy was to be forfeited unless the buildings were accurately described, and the trades carried on therein specified ; and if any alteration were made in the building, or the risk of fire increased, the alteration was to be , notified and allowed by indorse- ment on the policy, otherwise the insurance to be void. The plain- tifl' carried on no trade in the kiln except dryingVorn ; but, on one occasion, he allowed the owner of some bark, which had been wetted, to dry it gratuitously in the kiln, and this occasioned a fire by which the premises were destroyed. Drying bark was proved to be a distinct trade from drying corn, and more hazardous, insurance offices charging a higher premium for bark-kilns than corn-kilns. Held, that the plaintiff was en- titled to recover. But what was the ratio decidendi? Lord Den- INCREASE OP RISE. 517 risk, and, of course, will have no influence with respect to the insurance. 'But the alterations, man, C. J., 'If tlie plaintiff had But, wlien examined, we do not either dropped his business of think it is an authority for the doc- com-drying and taken up that of trine wliich it is cited to support, bark-drjdng, or . added the latter The insurance there was upon a to the former, no doubt the case manufactory, engine-house, and would have been within' the con- machinery, against fire ; and the dition relied on. ' Perhaps if he policy contained conditions re- had made any charge for drying sembling those in Shaw v. Rob- this bark, it might have been a herds, 6 A. & E. 72. Amongst question for the jury whether he others, that if the assured should had done so as a matter of busi- ' omit to communicate' to the in- ness, and whether he had not surance office ' any circumstance thereby (although it was the first which is material to be made instance of bark-drying) made an known to the company, in order alteration in Us business, within to enable them to judge of the the meaning of that condition, risk they had undertaken or were But, according to the evidence, required to undertake, the in- we are clearly of opinion that no surance should be of no force.' such question arose for the con- There were pleas on these con- sideration of the jury.' The court ditions alleging that the assured there intimates an opinion that carried on a more dangerous trade there was no implied warranty than that specified in the policy, that nothing besides com should which was a circumstance ma- ever be dried in the kiln, but gave terial to be made known, and had no countenance to the doctrine omitted to communicate it to the that another and more dangerous office, the non - communication trade could be carried on in the being made the infraction relied kiln without vitiating the policy, upon and the gist of the pleas. The other case, which was more The issues on these pleas were confidently relied on, and, on ac- found for the defendant ; but there count of some expressions of some was a rule for judgment for the of the judges, not without reason, plaintiff non obstante veredicto, was Pirn e. Beid, 6 M. & G. 1. which was made absolute. The 518 PIEB INSUEANCE. combined, with the use to which they may b6 ap- plied, will at once increase the hazard, and thus discharge the liability of the insurer. "Mere alterations," said Baron Parke, in Barrett v. Jermy,^ ^ in the case of the removing of a fire- grate or furnace, never increase the risk. It is only the use, and the ordinary use, of a fireplace so put up that increases it. As, for instance, a man might alter his house so as to cause, in every room, the beams which support the roof above to come into the chimney or fireplace ; or he might put up a fireplace in the centre of his drawing-room; but the mere alteration would pleas were considered bad, for not surance upon a house " composed showing that a reasonable time of two stories" is vitiated by add- had elapsed for giving notice ; and ing another story, so that it be- on this defect alone, Ooltman, J., comes a house " composed of three rested his judgment. The other stories." In point of fact, the judges do make use of some ob- third story had been added before servations as if, under this policy, the policy was made, so that it was the assured might change his trade a case of false description, instead to one more dangerous than that of a case of alteration. Accord- described at the time of making ingly, in Stokes ». Cox, 1 Hurl. & the policy ; but these observations Norm. (Exch.) 531, it was said appear to have reference to the by Willes, J., that any opinion necessity for giving notice for the expressed by the court in Sillem particular purpose specified in v. Thornton, as to the effect of an the conditions on which the pleas alteration in the state of the pre- were founded." mises insured after the date of the In Sillem v. Thornton the pre- policy, must be extrajudicial, cise point decided was that an in- ' 3 Excheq. 535. IKCEBASE OF RISK, 519 not increase the risk ; but the use and the em- ployment, added to the ordinary use, would ; and that seems to have escaped the observation of the judge and the jury.'" The clauses against increase of risk are some- what variant, and their precise meaning must be determined in each particular case ; but the general principle, as already stated, is that an alteration or enlargement of a building will not avoid the policy of insurance unless the risk is thereby increased. And this is a question of fact for the jury.^ And if a by-law of the com- pany provides that, in case of any alteration, application may be made to have the premises ej^amined, to ascertain and certify whether the risk has been increased or not, the assured may make such application, or may take the risk of that question before the jury.^ ' See also Sclimidt u. Peoria M. should be several changes in the and F. Ins. Co., 41 111. 395; Au- insured premises, detached in time rora Fire Ins. Co. ■». Eddy, 55 111. and place, and having no con- 213. nection with each other, some of 2 Curry v. Com. Ins. Co., 10 which would increase and others Pick. 535 ; Stetson v. Massachu- diminish the risk. Jones Manuf. setts Mut. Ins. Co., 4 Mass. 330; Co. ». Manuf. Mut. Ins. Co., Jones Manuf. Co. ■». Manuf. Mut. supra. Ins. Co., 8 Cush. 82. It might ' Perry Co. Ins. Co. v. Stewart, perhaps be otherwise if there 7 Harris, 45. 520 PIRE INSURANCE. Erection of contiguous huildings. 6. The erection of an adjacent building to the one insured, unless prohibited by the contract, does not invalidate the insurance. And if such erection increases the hazard of loss by fire, and a loss should occur, but from some other cause, the underwriters would still be liable. But if, on the other hand, the loss were owing to such erection, they would be discharged.^ If the policy provides that "if the risk be increased by any means within control of the assured, the in- surance shall be void," then the erection of other buildings on the premises which increase the risk avoids the policy.^ Or if the policy provides that whenever the risk should be changed, by any cause, within or without the building, the company should be notified, the erection of an- ' Howard 0. The Kentucky and policy," it was held that the Louisville Mutual Ins. Co., 13 B. "change" meant, was change in Monroe, 283 ; Stebhins i>. Globe police regulations made to prevent Ins. Co., 3 Hall, 632; Gates v. accidents from fire, and not change MadisonCo. Mut. Ins. Co.jlSeld. in the condition of the premises 469. from the erection thereon of other In Com. Ins. Co. v. Mehlman, buildings, for this was provided 48 111. 313, where the policy pro- for by-distinct stipulation, vided that " any change within * Murdock «. The Chenango the control of the assured, mate- Co. Mut. Ins. Co., 2 Comst. 210 ; rial to the risk, without written Dodge Co. Mutual Ins. Co. t. permission herein, shall avoid this Rogers, 13 Wis. 337. INCREASE OF RISK. 521 adjoining building and putting hay in it, which caused the loss, without giving such notice, avoids the policy.^ When parol testimony admissible as to increase of risJc. 7. If by the terms of the policy it is deter- mined what the test of increased risk shall be, as that any change or use of the insured property which shall put it out of the enumerated classes and rates shall avoid the policy, then such change or use is of itself conclusive, and testimony tend- ing to show that the risk, in point of fact, is not thereby increased, is inadmissible.^ But where ' Francis v. Ins. Co., 1 Dutch, making tender of the unearned (N. J.) 78. premium. In The Albany City Fire In- ' Diehl v. Adams Co. Mut. Ins. surance Company v. Keating, Co., 8 P. F. Smith, 443. In this 46 111. 394, it was a stipulation of case the condition was that if the the policy, that if the risk was in- insured premises " shall be so al- creased by certain specified causes, tered, or be appropriated, applied, or from any other cause, the com- or used to or for the purpose of pany might elect to terminate the carrying on or exercising therein insurance, after giving notice of any trade, business, or vocation their intention to the assured and which, according to the by-laws returning a rateable proportion of and conditions, class or hazard, the premium ; and it was held or rates herunto annexed, would that upon the risk being increased, increase the hazard, unless it be the liability of the company would by consent and agreement in writ- terminate upon giving notice and ing, indorsed upon the policy," 522 riEE INSURANCE. the condition is that any alteration or change of use which increases the hazard shall avoid the policy, or any similar condition, then testimony is admissible to show whether by the alteration or change the hazard has been increased.^ In j!^yres v. Maine Insurance Company,^ the defendants offered to prove that a small stable, standing on a lot adjoining the one upon which the dwelling-house insured was situated, owned by a third person, was removed to a spot nearer to the house insured than that on which it stood at the date of the policy, and had been raised in height and increased in other respects ; this evi- dence was excluded. When insurance officers competent witnesses. 8. An officer of an insurance company whose duty it is to examine buildings, and to act upon the policy shall cease and be void. Fire Ins. Co., 3 Gray, 583 ; Harris In the list of rates, '■'■Tanneries o. Columbiana Co. Mut. Ins. Co., without steam, eight per cent.," 4 Ohio St. 285 ; The Washington ■were enumerated. Subsequently Mut. Ins. Co. ■». The Merchants' steam was applied, and this was and Manufacturers' Mut. Ins. Co., held conclusive of increased ha- 5 Ohio St. 450. ' zard. The list was a mode of ' Perry Co. Ins. Co. v. Stewart, fixing what should be regarded as 7 Harris, 45 ; The Mutual Protec- an increase of hazard, and evi- tion Ins. Co. v. Schell, 5 Casey, dence that the hazard was not 31. increased was held to be inad- ^ 45 jig. igg. missible. See also Lee «. Howard INCREASE OF RISK. 523 the circumstances bearing upon the I'isk and rate of premium, is a competent witness to give his opinion upon these subjects.^ But insurance agents or officers cannot be called as experts in matters of this kind unless it appears that in the course of their business they have acquired special knowledge of the subject-matter of the inquiry.^ Burden of proof . 9. If the policy is issued subject to a charter which provides that the insurance shall be void if any alterations are subsequently made in the building insured, or if any other building or thing should be erected or placed contiguous thereto whereby it might be exposed to greater risk or hazard than it was when insured, unless the same should be done with the consent of the directors, and an additional premium paid on account of the same, the burden is on the company to show that this condition of the policy has been violated. "Whether alterations and erections have been erected so as to increase the risk is a matter of fact for a jury to determine/ ' Webber®. Eastern R. R. Co., Ins. Co., 41 111. 295, Mr. Justice 2 Mete. 147; Kern v. South St. Lawrence. Louis 3Iut. Ins. Co., 40 Mo. 19. = Rittei-D..Sun Mut. Ins. Co., 40 2 Schmiclt V. Peoria M. and P. Mo. 40. 524 FIRE INSUKANCE. Express obligation to give notice of increased risk. 10. "Where the insured was bound by the terms pf the policy to give notice to the company if anything should occur by the acts of others to increase the risk, the company thereupon having the right, at their option, to terminate the in- surance; and where the risk was so increased, and the insured gave no notice; and where the premises were subsequently destroyed, the fire, however, originating from causes in no way con- nected with the acts by which the risk had been increased, it was held that as it could not be certainly assumed that the company, if notified, would have terminated the insurance, their lia- bility upon the policy still continued.^ Where there is a provision against increase of risk, and "where alterations or additions materi- ally increase the risk, so that the insurer would be entitled to a higher rate of premium, the policy is to be treated as absolutely void if the insurer fail to give notice as required by the terms of the policy.^ Hence, where insurance is effected "on barley and malt in assured's ' Joyce V. Maine Ins. Co., 45 Com. Ins. Co., 10 Pick. 535; Me. 168. Jones Manufacturing Co. v. Manu- 2 Kern «. Soutli St. Louis Mut. facturers' Mut. Fire Ins. Co., 8 Ins. Co., 40 Mo. 19; Curry «. Cush. 83. • IlSrCEEASE OE RISK. 525 malt-house and brewery; and where the con- dition of the policy is that the assured shall not increase the risk, during the continuance of the insurance, without notice to the company, and an indorsement thereof on the policy, and where distilling is added to the business of brewing, without such notice and indorsement, the policy is avoided. But if in such a case the policy is granted, with the full knowledge of the agent of the company that distilling whiskey is to be carried on in the brewery, the condition about indorsement of notice has application, and the company have no ground to allege an increase of risk.^ In other words, an insurance company will not be permitted to avoid a policy issued by them, upon the ground that the insured failed to notify them of certain facts of which the policy required notice, if it is shown that the company or its agent had full knowledge of those facts at the time of issuing the policy ; the knowledge of the facts is sufficient notice.^ A condition which requires notice to be given of every change to. a building insured, or in which is insured property, by means of repairs, additions, or otherwise, and if made without the ' People's Ins. Co. v. Spencer, 40 N. Y. 557 ; Bidwell ». North- 3 P. F. Smith, 353. western Ins. Co., 24 N. Y. 802. ^ Rowley v. Empire Ins. Co., 526 l-IRE INSUEANCE. consent or approval of the president, in writing, , previously obtained, the policy to be without effect until the approval of the president or di- rectors js secured ; if such change is made, and without notice and consent as required by the condition, the policy is rendered ineffective, and, a loss meanwhile occurring, the insured cannot recover.^ Where the contract of insurance provides that any alterations which tend to increase the risk shall be reported to the company by the insured within thirty days after the same shall have been made, and such additional premium as may be required be paid, otherwise the insurance to be- come void; if alterations -are made, and no notice is given, it is a question for the jury whether the alterations were such as tended to increase the risk. If they were, the insured was in default in not giving the notice; if they were not, notice was unnecessary.^ Where the policy requires notice of any altera- tion to be 'given to the secretary or agent of the .insurance company, and in default of such notice the insurance to be void, notice to the agent can- ' Kerii V. South St. Louis Mut. diner v. Piscataquis Mut. F. Ins. Ins. Co., 40 Mo. 19. , Co., 38 Me. 439; Allen ». Mutual 2 Schenck v. Mercer Co. Mut. Fire Ins. Co., 2 Met. 111. Fire Ins. Co., 4 Zabris. 447 ; Gar- INCREASE OF RISK. 527 not be proved by evidence of casual conversations of third persons with the agent. The notice, to affect the company, must be direct notice to the agent.^ Where, before renewal of a policy, notice is given of an increased risk, such notice runs through all subsequent insurances, whether by renewal or by substitution of a new policy, and binds the insurer.^ And if a policy or a renewal is granted, with knowledge of the insurer's agent that a hazardous business is carried on, conditions as to indorsement of notice have no application.' The permission to use steam for a particular purpose does not exclude the use of it for any other purpose, if the risk is not thereby increased. And if the insured is bound to give notice, in the event of an increase of risk, of an alteration in the circumstances, if there is no increase of risk there is no necessity to give notice.* In Sykes v. The Perry County Mutual Fire Insurance Company^ the policy provided against any alterations or additions, or change of occu- pants or use, without notice to the insurer, and failure to give notice avoided the policy from the ' Sykes v. Perry Co. Mut. Fire ' Ibid. Ins. Co., 10 Casey, 79. '' Stokes v. Cox, 1 Hurlstone & 2 People's Ins. Co. v. Spencer, Norm. 531. 3 P. F. Smith, 353. « 10 Casey, 79. 528 riEE INSURANCE. commencement of such alterations or changes. It was proved that a steam-engine was attached to the insured mill after the insurance was effected, which increased the risk ; and as the required notice was not given, the underwriters were discharged. In Howell v. Baltimore Equitable Society^ the policy provided that notice must be given in writing to the company, and their consent ob- tained to any material alteration or repairs in the premises insured, or, " in default thereof, any loss happening to the said insured premises by reason of making said repairs or alterations shall not be paid or demanded under this policy." There was a total destruction of the building whilst repairs were being made by the tenant, unknown to the assured, who had never notified the company of the same or obtained their consent; and it having been shown upon the trial that the loss was occa- sioned, either wholly or to an unknown extent, by such unauthorized alteration which increased the risk, it was held that the loss must fall on the assured, unless he furnished proof of some loss occasioned by other causes than such altera- tions ; that the onus was on him, and not on the insurer. • 16 Md. 377. INCREASE OE RISK. 529 If the policy prohibits alterations without the previous written consent of the company, such consent must be obtained, and in the precise form prescribed by the contract, otherwise the policy becomes void/ If, by the terms of the policy, the assured is to give notice of the erection or use of new stoves or furnaces, or of the making of any alterations increasing the risk, and pay an increased pre- mium, this, it has been held, refers to some per- manent alterations or uses, and not to a mere temporary or casual matter.^ But the authority of these cases is somewhat doubtful ; and it has recently been holden that where, by the terms of the policy, steam-engines, stoves, or any descrip- tion of fire heat other than common fireplaces, are not to be used unless notice has been given and the use allowed, the policy will be avoided if a steam-engine, with furnace attached, is brought on the premises, and used only on one or two occasions for experimental purposes, an^ not in ' See Evans v. Trimountain " One cannot help feeling that the Mut. Fire Ins. Co., 9 Allen, 339. construction of the policy in that = Addison on Contracts, p. 541 ; case may have been somewhat Shaw V. Robherds, 6 A. & E. 75 ; influenced by the apparent hard- Pim v. Reed, 6 M. & (J. 1. In ship of avoiding it by reason of Glen n. Lewis, 8 Excheq. 607, the accidental and charitable use Baron Parke, referring to Shaw of the kiln, the subject of the in- «. Robberds, 6 A. & E. 75, said : surance." 34 530 PIEE INSURANCE. the business of the assured; but it must be proved that the risk of fire was increased by the thing done.^ When rate of premium the test of increased risTc. 11. Where the condition of the policy is "that if any alteration should be made in any house or building, by the proprietor thereof, after insur- ance has been made thereon with said company, whereby it may be exposed to greater risk or ■ Addison, swpra; Glen v. Lewis, terms of tlie condition apply to the 8 ExJclieq. 617 ; 32 L. J. Ex. 338. introduction of a steam-engine in " Now, the clause in question im- a heated state at anytime, without plies," said Baron Parke, "that notice to the company, so as. to the simple introduction of a steam- afford an opportunity to them to engine, without having fire ap- ascertain whether it will increase plied to it, will not affect the the risk or not. . . . There is not policy ; but if used with fire heat, a word to confine the introduction it will ; and nothing being said of the steam-engine to its intended about the intention of the parties use as an instrument or auxiliary as to the particular use of it, and in carrying on the business in the as, if it be used, the danger is pre- premises insured. If a construc- cisely the same, with whatever tion had already been put on a objectitisused, itseems tous that clause precisely similar in any it makes no difference whether it decided case, we should defer to is used upon trial, with the intent that authority. But, in truth, of ascertaining whether it will there is none. All the cases upon succeed or not, or as an approved this subject depend upon the con- means of carrying on the plain- struction of different instruments, tiff's business, nor does it make and there is none precisely like any difference that it is used for this." Glen t>. Lewis, a Jonger or shorter time. The INCEEASE OP RISK. 531 hazard from fire than it was at the time it was insured, then in every such case the insurance made upon such house or building shall be void, unless an additional premium and deposit, after such alteration, be settled with and paid to the directors ;" and if, before the fire, the insured building should be altered by the insured, or by his tenants, in such a manner that a higher rate of premium would be demanded to insure the building in its altered state than would have been required before such alteration, the policy would be avoided; otherwise the alteration would not be material.^ Construction of particular clauses. 12. Where it was provided that " if the situ- ation or circumstances affecting the risk" on the property insured should " be so altered or changed, by or with the advice, agency, or con- sent of the insured, as to increase the risk there- upon," the policy should become void, the erection by the assured of a factory with steam-boilers on an adjoining lot of land, under circumstances increasing the risk, vitiates the policy, and this although another clause of the policy provides ' Morrison ■». The Middlesex pairs and alterations not increas- Mut. Fire Ins. Co., 21 Pick. 163. ing the risls were not to affect the By the terms of the policy, re- insurance. 532 FIRE INSURAKCB. that " if, during the insurance, the risk be in- creased by the erection of buildings, or by the use or occupation of neighboring premises, or otherwise, or if the company shall so elect, it shall be optional with the company to terminate the insurance after notice given to the assured," etc. The two clauses were construed as .referring to different objects: the first, to whatever should increase the risk by the consent or agency of the assured ; and the second, to whatever should increase the risk without his consent, by the agency of others. The first clause is general, and includes all modes in which the risk should be increased by the agency of the assured.^ Effect of repairs. 13. It is not to be presumed, in the absence of any express agreement on the subject, that when the owner effects an insurance on his building he deprives himself of the right to use it in the common and ordinary mode, including the right to make all pi*oper and reasonable repairs.^ These ' Allen J>. Massasoit Ins. Co., insured," do not j?er »e avoid the 99 Mass. 160. policy. The assured party only 2 Eepairs and alterations under assumes the hazard of their in- a condition of the policy that creasing the liability of the in- " any alterations or repairs made surer. Qirard F. and M. Ins. Co. in or about the insured property n. Stephenson, 1. Wr. 293. must be at the risk of the party INCEEASE or RISK. 533 repairs, indeed, may be so extensive as to amount to an alteration, and in that case the question will be whether such alteration materially in- creased the risk ; but the substitution of a new bulkhead for one that has become useless by decay is not an alteration ; it is a repair, and not the less so because the old material is discarded and a more durable material employed in its stead.^ The risk, therefore, arising from ordinary re- pairs is covered by a policy; and hence if a fire occurs while they are going on, and even in consequence of the repairs — as where a tar-barrel was taken into a barn, for the purpose of repair- ing the building by tarring it, and the building was consumed from a fire being lighted inside to boil the tar — ^the insurers are liable. And this, too, although the policy specified that no fire ' Townsend v. Northwestern ate it," this is not understood as Ins. Co., 18 N. Y. 168 ; Washing- forbidding the casual repairs in- ton Fire Ins. Co. ■b. Davison, 30 dispensable to the proper conduct Md. 91. of the insured's business, but as When the policy provides that prohibiting such hazardous use of " the working of carpenters, roof- the building, known as " builder's ers, tinsmiths, gas-fitters, plumb- risk," which arises from placing ers, or other mechanics, in build- it in the possession or under the ing, altering, or repairing the control of workmen for rebuild- premiaes named in the policy, ing, alteration, or repairs. Frank- without permission indorsed in lin Fire Ins. Co. v, Chicago^ Ice writing on the policy, should viti- Co., 36 Md. 103. 534 PIEE IlfSUEASrOB. '■ was to be kept in the building, and no hazardous goods deposited there. " The condition," said Lord Tenterden, " must be understood as forbid- ding only the habitual use of fire, or the ordinary deposit of hazardous goods, not their occasional introduction for a temporary purpose connected with the occupation of the premises. The com- mon repairs of a building necessarily require the introduction of fire upon the premises, and one of the great objects of insuring is security against the negligence of servants and workmen."^ And so, too, where hazardous articles, such as oil and turpentine, were introduced into a build- ing, for the purpose of painting it, and, while being repaired and painted, the house was burnt; it was held that the .risk attending ordinary repairs was intended to be covered by the in- surance.^ But if,, in making siich repairs, the in- sured is grossly careless or negligent, and such gross carelessness or negligence is the cause of the loss, he cannot recover."' Waiver of forfeiture. 14. A policy of insurance invalidated by the acts of the insured may be revived and rendered ' DobsonB. Sotlieby, 1 Mood & Co., 3 Comst. R. 122; Grant ?j. Malk. 90; Shaw ». Robberds, 6 Howard Ins. Co., 5 Hill, 10. Ad. & Ell. 75. 3 Billings v. Tolland Co. Mut. » O'Neil ». The Buffalo F. Ins. F. Ins. Co., 20 Conn. 139. • INCREASE OF RISK. 535 binding by subsequent acts of the insurers, mani- festing an intention to treat it as a valid and sub- sisting contract, notwithstanding the forfeiture. The condition of forfeiture was intended for the benefit of the insurer; but if, with full knowl- edge of the forfeiture, he chooses to waive it, he is at liberty to do so.^ Where, however, he has formally declared a forfeiture of the policy, and the insured has received notice thereof, the con- tract of insurance is at an end, and can only be revived by an express agreement of the insurer. And if in such a case an assessment, through inadvertence or mistake, should be made on the insured's note, this would not have the effect to restore the policy.^ 1 Carroll v. Charter Oak Ins. 625; Shearman «. The Niagara Co., 38 Barb. 403. See also 3 F. Ins. Co., 46 N. Y. 536. Amer. Leading Ca^es, pp. 634, ^ Diehl «. Adams Co. Mut. Ins. Co., 8 P. F. Smith, 443. CHAPTER XVII. rOK WHAT LOSSES INS0KEB LIABLE. 1. Proximate cause of damage, 8. Loss from usurped power, and herein of loss by heat. mobs, &c. ! 3. Losses by removal of goods 9. Loss by falling of buildings, and otherwise. 10. Loss by negligence. 3. Loss by lightning. 11. Loss by misconduct. 4. Loss by explosion. 13. When policy avoided by 5. Loss partly by Are and partly acts, of tenants and others. by explosion of gas. 13. When violation of by-laws 6. Loss wholly attributable to by tenants, etc., does not affect explosion. the insurance. 7. Loss by flre unconnected with 14. Insurer subrogated to rights other cause. of insured. Proximate cause of damage, and herein of loss hy heat. *1. Insurers are answerable for direct and im- mediate, not for consequential and' remote losses from a peril insured against. Hence fire, igni- tion, or actual combustion must be the proximate cause of the loss. Marshall says actual ignition must cause the damage, and no damage occa- sioned by mere heat, however intense, is covered by a policy.^ And for this he relies on Austin V. Drew.'' But Gushing, J., in commenting on ' Marshall on Insurance (3d » 6 Taunt. 436 ; S. C, 4 Camp, ed.), 790. 360. fOR WHAT LOSSES INSUEER LIABLE. 537 this passage in the case of Scripture v. Lowell Manufacturers' Fire Insurance Company,' says this cannot be sound law, because serious damage, within the scope of a fire policy, might be done to a building or its contents by the action of fire in scorching paint, cracking pictures, glass, furniture, etc., or heating and thus destroying many objects of commerce, and yet without actual ignition — that is, visible inflammation; and he considers the true doctrine to be stated by Beau- mont, namely, that when a chemist, artisan, or manufacturer employs fire as a chemical agent, or as an instrument of art or fabrication, and the article which is thus purposely subjected to the action of fire is damaged in the process by the unskilfulness of the operator, and his mismanage- ' 10 Cush. 356. In this case a powder as igneous action ; and burning match being applied, although the damage done was without fault of the insured, to a partly the result of combustion cask of gunpowder in the attic of and partly of explosion, the whole his house, occupied by a tenant, was covered by the policy which the gunpowder took fire, explod- insured " against loss or damage ed, set fire to a bed and clothing, by fire." "All the eflFects, what- charred and stained some of the ever they may be in form, are the woodwork, and blew off the' roof natural results of the combustion of the house ; and the question of a combustible substance ; and was whether the loss thus occa- as the combustion is the action sioned to the building was covered of fire, this must be held to be' by the conditions of an ordinary the proximate and legal cause of policy against fire. The court all the damage done to the pre- considered the explosion of the mises." 538 riBE INSURANCE. ment of heat as an agent or instrument of manu- facture, that is not a loss within a fire policy.^ And in Case v. Hartford Insurance Company,^ Trumbull, J., said: "The idea that there can be no loss by fire without actual ignition is so un- reasonable to my mind, that, but for the respect- able authorities that have been vouched for the position, I should' not have thought it worthy a moment's consideration."^ Losses hy removal of goods and otherwise. 2. Whatever loss arises as a natural or neces- sary consequence of the peril insured against is within the protection of the policy. The rule laid down in the case of Peters v. Warren In- surance Company* is that " whenever the thing insured becomes by law chargeable with any ' Beaumont on Insurance, 37. municated from ■without, and Where a policy contains a clause hence the underwriters are liable, to this effect, namely, "this policy Sohier «. Norwich Fire Ins. Co., not to cover any loss or damage 11 Allen, 336. by fire which may originate in the " 13 xu. G76. theatre proper," and where there 'Walters v. Louisville Mer- is a fire without the wall of the chants' Ins. Co., 11 Peters, 234; building insured, of such intensity Pentz i>. Receiver jEtna Ins. Co., as to heat the wall of the "theatre 9 Paige, 568 ; The City Fire Ins. prpper" sufficiently to cause the Co. v. Corlies, 21 Wend. 367, are interior of it to burn, it is held cases of recovery where the injury that the fire did not " originate in was not the result of burning, the theatre proper," but was com- * 14 Peters, 108. FOR WHAT LOSSES INSUREE LIABLE. 539 expense, contribution, or loss, in consequence of a particular peril, the law treats that peril, for all practical purposes, as the proximate cause of such expense, contribution, or loss." But the insurer is not liable for injury to goods arising from their removal in. consequence of a distant fire, although the apprehension of the fire extending to the insured goods is a reasonable one.^ The circumstances of each case must de- termine the necessity for removal. But generally any loss resulting from an apparently necessary and bond fide effort to put out a fire, whether it be by spoiling the goods by water, or throwing the articles of furniture out of the window, or even the destroying of a neighboring house by an explosion for the purpose of checking the progress of the flames — in a word, every loss that clearly and proximately results, whether directly or indirectly, from the fire, as goods lost or stolen at a fire — is within the policy.^ The ' Hillier d. Allegheny Co. Mut. the fourth house from that of the Ins. Oo.,3Barr, 470. In this case assuredln the same hlock. neither the house nor the goods ' Stanley v. Western Ins. Co., insured were touched by fire, but Eelley, C. B., 3 Law Rep. (Ex- the goods were damaged in the cheq.) 71; Independent Ins. Co. removal of them from apprehen- d. Agnew, 10 Casey, 96 ; Case v. sion that they would be reached The Hartford Ins. Co., supra; by the flames, which had caught Tllton v. Hamilton Fire Ins. Co., 540 PIKE INSURANCE. pi'ecise time when a theft occurs is not impor- tant, if it be occasioned directly by the fire. In other words, the liability of the insurer is not restricted to the precise time when the fire was extinguished.^ In Brady v. The Iforthwestern Insurance Com- pany,^ Martin, C J., said : "The fair and reason- able interpretation of a policy of insurance against loss by fire will include within the obligation of the insurer every loss which necessarily follows from the occurrence of the fire, to the amount of the actual injury to the subject of the risk, when- ever that injury arises directly and immediately from the peril, or necessarily from incidental and surrounding circumstances, the operation and influence of which could not be avoided," So, too, the insurer is liable for injury caused in the removal of articles of a fusible character in a case of 'imminent danger, such as the ad- joining house being on fire. In such a case it would be gross negligence not to remove articles of that character — lead pipe, for example. In the removal of goods in consequence of fire, care must be taken that they are not unnecessarily 1 Bosw. 367 ; Brady v. North- 160. See also Witherell v. Maine ■western Ins. Co., 11 Mich. 425. Ins. Co., 49 Me. 200; 6 Jones' ' Newmark v. London and Liv- (N.C.) Law, 352. erpool F. and L. Ins. Co., 30 Mo. « 11 Mich. 425. POR WHAT LOSSES INSURER LIABLE. 541 and wantonly injured by handling and exposure, otherwise the insurers are discharged/ Loss hy lightning. 3. Where the words of the policy are that the company will be liable for fire by lightning, they mean that there must be actual ignition, and that the loss or damage must be caused from actual burning. If the building is prostrated, torn to pieces by lightning, and not set on fire, the loss occurring from the former, not the latter cause, the insurers are not liable.^ In the case of live stock, fire includes lightning, if there be any mark of fire ; but not otherwise.^ And a company incorporated to insure against loss or damage by fire, whether the same shall happen by accident or lightning, is not authorized to insure against loss occasioned by any other element than fire. If a loss by fire occasioned by lightning occurs, the insurers are liable, but not for a loss occasioned solely by lightning.* Loss Tyy explosion. 4. "Where a building is blown up or torn down, in a case of necessity, to prevent the spreading ' Case V. Hartford Fire Ins. Co. , cock ^i. Montgomery Co. Mut. Ins. 13 111. 676. Co., 6 Barb. 637. * Keniston v. Merrimack Co. ' Beaumont on Insurance, 37. Mut. Ins. Co., 14 N. H. 341 ; Bab- " Andrews v. The Union Mut. Fire Ins. Co., 37 Me. 256. 542 PIKE INSUKANCE. of a fire, the insurers, as before stated, are liable for the loss. And if a recovery is had against the municipality whose authorities ordered such building to be blown up or destroyed, but for a less sum than the amount of the insurance and the absolute loss, the assured may recover the residue of his loss from the underwriters.^ A loss by the explosion of gunpowder is a loss by fire, fire being the proximate cause of the loss; and since, if the loss happen by fire, unless there is fraud on the par^ of the insured, it matters not how the flame is kindled.^ But damage to the insured premises by the explosion at a distance of a large quantity of gunpowder — the damage arising from concussion merely — is not covered by an insurance " from loss or damage by fire ;'" nor is damage caused by an explosion of steam.* ' Pentz v. ^tna Fire Ins. Co., "we are bound to look to the im- 9 Paige Ch. R. 568. • mediate cause. In this instance ' City Fire Ins. Co. v. Corlies, it cannot be said that the loss was 21 Wend. R. 367 ; Waters v. The ' occasioned by fire ;' it was occa- Merchants' Louisville Ins. Co., 11 sioned by a concussion caused by Peters' R. 213; Scripture «. Lowell Are, and we must therefore go to M. F. Ins. Co., 10 Cush. 356. the cause of causes before we ar- ' Everett ». London Assurance, rive at the origin of the loss ; but 15 Jurist (N. S.), 546 ; S. C, 19 then this was not what was con- Com. Bench (N. S.),136; Cabal- templated by the parties to the lero V. Home Mut. Ins. Co., 15 policy." La. (An.) R. 217. "In these * St. John-o. Am. Mut. F. and insurance cases," said Willea, J., M. Ins. Co , 1 Kernan, 516 ; Hay- in Everett v. London Assurance, ward v. Liverpool and London P. FOE WHAT LOSSES INSUEER LIABLE. 543 But if there is combustion in consequence of the explosion, then the insurer is liable to the extent of the damage properly attributable to the com- bustion, unless he is exonerated by an express stipulation of the contract.^ and L. Ins. Co., 7Bosw. 385; S. C, 40 N. T. 456. In the former case the policy declared that the com- pany would not be liable for any loss occasioned by the explosion of a steam-boiler. Hence, if the explosion caused a fire, the com- pany would not be responsible for any loss or damage caused thereby. "The parties," said Denio, J., "knowing that fires were liable to be kindled by the explosion of a steam-boiler, and that by the general terms of the policy the insurers would be liable for a fire thus originating, agreed that for such losses the party would be his own insurer." See, to the same efiect, Montgomery v. Firemen's Ins. Co., 16 B. Monroe, 427. ' Millaudou v. New Orleans Ins. Co., 4 La. (An.) 15; St. John v. Am. Mut. F. and M. Ins. Co., 1 Keman, 516; Hayward ®. The Liverpool and London F. and L. Ins. Co., iupra; S. C, 40 N. Y. 456. In Perrin v. The Protection Ins. Co., 11 Ohio, 146, it was held that the loss of a steamboat, caused by explosion of the boiler, is covered by a fire policy. The decision was put on the ground of the nature of the subject of in- surance, and the sort of risks it is of necessity exposed to. In Uj^ion Ins. Co. i). Groom, 4 Bush (Ky.) 289, the policy covered eight mules, which were insured against "perils of the river." They were injured on the steamboat by steam escaping from some unknown cause. It was held that ' ' perils of the river' ' are generally understood to mean dangers peculiarly incident to the insured goods on that element in the craft used for their transporta- tion, and to which they would not have been liable on land. And that steam was a peril of the river to which the mules were liable in their transportation ; and as they were prudently stationed on board the boat, and as they were injured by an escape of steam, without the fault of the oflBcers of the steamboat, the underwriters were liable therefor. Ins. Co. v. Trans- portation Co., 12 Wallace, 194. 544 PIRE INSUEANCE. And when an eflficient cause nearest the loss is a peril expressly insured against, the insurer is not relieved from responsibility by his showing that the property was brought within that peril by a cause not mentioned in the contract.^ Loss partly Try fire and partly iy explosion of gas. 5. A company stipulated that it would not be responsible for loss or damage by explosion, "except for such loss or damage as shall arise from explosion by gas." The plaintiff's business was that of extracting oil from shoddy. In the process of doing this a vapor is generated which is highly inflammable, and, when mixed with air in the proportion of one to fifteen, is explosive. In this case the accident was caused by the vapor escaping, then taking fire at the lamps and igniting some matting and bags lying near, and, becoming sufficiently mixed with air, exploding. The explosion blew off the roof, and blew down part of the walls ; after which the fire became general, and burnt for some time. The plaintiff , claimed that the vapor in question was gas within the meaning of the policy ; or if not, that the exception of explosion applied only to cases ' St. John V. The Am. Mut. Ins. Co., supra; Ins. Co. «. Transportation Co., supra. rOR WHAT LOSSES INSURBB LIABLE. 545 where the fire was originated by the explosion, not where the explosion occurred in the course of the fire, and hence did not include the present case. It was held, however, that the word gas in the policy meant ordinary illuminating coal gas. The company bargained that they Would not be responsible for any loss or damage by explosion, unless by such gas. And they were not liable for any loss which arose from the shock of the explosion, or from a fire occasioned by the explosion, but they were liable if any portion of the premises or property was destroyed or injured by reason of the original fire, or any subsequent extending of that fire unconnected with the ex- plosion. If an explosion occurs in the course of a fire, the insurers are exempted from liability not only in respect to the damage from the ex- . plosion itself, but also of the damage done by the further fire caused by the explosion.^ ZfOSS wholly attrihutahle to explosion. 6. Accordingly, if the insurers exempt them- selves from liability for any loss or damage " by fire which might occur by means of any invasion, insurrection, riot, or civil commotion, or any mili- tary or usurped powers, explosion, earthquake, or ' Stanley v. Western Ins. Co., 3 Law Rep. (Excheq.) 71. 35 546 FIRE INSTJEANCE. liurricane," they are not liable if the explosion or other enumerated cause produces or sets in operation the fire which burns the insured pro- perty. If a new force or power intervenes, of itself sufficient to stand as the cause of the mis- fortun'e, then the explosion will be considered too remote. But the fact that the fire which was caused by the explosion is carried to the property insured, by first burning another building, does not supply such new force or power. Nor would the additional fact that the wind favored the progress of the fire towards the property insured be considered a new cause. In other words, if the facts show that the fire is directly and wholly occasioned by the explosion, the insurer is not liable.^ ' Insurance Co. ». Tweed, 7 that the railroad company or the Wallace, 44. If an engineer upon steamboat proprietors, as the case a steamboat or locomotive, in pass- may be, are not liable, and for the ing the house of A., so carelessly reason that the damages Incurred manages its machinery that the by B. are not the immediate but coals and sparks from its fires fall the remote result of their negli- upon and consume the house of gence. Ryan o. N. York Central A., the railroad company or the R. R., 35 N. Y. 210. B.'s house steamboat proprietors are liable was 130 feet distant from A.'s. to pay the value of the property In the recent case of the Penn- thus destroyed. Field n. N. York sylvania Railroad Co. b. William Central R. R., 32 N. Y. 339. Kern, which will be reported, But if the fire communicates doubtless, in 13 P. F. Smith, a from the house of A. to that of B. , warehouse situated very near the and that is destroyed, it is held track of the Pennsylvania Central FOE WHAT LOSSES INSURER LIABLE. 547 Loss iy fire unconnected with other cause. 7. Stock " contained in the new granite store, No. 93," was insured. One of the walls gave Railroad -was negligently set on Met. 99 ; Ross v. Weston R. R. fire by sparks emitted from an en- Co., 6 Allen, 87; IngersoU o. gine of the company. The ware- Stockbridge and Pittsfield R. R. house communicated flre to a hotel Co., 8 Allen, 438; Perley«. Eastern occupied by one Kern, as tenant, R. R. Co., 98 Mass. 414. In the some thirty-nine feet from the latter case, Chapman, J. , in com- ■warehouse, and the hotel, with its menting on Ryan ». New York contents, was destroyed. For this Central R. R. Co., sapra, . says : loss suit was brought against the " In that case a distinction is made company. It was held by the between proximate and remote court, 2%o??y)son, C. J., delivering damages. The fire was commu- the opinion, that the company nicated from the defendants' lo- was not liable, the negligence of comotive to their woodshed, and the company being the remote thence, by sparks, one hundred and not the proximate cause of and thirty feet to the plaintiflTs the accident. These cases are said house ; and it was held that the to be distinguishable from Insur- plaintiff could not recover, be- ance Company v. Tweed, on the cause the injury was a remote ground that the law of the latter and not a proximate consequence depends on a special contract, and of the carelessness of the defend- is not influenced by any question ants in permitting their fire *p of social duty. escape. Our own cases, above But the cases in Massachusetts referred to, are not noticed in the have a contrary tendency. The opinion. Nor does the opinion liabilitythere, however, is a statute draw any line of distinction be- liability; but, nevertheless, the tween what is proximate and what reasoning of the court is adverse is remote ; and such a line is not to the doctrine established in obvious in that case. If, when Pennsylvania and New York in the cinder escapes through the air, the cases we have cited above, the effect which it produces upon See Hart v. Western R. R. Co., 13 the first combustible substance 548 FIRE INSTJBANCE. way, and half of the store and the adjoining building fell. Shortly after, between fifteen and forty minutes, a fire broke out in the ruins of such adjoining building, which communicated with the remaining portion of the " granite store." It was held that the insurers were liable for damage from fire, and from water used to extin- guish it, to goods not displaced or injured by the fall.^ In this case the flames broke out and burned the insured goods before there could have been any interposition for their safety. against which it strikes is proxi- insurable interest in the property mate, the effect must continue to along their routes, for whose de- be proximate as to everything struction by Are communicated which the fire consumes in its from their engines they are ■ re- direct course. This is so, whether sponsible. How far this liability we regard the fire as a combina- extends has been the subject of tion of the burning substance with several decisions. In Hookset v. the oxygen of the air, or look Coiyiord R. R., 38 N. H. 243, it merely at its visible action and was said: "Perhaps the liability of effect. As matter of. fact, the in- the company will be found to ex- jury to the plaintiff was as im- tend to such property only as can mediate and direct as an injury be said to be reasonably exposed would have been which was to the danger ; and where the pro- caused by a bullet, fired from the perty is so far distant as not to be train, passing over the interme- exposed except in some violent diate lots and wounding the plain- gale of wind or other extraordi- tiff as he stood upon his own lot." nary circumstance, the loss might See also, to the sSme effect. Smith not be held to be within the spirit V. The London and S. W. R. R. or intent of the act." Co. L. R., 5 C. P. 98. 1 Lewis v. Springfield F. and M. In several of the States railroad Ins. Co., 10 Gray, 159. corporations by statute have an FOE WHAT LOSSES INSURER LIABLE. 549 Loss from '^ usurped power," " mohs," etc. 8. Exemption in case of loss arising from "usurped power" means a usurpation of the power of gorernment, and not a mere excess of jurisdiction by a lawful magistrate.^ Destruc- tion of property by a " mob" is not a destruction by " usurped power."^ These words mean inva- sion from abroad, or an internal rebellion where armies are employed to support it; where the laws are dormant and silent, and firing of towns is unavoidable. " Usurped power," said Lord Mansfield, "takes in rebellion, acting under usurped authority."* A clause excepting " loss by fire occasioned by mobs or riots" does not apply to a loss by fire occasioned proximately by the burning of a bridge lawfully ordered by the military authorities, to prevent the advance of an armed force, operating as a regularly organized public enemy. Such a force is much more than either a "mob" or a "riot," in the ordinary acceptation of those terms.* And where the insurer exempts himself from any liability "for loss or damage by fire which ' The City Fire Ins. Co. v. Cor- ' 2 Marsh. Ins. 791. lies 21 Wend. 367. " Hams v. York Mut. Ins. Co., s Drinkwater «. London Assur- 14 Wr. 341. ance Co., 2 Wils. 363. 550 FIRE INSURANCE. may happen by means of any invasion, insurrec- tion, riot, or civil commotion, or of any military or usurped power," etc., he is not liable if the military or usurped power or the invasion was the means that occasioned or was the proximate cause of the loss.^ "Where the loss occurs from a " riot," and the insurer, by a clause in the policy, is not liable therefor, it is not necessary, in order to exempt him from liability, to first establish the guilt of the rioters by a criminal prosecution.^ If or is it material that the rioters originally assembled for a lawful purpose, but subsequently were guilty of a riot.^ Loss iy falling of huildings. 9. If the insured premises, by reason of over- loading or of defective construction, before the happening of the fire, and without any agency of fire, fall down and become a mass of rubbish, and a fire subsequently breaks out among the ' Barton ». The Home Ins. Co. proximate cause of the burning of New Vork, 42 Mo. 156. In this and destruction of the property ? case, Wagner, J., said, " The real If so, the judgment should be for question is, did the Are happen or the defendant ; otherwise, for the the loss occur by reason of or in plaintiff." consequence of the military and = Dupin s. Mut. Ins. Co., 5 La. usurped power of the rebels being (An.) 483. in Glasgow, and were they the ' Ibid. FOR WHAT LOSSES INSURER LIABLE. 551 fallen materials and destroys them, the insurers are not liable. The cause of the loss of the sub- ject insured is not the fire, but the fall. That a fire springs up afterwards in the rubbish, and destroys the fallen materials, is something beyond the reach of the contract. The materials were not insured. The building insured, after the fall, no longer exists as such, and it ceases to exist by reason of a peril not insured against.^ Loss hy negligence. 10. The object of insurance is to guard against the negligence of servants and others, and there is no ground of distinction between the negli- gence of strangers and others and that of the assured. Hence losses occasioned by the mere fault or negligence of the assured or his servants, unaffected by fraud or design, are within the pro- tection of the policy, and, as such, recoverable from the underwriters.^ So, too, are losses occa- sioned by the negligence of tenants, or by the > Nave V. Home Mut. Ins. Co., Ins. Co., 11 Foster, 338 ; Whiter. 37 Mo. 431 ; Boyd o. Dubois, 3 Mut. Fire Ins. Co., 8 Gray, 566 ; Camp. 133. Brown v. King's Co. F. Ins. Co., 2 St. Louis Ins. Co. v. Glasgow, 31 How. (N. Y.) 508 ; Shaw i>. SMo. 713; Busk B. The Royal Ex. Bobberds, 6 Ad. & El. 75; Chan- Assur. Co., 2 B. & Aid. 73 ; John- dler v. Worcester Ins. Co., 3 Cush. son V. Berkshire Mut. P. Ins. Co., 328. 4 Allen, 388 ; Huckins v. People's 552 riEE INSURANCE. criminal "wantonness or misconduct of mere tres- passers or intruders, or felons.^ But if the negli- gence of the assured or his servants or tenants be so gross as to raise the presumption of fraud, the underwriters are not liable.^ They are liable, however, notwithstanding the insured fails to repair a defect in the insured property after the policy issues, unless the insured be guilty of gross neglect in respect thereto. Doubtless, if the fire which destroyed the property originated from such defect, it would be evidence of gross neglect.^ To what extent negligence must go in order to amount to gross or culpable negligence is diffi- cult by any definition or abstract rule of law, in- dependently of circumstances, to define. Sup- pose the premises insured should take fire, and the flame begin in a small spot which a cup of water would put out, and the assured has the water at hand, but neglects to put it on; this would be culpable negligence, in violation of the ' Catlin V. Springfield Fire Ins. Protection Co. v. Douglas, 8 P. F. Co., 1 Sum. 434; Waters «. The Smith, 419 ; Foster®. Essex Bank, Merchants' Louisville Ins. Co., 11 17 Mass. 479 ; Neptune Ins. Co. v. Peters, 213 ; Dixon v. Sadler, 5 Robinson, 11 G. & Johns. 356. M. & Wils. 405 ; Shaw v. Rob- » Whitehurst v. Fay Mut. Ins. herds, 6 Ad. & El. 75. Co., 6 N. C. (Jones') R. 353. 2 See Cumberland Valley Mut. rOE WHAT LOSSES ISTSUEER LIABLE. 553 maxim, sic utere tuo ut alienum non Icedas (so use your own rights as not to injure another)/ IjOss hy misconduct. 11. iNTegligence and carelessness are insured against, but misconduct, which is a violation of definite law, a forbidden act, is never insured against. Hence, where a barrel of turpentine was brought from the hold of a vessel and used in the furnace, to increase the head of steam, whereby the vessel was set on fire and destroyed, the insurer was discharged, because, by act of Congress, turpentine in steamboats must be se- cured in metallic safes, at a secure distance from any fire, and it was therefore a violation of a rule of duty to use it in the manner it was used.* ' Shaw, C. J., Chandler v. Wor- gence in either, however great in cester Ins. Co., 3 Cush. 328. In degree, has never been held to be Gates ». The Madison Co. Mut. a defence in such policy. " Ins. Co., 1 Selden, 469, Jewett, J., ^ Citizens' Ins. Co. ». Marsh, 5 in delivering the opinion of the Wr. 386. See also Johnson «. court, said : " There can be no Berkshire Mutual Fire Ins. Co., 4 doubt that one of the objects of Allen, 388 ; The Phoenix Ins. Co. insurance against fire is to pro- ■». Cochran, 1 P. F. Smith, 148 ; tect the insured from loss, as well Chandler ». Worcester Ins. Co., 3 against his own negligence as that Cush. 398 ; Goodman v. Harvey, of his servants and others, and 4 Ad. & El. 870. therefore the simple fact of negli- 554 PIRE INSURANCE. WTien policy avoided hy acts of tenants and others. 12. Ifor can the assured recover if a tenant violates any of the express covenants in the policy. These covenants are equally binding on him, whether he occupies personally or by a tenant.^ !N"or can he recover if a servant or agent violates one of the conditions of the policy without his knowledge or consent ;, as where the policy contained a stipulation that if wood ashes are allowed to remain in wooden vessels the policy shall be void, it is avoided by the placing of ashes in a wooden barrel by a servant, with- out any direction by the assured.'' When violation of by-laws by tenants, etc., does not affect the insurance. 13. On the other hand, where a condition of the policy is not violated, but a by-law of the in- surance company provides that " whenever the I'isk of any insurance company is increased by the act of the assured, the policy shall thereupon be void," it is held that the words assured or ' Diehl ». Adams Co. Mut. Ins. Co., 9 Gray, 27. See also Fire As- Co., 8 P. F. Smith, 443 ; Howell sociation v. Williamson, 3 Casey, V. Baltimore Equitable Society, 16 196 ; Mead v. Northwestern Ins. Md. 377; Kelley ». Worcester Co., 3 Selden, 533; ante, p. 352 Mut. Fire Ins. Co., 97 Mass. 284. et seq. « Worcester «. Worcester Ins. FOR WHAT LOSSES INSURER LIABLE. 555 insured apply to the party -whose interest was originally insured, and not to a lessee under ,him, nor to a party to whom, in case of loss, the policy was made payable; and that the assured, having previously leased the premises, is not responsible for acts of svib-lessees done without his consent or knowledge ; and that the lessee to whom the money was made payable in case of loss is en- titled to recover, notwithstanding the risk was increased by such sub-lessees.^ Doubtless, it would be otherwise if the risk were increased by others, openly and notoriously, so that the as- sured could have taken measures to prevent it. Where the charter of a mutual insurance com- pany contains a provision " against alteration by acts of proprietor," this does not apply to the acts of a tenant who is not the proprietor. The clause means the insured owner, and it must be his act, one that he does himself or authorizes to be done, or one which he adopts as his before any loss occurs.^ Insurer subrogated to rights of insured. 14. If the loss is caused by the negligence or otherwise of third persons,, the insurer, after pay- ' Sanford v. Mechanics' Mut. F. ' Paddleford v. Providence Mut. Ins. Co., 13 Cush. 541. Fire Ins. Co., 3 E. I. 103. 556 riRE INSUEANCE. ing the loss, may recover, from them, in the name of the insured, the amount thus paid.^ Every insurer has a right to be put in- the place of the insured, and to use the name of the latter in order to recover compensation from a wrongdoer who has caused the loss. If the insured has received from the insurer the amount of his loss, and then recovers from the wrongdoer compensation also, he holds the sum thus recovered as trustee for the insurer, and is bound to hand it over to him.'' ' Hart V. Western R. R. , 13 Met. Hall v. Railroad Cos. , 13 Wallace, 99 ; Peoria Ins. Co. ■». Frost, 37 367. 111. 333 ; Rockingham Mut. F. Ins. ^ Mason v. Sainsbury, 3 Doug. Co. V. Barker, 39 Me. 253 ; Conn. 61 ; Clark v. Inhabitants of the Life Ins. Co. v. The N. Y. and Hundred, 3 B. &C. 3S4; S. C, 3 N. H. R. R. Co., 35 Conn. 365 ; D. & R, 489. CHAPTER XVIII. NOTICE OF LOSS. 1. Insured required to give no- 7. Assignee may give notice of tice of loss. loss. 2. Condition as to delivering in 8. Failure of insurers to object statement of loss. to defective notice. 3. Forthwith and immediate, 9. Duty of insurer with regard meaning of. to notice. 4. Condition precedent. 10. Waiver of defective notice. 5. Notice to authorized ofllcer. 11.' Keference to insurer's agent. 6. Surplusage does not invali- 13. Effect of requirements in date notice. the by-laws as to notice. Insured required to give notice of loss. 1. Where a loss occurs, it is a usual condition of the policy that the insured shall " forthwith" give notice, or shall give "immediate" notice, thereof to the insurers. The notice is required, that the insurer may as early as possible be ac- quainted with the event, that he may look after the property, and that he may have the best opportunity of investigating the circumstances of the fire and Ibss. But where the insurer receives intelligence of the fire, appears on the ground, and sees what has occurred, the insured may well be excused from giving any further notice. If the knowledge be fully coramuni- 558 FIRE INSUBANCE. cated, courts are not very particular as to the mode by which it is conveyed.\ But. where no- tice of the loss is required to be given in writing to the secretary, notice by parol to an agent will be of no effect;^ but in such a case a written notice to the secretary from the local agent, upon information conveyed to him by the assured, is suflS-cient.' • Roumage v. Insurance Co., 1 a sufficient compliance with that Green (N. J.)i HO; Kingsley d. part of the rule which requires N. E. Mut. Fire Ins. Co., 8 Gush, the notice to be in writing. But 393 ; Clark v. N. E. Mut. P. Ins. it was the fourth day after the Are Co., 6 Cush. 343; Phillips v. Pro- that the agent communicated the tection Ilis. Co., 14 Mo. 220 ; Ins. notice. Was this in time ? We Co. of N. A. 9. McDowell, 50 111. held, in Trask v. The State Ins. 130. Co., 5 Casey, 198, that eleven 2 Patrick «. Insurance Co., 43 days was too long a delay, if not N. H. 631 ; Beatty v. Lycoming excused by circumstances. And Co. Mut. Ins. Co., 16 P. F. again, in the Inland Ins. Co. v. Smith, 9. . Stauffer, 9 Casey, 408, that a delay ' Stimpson ». Monmouth Mut. of written notice for eleven days Fire Ins. Co., 47 Me. 379 ; West was not excused by a verbal no- Branch Ins. Co. V. Helfenstein, 4 tice to a director and an agent of Wr. 389. In this case, Woodward, the company. In the case of the J., in delivering the opinion of State Mut. Fire Ins. Co. ■». John the court, said: The notice is to Roland, M.S. of Oct. T. 1860, un- be forthwith and in writing, and der a policy similar to the present, is to be directed to the secretary, a written notice by the agent of Helfenstein started the very day the company, sent to the secretary of the fire, to communicate notice four days after the fire, at the in- to the secretary. He had a right stance of the assured, was held to do it through the local agent, sufficient. The doctrine deducible and the letter of the agent was from these cases is, that notice is KOTiCE or LOSS. 559 Condition as to delivering in statement of loss. 2. And where, too, a condition of the policy- requires the insured, in case of loss, to deliver in a particular account of such loss or damage within a specified time, this is not complied with by depositing such account, properly made out, in the post-office, inclosed in a sealed envelope, post-paid, and addressed to the secretary of the' company; and this, notwithstanding a clause in a condition precedent to the right tice to the underwriters of any 'of recovery ; and where it is loss. The mail left the place of stipulated to be given forthwith, the loss for Baltimore on Monday, the condition imposes upon the Wednesday; and Friday. The Are assured due diligence under all the took place on Friday night, and circumstances of the case. And the assured did not give notice by this is the rule as given in Angell mail till the next Wednesday. All on Ins., sec. 331. The assured the circumstances attending the may be necessarily occupied a day -.condition of the property and the or two after a fire in providing efforts of the assured to collect for his family, or for the safety of and preserve it were left to the goods that have been rescued, and jury, to determine whether he was which the insurance company not excused for not mailing his would have to pay for if not taken letter in due season. There was care of. It would be very unrea- a delay of more than five days, sonable in such cases to construe ,and it was not held fatal to the the stipulation for notice forth- plaintiff's right. We depart from with so sharply as to make his no rulings of our own, and we prudent and proper conduct the violate no safe precedents, when ground of denying him the stipu- we decide that, all things consi- lated indemnity. In the case of dered, written notice of the plain- Edwards V. The Baltimore F. Ins. tiff's loss was given to the secre- Co., 3 Gill. 176, the policy required tary within reasonable time after the assured forthwith to give no- the fire." 560 riRB INSURANCE. the policy that " all communications and notices must be post-paid, and directed to the secre- tary.'" The requirement to deliver in is positive, and must be complied with.* A party may, doubtless, if he chooses to run the risk, send his proofs by mail, and if they are received without objection all will be well; but if they are not .received, he has not complied with the condition which requires him to deliver them in within the specified time.' The requirement of a policy that the insured, in case of loss, should give to the secretary of the company, in writing, a particular account of the loss, is not waived by the president of the company examining the books of the insured, to ascertain their loss, or by his giving the insured, ^t their request, a memorandum of what the statement should contain.* . ' Hodgkins v. Montgomery Co. days, to deliver to the secretary a Mut. Ins. Co., 34 Barb. 213. particular account, on oath, of the " Ibid. property lost or damaged. Within ' Hodges «. Montgomery Co. the time specified this particular Mut. Ins. Co., supra. See also account seems to have been sent Bumstead v. Dividend Mut. Ins. by mail, and no question was Co., 2 Kern. 81 ; Lycoming Co. raised as to that being a sufficient Ins. Co. v. Updegraff, 4 Wr. 311 ; compliance with the requirement. 2 Ibid. 130. In Bartlett v. Union » Lycoming Co. Ins. Co. v. Up- Mut. F. Ins. Co., 49 Me. 500, the degraff, 4 Wr. 311. Where the by-laws of the underwriters re- insurer acts upon the notice as quired the insured, within thirty received in time, makes no objec- NOTICE OF LOSS. 561 Where the insured is required, in case of loss, as soon as possible to deliver a particular account in writing, under oath, stating the value of the property lost and of that saved, and he claims for a total loss, stating the value, this is suffi- cient, notwithstanding some of the property, un- known to the assured, was saved.^ ForthwitJi and immediate, meaning of. 3. Although the words forthwith or immediate signify without delay, directly, yet they have never been construed literally to require notice on the day; they are complied with by the in- sured using due diligence under all the circum- stances. They do not mean that no interval is to elapse between the time of the fire and the giving of notice, but they do mean that unreason- able or unnecessary delay will not be tolerated. If the insured has not been guilty of unnecessary delay or laches in giving the notice, the insurer is bound.^ Hence, where a fire occurred on the tion nntil the trial that five days promise, etc., he is estopped from is too great a lapse of time under setting up the insufficiency of the the clause requiring notice forth- notice as to time. Lycoming Ins. witTi, he is held to have waived Co. v. Schaffer, 6 Wr. 188. the objection. For example, if, ' Harkins v. Quincy Mut. Fire upon receiving notice of loss, he Ins. Co., 16 Gray, 591. sends an agent to investigate the " West Branch Ins. Co. v. Hel- loss, and he makes offers of com- fenstein, 4 Wr. 389 ; New York 36 562 PIKE INStJKANCE. 15th of June, was known to the insured on the 18th, and by him notified to the company on the 23d by mail, it was held, under all the circum- stances of the case, a sufiicient compliance with the condition requiring notice of loss to be given forthwith} On the other hand, it has been held that notice of loss eleven days after it occurred was not a compliance with such a condition. The insured, it was said, must comply with the contract, or present a reasonable excuse for his laches.^ Where a fire occurred on the 10th, and notice of it was dated and mailed on the following day, and received by the insurers on the 15th, it was held that this was a compliance with the condi- tion requiring immediate notice. "If the notices," said the court, " were mailed on the day of their date, it was all the plaintiff was bound to do. . . Due diligence is all that is required ; and it was held in St. Louis Insurance Company v. Kyle,^ that, under the circumstances of that case, notice on the fourth day after the fire was sufficient. And, besides this, the secretary, on receiving the Central Ins. Co. v. National Pro- National Protection Ins. Co., 30 tection Ins. Co., 20 Barb. 468 ; In- Barb. 468. man «. The Western F. Ins. Co., » Trask v. State Ins. Co., 5 13 Wend. 453 ; St. Louis Ins. Co. Casey, 198 ; Edwards jj. Baltimore ». Kyle, 11 Mo. 278 ; Patrick «. F. Ins. Co., 3 Gill (Md.), 176. Ins. Co., 43 N. H. 631. « 11 Mp. 278. ' New York Central Ins. Co. v. NOTICE OF LOSS. 563 notices, informed the insured party that prompt steps would be taken to examine and adjust the matter ; and in the resolutions of the company, subsequently adopted, they put their refusal to pay exclusively on the ground of non-compliance on the part of the insured with the sixth and twelfth articles of the deed of settlement. This was a waiver of their objection on the part of the company."^ A notice given two days after the loss, was held to be forthwith, within the meaning of the condition ; and furnishing the preliminary proofs five days after the loss, was within the condition requiring them " as soon after (the loss) as pos- sible.'"' Condition precedent. 4. The acts required to be performed by the assm-ed are well understood to be conditions pre- cedent, without the performance of which the assured cannot recover. An averment, therefore, of the performance is necessary, and the proof must sustain the averment.^ ^o excuse will be received in lieu of perform- ' Schenck «. Mercer Co. Mut. " The Peoria Marine and Fire F. Ins. Co., 4 Zabris. 447; Clark Ins. Co. v. Lewis, 18 111. 553. 0. New England Mut. Ins. Co., 6 ' St. Louis Ins. Co. v. Kyle, 11 Cush. 343 ; Underbill «. The Aga- Mo. 378. warn Mut. F. Ins Co., Ibid. 440, 564 FIRE INSUEANCE. ance, and it will not avail the insured to show that he has done everything in his power to comply with the condition, but has been pre- vented by the unreasonable or wrongful act of a third person, l^or will it avail him that the risk of the insurer has not been increased by his omission. But, nevertheless, in construing these ■wovdiB fortJiwitJi and immediate^ regard is had to the nature of the act or thing to be performed, and the circumstances of the case. And this prompt and imperative language, practically means that the insured shall use due diligence under all the circumstances of the case. There must be no unnecessary procrastination or delay; nothing which the law calls laches} Notice to authorized officer. 5. Where notice is required to be given forth- with to the secretary or other authorized officer, a director is not an authorized officer within the meaning of the condition. Directors are usually but consulting managers, not executive agents. They are but occasionally at the place of busi- ness, and if the company could be affected by notice to them, no matter how remote they might be from the office, all the benefits of notice 1 Inman v. Western F. Ins. Co., 12 Wend. 452 ; Cornell v. Le Roy, 9 Wend. 165. KOTICE OF LOSS. 565 might be lost.^ However, if a director on re- ceipt of notice goes to the scene of the fire, and there promises the insured that he will give the notice required by the policy, and does give it, this is sufficient. In that case he becomes the agent of the assured for such purpose, and his communication of the notice is the act of the assured.'' If written notice is required to be given to the secretary within thirty days after a loss, oral notice to the local agent two days after the loss,, and written notice to the secretary more than a month afterwards, is not a substan- tial compliance with the condition.' Surplusage does not invalidate notice. 6. "When the notice of loss is sufficient in other respects, it is not invalidated because it contains additional matter foreign to the pur- pose, as when it invites the insurer to assist in measures for determining the cause of the fire.* Assignee may give notice of loss. 7. When the condition of the policy provides that all persons insured by the company, and ' Inland Ins. and Deposit Co. v. ' Cornell v. Milwaukee Mut. F. Stauffer, 9 Casey, 397, Strong, J. Ins. Co., 18 Wis. 287. s The Inland Ins. and Deposit ♦ Rix v. Mut. Ins. Co., 20 N. H. Co. v. Stauffer, supra. 198. 566 riRE IlifSURANCE. sustaining loss or damage by fire, shall forthwith give notice thereof, a person holding the policy as assignee, with the consent of the insurer, may well be considered the assured within the mean- ing of this clause. He is the party in interest, and the preliminary proceedings may be con- ducted in his name, although, when a suit is commenced, it must be in the name of the party to the contract.* Failure of insurers to ohject to defective notice. 8. If the underwriters on receiving notice fail to object if it is not sufficiently formal, or is deficient in the information required by the by- laws, and also fail to ascertain and determine the amount of the loss, in accordance with the provisions of their charter and by-laws, which require them to do so " as soon as may be," and pay the same within three months, otherwise the insured may within three months after the de- termination of the loss bring an action at law for the recovery of the same, he may bring such action after the time limited. The underwriters, by neglecting or refusing to do their duty, can- not deprive the insured of his right of action.'' ' Cornell v. Le Roy, 9 Wend. Ins. Co., 46 Me. 500 ; Nevins v. 163. Rockingham Fire Ins. Co., 5 « Bartlett v. Union M. and F. Foster, 32. KOTiCE or LOSS. 567 Duty of insurer with regard to notice. 9. It is not the duty of the insurer to ac- knowledge the receipt of the notice, or object to its not being given in time. !N"either silence on the part of the insurer, nor positive objections, alter the character or sufl&ciency of the notice, so far as the time is concerned. If it is too late, there is an end of the matter.^ But if the notice given is defective or erroneous, and the insurer puts his refusal to pay the loss on other grounds, that is a waiver of this condition of the contract.* And an error in the notice, not suggested until after suit brought, cannot be availed of at the trial, and is held to be waived.^ But this relates to an error as to the matter or form of the notice, which, if objected to, may be remedied, and not to an error as to time, which, if the insurer chooses to insist upon it, is ii-remediable, and therefore fatal.* The • St. Louis Ins. Co. v. Kyle, 11 ' Kernochan v. K T. Bowery Mo. 278; Inman «. Western F. Ihs. Co., 17 N. Y. 428; Clark v. Ins. Co., 13 Wend. 452; Patrick N. E. Mut. F. Ins. Co., 6 Cusli. «. Ins. Co., 43 N. H. 631. 343 ; Agawam Mut. F. Ins. Co., « Patrick n. Ins. Co., 43 N. H. lb. 440; Columbian Ins. Co. v. 621 ; Bumstead v. Dividend Mut. Lawrence, 10 Peters, 507 ; Works Ins. Co., 2 Kern. 81 ; Schenck v. v. Farmers' Mut. P. Ins. Co., 57 Mercer Co. Mut. F. Ins. Co., 4 Me. 28. Zabr. 447 ; Francis v. Insurance « See Trask v. State F. and M. Co., 1 Dutch. 78. Ins. Co., 5 Casey, 198. In this 568 riEE INSUEANCB. insurer who does not give notice of a defective notification of loss, defective as to matter or form, and therefore remediable, is not acting in good faith, and the courts will not allow him to take advantage of his own wrong/ case the insured in his notice, fact for the jury. See Coursin «. •which, although required tq be Pa. Ins. Co., 10 M. 333. immediate, -was given in eleven If Trask v. The State F. and M. days after the fire, set up an ex- Ins. Co. was intended to deny the cuse for his delay. The secretary general principle that insurers of the company thereupon waived may waive performance of a the notice without, objection, and formal condition introduced for gave the insured some directions their benefit, it is not good law. about making out the statement of Perhaps in that case the condition his loss ; and one of the insurer's was that if notice was not given agents also made some exami- forthwith the policy should be nations respecting the nature of void. But the report of the case the loss. These circumstances does not show this. , were held not to constitute a • Patrick v. Ins. Co., 43 N. H. waiver ; the time for the perform- 621; Noyes v. Ins. Co., 30 Vt. ance of the condition having al- 569 ; Peoria M. and Fire Ins. Co. ready passed, and the insured not v. Lewis, 18 111. 553 ; Ayers v. proving his excuse. When the The Hartford Fire Ins. Co., 17 acts on the part of the insurer, Iowa, 176 ; Cornell v. The Mil- which it was concluded furnished waukee M. F. Ins. Co., 18 Wis. the evidence ofwaiver, were done, 387. The conditions in policies the insurers, said the court, were of insurance requiring an account free from their contract, and such of the loss are construed liberally acts could not re-establish it. See in favor of the assured, in all also Smith v. Haverhil^ Mut. F. cases that relate to the form of Ins. Co., 1 Allen, 297. Theques- the notices. Bartlett v. Union tion whether there has been a M. and F. Ins. Co., 46 Me. 500. waiver is ordinarily a question of "Good faith on the part of the KOTioE or LOSS. 569 Waiver of defective notice. 10. But a defective notice, even as to time, may be waived, and the waiver may be evidenced by the acts of the insurer, as by a visit to the spot through an agent, offers of compromise, demanding statement of loss, etc.^ A waiver of notice of loss is not, however, waiver of pre- liminary proofs.^ In Phillips V. Protection Insurance Company^ the court said: "We are not disposed to- say that in all cases and under all circumstances, the mere reception by the company of a notice, without objection at the time, and the additional fact of directly proceeding to an investigation of the claim, would be conclusive evidence that the notice was a timely one, and that the com- pany waived any objections to the claim on this ground. It might be, that the importance of an earlier notice would be for the first time ascer- underwriters," said Buggies, J., silence should be held a ■waiver of in O'Neill v. Buffalo F. Ins. Co., the defect." See also Bumstead 3 Comst. 123, "requires that, if v. Dividend Mut. Ins. Co., 3 Ker- they mean to insist upon a merely nan, 81. formal defect in the preliminary ' Lycoming Ins. Co. ». SchreflFer, proofs, they should apprise the 6 Wr. 188. assured of the natureof the objec- " Desilver®. State Mut; Ins. Co., tions, so as to give him an oppor- 2 Wr. 130. tunity of supplying the defect ; ' 14 Mo. 220. and, if they neglect to do so, their 570 riRE INSUEANCB. tained in the course of the investigations, and if it was then insisted on as a bar, we could hardly infer a previous waiver." In this case the written notice was given twenty days after the fire. There was proof that the plaintiff called at the office of the com- pany a day or two after the fire, and told them " he was burnt out ;" that the agent of the com- pany was seen examining the ruins before the fire was extinguished ; that when the written notice was handed in, the plaintiff was informed that the pressure of business was- such that his case could not be immediately attended to, but would receive attention in its turn. . . . " I9 it not absurd to talk about a notice being too late, when the company for whose benefit it is given declares in effect that it is too early for their convenience — when it is subsequently taken up and investigated, no opposition at any time made to it for want of being in time, and an ultimate offer to pay a sum which the com- pany believes sufficient to cover the actual loss ?" Meference to insurer^s agent. 11. If an insurance company, on receiving' notice of a loss, refer the insured to their resident- agent for settlement of the loss, he is thereby invested with full authority to receive a NOTICE OF LOSS. 571 statement of the loss and extend the time for furnishing it ; and if such statement is in fact furnished within the time required by the agent, though after thirty days from the fire, the con- dition in the policy requiring it to be done within that time is not broken.^ Mffect, of requirements in the hy-laws as to notice. 12. Where the by-laws require that the nature and value of the interest of the assured shall be contained in the notice of loss, and where the policy is expressly made subject to the condi- tions of the charter and by-laws, the failure to state the nature and value of the interest is fatal to the policy.'* This wpuld be so, doubtless, although the policy was not thus made subject to the by-laws. The assured in a mutual com- pany is bound by the by-laws.^ > Lycoming Co. Mut. Ins. Co. « Welcome «. People's Equita- V. SchoUenberger, 8 Wr. 359. See ble Mut. F. Ins. Co., 2 Gray, 480. also Works v. Farmers' M. F. Ins. » Woodfin v. The Asheville M. Co., 57 Me. 281. Ins. Co., 6 Jones (N. C.) 558. CHAPTEE XIX. PEELIMIKAKT PROOFS. I. When preliminary proofs must be furnished. 3. Material mistake in the proofs. 3. Insured's affidavit of loss, when sufficient. 4. What may be omitted in the proofs. 5. Questions for the jury and for the court. 6. Preliminary proofs not evi- dence per se for the jury. 7. Particulars of loss a condition precedent. 8. How clause as to particulars of loss construed. 9. Meaning of full particulars. 10. Question of particularity and waiver for the jury. II. As to time of payment. 12. Valuation of the loss. 13. When interest allowed on loss. 14. Particular requirements in preliminary proof. 15. Certificate as to loss. 16. Formal accuracy of cer- tificate. 17. Construction as to nearest magistrate. 18. Insurer must give notice of defects, if any, in certificate. 19. When certificate must be produced. 20. Waiver of defective certifi- cate. 21. Certificate does not con- clude insurer. 22. Waiver of preliminary proofs. 28. Insurer bound to point out defects in proofs. 24. Effect of failure to point out defects in the proofs. 25. When insurer estopped to set up defective proofs. 26. Waiver of delay in furnish- ing proofs. 27. Waiver of proofs and no- tices by an agent. When preliminary proofs must Refurnished. 1, Preliminary proofs, or the particulars of loss, are conditions precedent to the right of the assured in a fire policy to recover.^ They must ' Irvings. The Excelsior F. Ins. Co., 1 Bosw. 507; Franklin Fire Ins. Co. B. UpdegrafF, 7 Wr. 350. PEELJMINAKT PEOOFS. 573 be delivered within the time required by the policy, or if no time is specified, then within a reasonable time under all the circumstances ; and this is proper, otherwise a party might lie by four or fire years after the loss, and then send in a claim, when the means of investigation, per- haps, were lost.^ But where the policy requires the preliminary proofs to be delivered in as soon as possible, yet as time is necessary to prepare them, this clause is construed liberally. Thus it has been held that a delay of nineteen days for the purpose of preparing proofs was not, under the circum- stances, unreasonable.^ Material mistaJce in the proof. 2. If the insured, through mistake, makes an incorrect statement of a material matter in his preliminary proofs, and files no amendatory statement correcting his previous one, he will not be allowed at the trial to show that by mis- take he has misled the insurers in matters where he had bound himself to state truly, as- a con- dition precedent to his right of recovery. He « ' Worsley «. Wood, 6 T. R. 710 ; nett, 5 Wr. 161 ; Tayloe v. Mer- Mason v. Harvey, 8 Excheq. 819 ; chants' F. Ins. Co., 9 How. 390. Commonwealth Ins. Co. v. Sen- = Wightman «. Western M. and F. Ins. Co., 8 Rob. (La.) 442, 574 PIBE INSURANCE. should have filed an amendatory statement be- fore initiating a suit/ Insured's affidavit of loss, when sufficient. 3. When the insured makes and serves on" the insurers his own affidavit of the loss, and thus attempts to comply with the contract of insur- ance with respect to preliminary proofs, and the latter do not notify him that his affidavit is in- ' Campbell s. Charter Oak Fire In the case of the ^tna Ins. Co. and Mar. Ins. Co., 10 Allen, 213. v. Stevens, 48 111. 31, it was held. But see McMaster v. Ins. Co. of on the contrary, that where the North America, 64 Barb. 536, assured is compelled to bring suit where the court say : " We think for the loss, he has a right to prove the court at special term committed the value of articles, which, by no error in admitting evidence of inadvertence, were omitted in the mistake in the statement (in the account submitted with the pre- proofs of loss) that the property liminary proofs. And in Com. in question was covered by other Ins. Co. «. Huckberger, 53 111. insurance. The plaintiff is not 464, where the assured, in addi- concluded by that statement, tion to the preliminary proofs. There is no reason for holding it was required to submit to an ex- an estoppel, as it does not appear amination, undex oath, touching that the defendants were misled the condition of his affairs con- by it to their injury, but the con- nected with the insurance, and trary appears." This is in con- upon such examination in the ab- flict with Irving v. The Ex- sence of his books of account he celsior Fire Ins. Co., 1 Bos. 507, made a mistake in his statement, where it is held that the assured it was held that he was'not con- is bound by the statements con- eluded thereby, but the mistake tained in his notice of loss, and was open to correction, cannot upon the trial contradict them. PRELIMINARY PROOrS. 575 sufficient, but make an examination and pursue the inquiry to satisfy themselves, take other affida- vits which are received by their agent within the time limited for making preliminary proof, this may be submitted to the jury as evidence of a substantial compliance with the terms of the contract.^ What may he omitted in the proofs. 4. Unless the . conditions of the policy require it, it is not necessary in the preliminary proofs to set forth the nature of the insured's interest in the property ; nor is it necessary to negative the exceptions of losses from design, invasion, public enemies, etc.^ N"or is it necessary in suing on a policy to negative the exception which may exist against a judge or justice, or magis- trate who is required to furnish a certificate of the circumstances attending a loss.^ If, how- ever, the policy requires the insured to state in his particular account of the loss the nature and value of his interest in the property, it will not be a compliance with the condition to state that the property was totally destroyed. And this > Sexton V. Montgomery Co. ' Lounsbury ». Protection Ins. Mut. Ins. Co., 9 Barb. 191. Co., 9 Conn. 459. » CatUn V. Springfield Fire Ins. Co. 1 Sum. 434 576 riEE INSUEANCE. notwithstanding the value of the property was stated in the application which formed a part of the contract of insurance.^ Questions for (he jury and for the court. 5. Whether a loss has occurred, whether, also, notice of the disaster was forthwith communi- cated to the company, and a particular account of the loss or damage sustained by the insured delivered as soon as possible after the fire, in conformity with the stipulations of the policy, are questions for the consideration of the jury, and are not to be assumed by the court.^ JN"ever- theless, it is for the court to determine whether the preliminary proofs are sufficient.* Preliminary proofs not evidence per sefor a jury. 6. Although the insurer may not object to the regularity of the preliminary proofs, yet the in- sured cannot prove his loss or the particulars of it by his own statement/ And hence it was ' Wellcome «. People's Equit- » Franklin Fire Ins. Co. v. able Mut. F. Ins. Co., 2 Gray, 480. Hamill, 6 Gill (Md.), 87. See also Campbell o. Charter Oak ' Klein «. The Franklin Ins. F. and M. Ins. Co., 10 Allen, 213, Co., 1 Harris, 247. to the effect that whatever the « Sexton v. Montgomery Co. M. policy requires the preliminary Ins. Co., 9 Barb. 191 ; Citizens' F. proofs to contain must be fur- Ins. Co. «. Doll, 35 Md. 89. nished or set forth. PREIilMINAET PROOPS. 577 held to be error where the court permitted the schedule, statements, and aflSdavits of the in- sured, relating to their loss, to go to the jury as evidence, not only of compliance with the con- dition requiring preliminary proof, but also as prima facie evidence of the quantity and quality of the goods lost.^ "The insured cannot make evidence for him- self, or otherwise the insurer would be entirely at the mercy of an unscrupulous man, who might easily double the actual amount of his loss."^ These preliminary proofs are intended for the information of the insurers, but they are not evidence per se to be submitted to a jury as prima facie evidence of the goods lost. They are conditions precedent, a preliminary to the initiation of a suit, and for the court who are to- decide on their sufficiency. If they are not sufficient, and have not been waived, the cause is ' Commonwealth Ins. Co. v. under oath, in accordance with a Sennett, 5 Wr. 161 ; Sexton v. stipulation of the policy, is not Montgomery Co. Mut. Ins. Co., evidence to go to the jury. It can 9 Barb. 191; Newmark t). L. and never be evidence of the subject S. Fire Ins. Co., 30 Mo. 160; or amount of the loss sustained. Yonkers and N. Y. Fire Ins. Co. Lycoming Ins. Co. v. Schreflfer, V. Hoffman F. Ins. Co., 6 Robt. supra. 316; Lycoming Co. v. Schrefter, = Bead, J., in Commonwealth 6 Wr. 181. The insured's state- Ins. Co. v. Sennett, supra. ment of loss made out by him 37 578 PIRE IlirSUEANCE. at an end. If they are sufficient, or have been waived, the case proceeds; but they cannot be turned, being merely an ex parte statement of the plaintiff, into prima facie evidence of the most important part of his case/ IS^evertheless, the particular statement of the insured may be used to refresh the memory of a witness.^ Particulars of loss a condition precedent. 7. The condition requiring the insured to de- liver a particular account of his loss and damage within a specified time must be strictly per- formed. Time is of the essence of such a condi- tion, and the courts cannot dispense with the condition or excuse its non-performance. It is not like a duty created by the law, the perform- ance of which is excused if performance is ren- dered impossible by the act of God, but it is a duty created by contract, and which the in- sured must perform or lose the benefit of his in- surance.^ • The Common-wealth Ins. Co. » Owen v. Farmers' Joint Stock V. Bennett, supra; Thurston a. Ins. Co., 57 Barb. 518. See also Murray, 3 Binn. 326. Inman v. Western Ins. Co., 12 = Lycoming Co. Mut. Ins. Co. Wend. 460 ; Harmony v. Bing- «. Schreffer, 8 Wr. 269. ham, 2 Kern. 99. PEELIMINAET PROOFS. 579 Sow clause as to pai-ticulars of loss construed. 8. But notwithstanding the delivery of the particulars of loss is made a condition precedent to the assured's right of recovery, yet it is not constraed with such strictness that the accidental omission of some article will defeat his action. " Its meaning is," said Pollock, C. B., in Mason V. Harvey,^ "that the assured will, within a con- venient time after the loss, produce to the com- pany something which will enable them to form a judgment as to whether or no he has sustained a loss." And where the insured is bound by the terms of the contract, after furnishing proofs of loss, to submit, also, if required, to an examina- tion under oath, this examination must be confined to matters pertinent to the loss. He is not bound to answer questions respecting the amounts for which he had made settlements with other in- surers.^ The clause requiring a particular account has always been construed with great liberality, as the insured must necessarily often make out the account under embarrassment arising from loss of books, bills of parcels, etc. The clause re- quires only reasonable information to be given, ' 8 Excheq. 819. ' Ins. Cos. «. Weides, 14 Wal- lace, 375. 580 PIEE INSURANCE. SO that the company may be enabled to form some estimate of their rights and duties, before they are obUged to pay.^ Hence, when the in- sured, from loss of books and accounts, stated generally that the loss of his goods amounted to $1495, this was held to be sufficient.^ Meaning of full particulars. 9. Full particulars mean best particulars the assured can reasonably give.^ Hence, if the assured, from loss of books and vouchers, or the total destruction of the goods insured, cannot furnish the "particular account" required, a statement of the gross amount lost, together with the circumstances of the loss, under oath, is sufficient.* The " particular account of the loss ' McLaughlin v. Washington exception that those might he re- Co. M. Ins. Co., 23 Wend. 535. covered for, the total destruction ^ Ibid. See also Norton v. Reus- of which prevented more particu- selaer and S. Ins. Co., 7 Cowen, larity in specifying them, accom- 645. panied as it was by a reference to ' Mason n. Harvey, supra, 22 the destruction of books and pa- L. J. (Excheq.) 336. In Hoff- pers.in his charge. The policy man «. Mtna. Fire liis. Co., 19 itself, in its ninth condition, re- Abbott's Practice R., Eobertson, quired only as much particularity J., said: " The learned judge be- as the nature of the case would fore whom the cause was tried admit of." was correct in qualifying his in- * Bumstead v. The Dividend struction that the plaintiffs could Mut. Ins. Co., 12 N. Y. 81. See only recover for the goods set also Hoffman «). ^tnaF. Ins. Co., forth in their schedule, with the 19 Abbott's Practice R. 335. PEELIMIKAET PEOOrS. 581 or damage," and the " inventory of all property destroyed or damaged, giving the value in cash of the damage sustained to each item," require the party only to furnish a statement as particu- lar and full as he can under the circumstances make. Where the hooks and papers of the in- sui-ed are destroyed hy the same fire which con- sumes the property insured, he is prevented from complying with the conditions of the policy, and a less particular statement is sufficient, and all that is called for- within the fair meaning and intent of the parties as expressed in the contract by the conditions/ We may here add that the particular account of loss and damage refers to the articles lost and ' Ibid. Mason v. Harvey, 8 tute the loss, he must furnish Excheq. 819. Evidence of losses some statement, some particnlars, in consequence of removal of or some satisfactory substitute goods from a store may be derived therefor, as in Bumstead v. The from the insurer's invoices, bills Dividend Mut. Ins. Co., supra. of purchase, books of account. See Beatty v. Lycoming Co. Mut. amount of sales, inventories of Ins. Co., 16 P. F. Smith, 9. In stock taken immediately after the the latter case the insurance was loss, together with such f£tcts as on household furniture and gro- may be established by his clerks, ceries. No particulars of the loss Case B. Hartford P. Ins. Co., 13 were furnished; nothing but a 111. 676. mere reiteration of the descrip- While it may be out of the tion in the policy. Held that this power of the assured to report all was insuflBcient. Lycoming Co. the items in detail which consti- Ins. Co. v. Updegraflf, 4 Wr. 311. 582 riRE INSTTBASrCB. damaged, and not to the manner or cause of the loss.^ Question of particularity and waiver for the jury. 10. The question whether the amount of loss furnished by the insured is as particular as the nature of the case admits of is for the jury, as is also the question whether the insurer has waived a particular statement of loss. And this may be inferred from circumstances, such as the ap- pearance of the insurer's agent at the fire, and an agreement between him and the assured to ascertain the amount of the loss by an examina- tion of the books, followed by such examination, together with the letter of the president of the company, acknowledging the receipt of the ac- count of loss, but refusing payment on other grounds.^ " Knowledge of the amount of loss is the substance," said Strong, J., " the particu- lar statement is but a means of ascertaining it. When, therefore, it is agreed between the in- surers and the assured that some other mode shall be adopted to fix the amount, the agree- ment must be regarded as a waiver of the formal requisition of a statement; at least it is evidence of such waivei'.'" ' Catlin V. Springfield F. Insv ' Franklin Fire Ins. Co. v. Up- Oo., 1 Sum. 434. degraff, 7 Wr. 350. ' Ibid. PEELIMINAKT PROOFS. 583 As to time of payment. 11. And when the condition is that the insurer will pay the loss in sixty days after it shall have been ascertained and proved, and the proof re- ceived at the office; this applies to cases where a proper adjustment of the loss has been made by the proper ofl3.cers of the company. Where the company refuse to make an adjustment, the insured need not wait the expiration of the sixty days, but may sue forthwith.^ If the directors indefinitely postpone the subject of a loss, this will be construed as a refusal to allow anything on account of it, and as a waiver of a condition of the policy which requires notice of the loss to be given within thirty days.^ Valuation of the loss. 12. If the policy fixes the standard at which the goods shall be valued, namely, the cost of replacing them at the time of the fire, but also requires the preliminary proofs to state the actual cost of the articles, such statement does not prevent the insured from recovering more ' Phillips «. Protection Ins. Co., » Patrick v. Ins. Co., 43 N. H. 14 Mo. 330; The Norwich and 621. K. Y. Transportation Co. o. West- em Mass. Ins. Co., 34 Conn. 561. 584 riEE INSUIiAIfCE. than such actual cost. The price at which other wholesale dealers and manufacturers sell similar goods is one mode of arriving at their market value, market value and not the original cost of the goods being the standard by which to estimate the amount of the assured's loss.^ And in the absence of books and invoices show- ing the value of the goods on hand at the time of the loss, it is competent for the insurer to contradict the insured's own statement as to the amount of his loss, by proving from the general course of trade in that place in like business, and to the like extent, that the average of goods on hand did not exceed one-fifth of the annual ag- gregate sales. The proof, though, must be con- fined to the personal experience of the witnesses in the particular business. They cannot be asked what the course of trade is, in reference to the specific trade.^ When interest allowed on loss. 13. "Where the amount of loss is made up by the insurers from the proofs furnished them, interest is allowed from the time specified in the policy; but where the insurers are unable to • Hoffman®. ^tnaF. Ins. Co., * Insurance Co. v. Weide, 11 19 Abbott's Practice R. 325. Wallace, 438. PRELIMINARY PROOPS. 585 ascertain the sum to be paid, owing to the de- fective character of the preliminary proofs, in- terest is disallowed.^ Particular requirements in preliminary proof. 14. If the insurer agree to pay the loss within sixty days after the rendition of the preliminary proofs, such proofs must be furnished feixty days prior to bringing an action.^ And, if it is re- quired as a part of the preliminary proof that the assured should state under oath what, if any, other insurance has been made on the same pro- perty, a failure to comply with this condition forfeits his right to recover.^ "Where, too, the insured is required in his account of a loss to state what other insurance was on the property, and also to give copies of the written portions of all policies thereon, if he fails to- give such copies, he cannot recover. The giving of the copies is a condition precedent.* ' Bridge u. Niagara Ins. Co., 1 Ins. Co. of New Orleans, 3 Rob. Hall, 361 ; McLaughlin v. Wash- (La.) 384. ington Co. M. Ins. Co., 33 Wend. ■• Blakely v. The Phoenix Ins. 535_ Co., 30 Wis. 305. But see Wy- 2 Harris v. Protection Ins. Co., man v. People's Equity Ins. Co., 1 Wr. (Ohio) 548. 1 Allen, 301. ' Battaille «. The Merchants' 586 riKE iNSUEAisroE. Certificate as to loss, etc. 15. The insured is often required by the terms of his policy to procure the certificate of a magistrate, notary public, or clergyman most contiguous to the fire and not concerned in the loss, setting forth that they are acquainted with the character and circumstances of the assured, and that the loss or damage sustained by him amounts to such a sum. With regard to this condition, it has been held that the obtaining of such a certificate is a condition precedent ; and it must be complied with, or the company cannot be called on to pay, and this is the case although the person whose certificate is required, wrong- fully and without probable cause, refuses to grant it.^ It must be exactly fulfilled, and if all the other particulars are furnished as required, but the amount of loss is omitted, this omission, if the insurer makes the objection, is fatal.'' But if the policy is a valued one, and the insured reports the loss as total, giving at the same ' Worsley v. Wood, 6 Tenn. R. Noonan v. The Hartford F. Ins. 710 ; vide Columbian Ins. Co. v. Co., 31 Mo. 81 ; Simsa. State Ins. Lawrence, 3 Peters, 35 ; Dawes «. Co., etc., 47 Mo. 54. N. R. Ins. Co., 7 Cow. 463 ; Scott 2 Roumage ®. Mechanics' Fire V. Phoenix Assur. Co., 1 Stuart Ins. Co., 1 Green (N. J.), 110; (Lower Canada), 354 ; Leadbetter Scott v. Phoenix Ins. Co., 1 Stuart V. Mlna. Ins. Co., 13 Maine, 365 ; (L. C), 354. PRELIMIlirAET PEOOPS. 587 time the number of his policy and the amount of his insurance, such a statement of loss, though in the preliminary notice, is substantially a par- ticular statement, and a compliance with the condition requiring it.^ Formal accuracy of certificate. 16. The certificate need not be expressed in the precise words mentioned in the policy ; it is suflScient if it is so drawn as evidently to mean the same thing.^ But it must be sworn to by the assured, if required 'by the policy, and the oath of his agent is not suflScient. "When, how- ever, the policy is obtained by the agent (the property being under his exclusive management and control), the application made and signed by him, the premium note executed by him, and who alone knows the facts necessary to be em- bodied in the paper; who, in fact, is, so to speak, insured as agent, in such a case, it is held, and we think with propriety, that proof and certifi- cate made by such an agent is a compliance with the requirement of the policy.' ' Lycoming Co. Mut. Ins. Co. ' Sims ». State Ins. Co., etc., 47 V. SchoUenberger, 8 Wr. 259. Mo. 54. 2 ^tna P. Ins. Co. ». Tyler, 16 Wend. 385. 588 FIRE IITSUEANCE. Construction as to nearest magistrate, etc. 17. While, as we have already seen, the re- quirement of a policy as to the certificate of a magistrate most contiguous to the fire is a con- dition precedent, and must be complied with, the courts will not nicely calculate distances to ascertain who was the nearest magistrate, where the one who furnishes the certificate was near by and acquainted with all the circumstances. The condition is fulfilled by procuring the cer- tificate of the nearest notary or magistrate, and courts will not be very particular on the point of propinquity — a few yards more or less will not be regarded.^ ' Peoria M. and F. Ins. Co. a. the place of his business, and not Whitehill, 35 111. 466 ; jEtna Ins. his residence, will be regarded. Co. ». Miers, 5 Sneed (Tenn.), The courts will not go into a nice 139 ; Turley v. North Am. Fire calculation o^ distances, and settle Ins. Co., 35 Wend. 374. The the question upon the laws of clause requiring a certificate must mensuration. Lex minimis, etc., receive a reasonable interpreta- is a sufficient answer to such an tion ; its intent and substance as objection. The spirit of the con- derived from the language used dition does not require absolute should be regarded. There is no mathematical precision from the more reason for claiming a strict assured. Turley v. The N. Am. literal compliance with its terms F. Ins. Co., 35 Wend. 374. thanin ordinary contracts. Hence, In Phillips v. Protection Ins. in determining the contiguity of Co., 14 Mo. 220, Napton, J., in the magistrate, clergyman, or no- deli veiling the opinion of the court, tary public to the place of the fire, said: " How are the rights of this PEELIMIIirAET PROOFS. 589 Insurer must point out defects, if any, in certificate. 18. If the certificate is furnished, but contains a formal defect, it is the duty of the insurer to apprise the insured of the nature of the objection, so as to give him an opportunity of supplying the defect ; and if he neglects to do so, his silence should be held a waiver of the defect.^ And if the agent makes objections to the cer- tificate, but does not specify the defects, and company affected by the fact that On the other hand, in Protection a notary public, an unnaturalized Ins. Co. v. Pherson, 5 Ind. R. 417, foreigner, had his oflBce fifty or one it was held that if the contract of hundred yards nearer to the place the parties is that a certificate of the fire than the two justices, shall be furnished by a notary or Butler and Ketcham, who signed magistrate most contiguous to the the certificate?" This was said placeof the fire, not concerned in in a case, however, where the the loss, or related to the insured, company had refused to pay in then any difference in point of any event, irrespective of the distance between the residence of question of preliminary proofs. the magistrate who furnishes the In ^tna Ins. Co. v. Miers, 5 certificate and anotlier who de- Sneed (Tenn.), 139, it was held dines to furnish it, will prevent a that the stipulation requiring that recovery. Such difference is ma- aflldavits and certificates of loss terial, "made so by express con- should be made before and by the tract, and the jury were bound to nearest magistrate, was not in- regard such difference in distance tended as a condition precedent as material, without any further to the liability of the insurers, inquiry on their part." "Justice Roddie was the nearest, > ^tna F. Ins. Co. v. Tyler, 16 except two who were creditors of Wend. 403 ; O'Neil v. The Buffalo the insured, and was, therefore, P. Ins. Co., 3 Comst. 133. the proper officer." Oaruthers,J. 590 FIRE INSUEANCE. refuses to permit the assured to see the certifi- cate, so that he may have an opportunity to cor- rect it, the courts will refuse to consider the defects.^ The certificate of the magistrate that he is not interested in the loss is sufficient primd facie evidence of the fact. It is for the defendants to. impeach his certificate by showing his interest, if any interest existed.^ Wlien certificate mvst be produced. 19, Where the condition of the policy requires that the assured shall procure a certificate, with- out stating that it shall be done forthwith or immediately, the rule is that it must be procured within a reasonable time after the loss, and what is reasonable time must depend upon the circum- stances of each case.^ Wdivet of defective certificate. 20. If the certificate is to be furnished by the nearest notary public, and the insured furnishes I Turley o. North Am. F, Ins. » Columbia Ins. Co. o. Law- Co., 35 Wend. 374. rence, 10 Peters, 507. See also ' Cornell a. Le I}oy, 9 Wend. .lEtna Fire Ins. Co. v. Tyler, 16 163. See also Ketcliam v. Protec- Wend. 385. tion Ins. Co., 1 Allen (N. B.), 136. PRELIMINAET PROOFS. 591 a certificate from a notary, but not the nearest, but which nevertheless is received by the agent and retained by the company, without objection, until the trial, the defect is waived, particularly when the agent had promised to pay the loss.^ If the certificate is not of the nearest magistrate, and the company refuse to pay on other grounds, they are held to have waived the objection/ In Bilbrough v. Metropolis Insurance Com- pany^ the certificate of the magistrate, in pur- suance of the requisitions of the policy, only stated that he had made diligent inquiries as to the cause of the fire, but it did not in fact certify to the claim or statement of loss. It was held that this was not a fatal objection, when taken for the first time at the trial. ' Byrne «. Rising Sun Ins. Co., such a length of time and until 20 Ind. 103. See also Post ®. the trial, coupled with the posi- ^tna Ins. Co., 43 Barb. 851. In tive evidence of one witness, that Byrne v. Rising Sun Ins. Co., there was a promise to pay by the supra, the proof was that there agent, made out, in our opinion, was a notary public about a square such a case of waiver as is not nearer the property injured than shaken by the hesitating evidence the one who gave the certificate of said agent as to whether his required by the policy. Neither promise was that they would pay the certificate nor the proofs of or would adjwsi the claim. " Sims loss were objected to by the in- v. State Ins. Co., etc., 47 Mo. 54. surers, until the trial. "The fact ^ O'Neil i>. Buffalo F. Ins. Co., of the failure of the company," 3 Comst. 133. said the court, "to apprise the in- ' 5 Duer, 587. sured of the supposed defect for 592 PiRE risrsuRANCE. Certificate does not conclude insurer. 21. The stipulation for the production of a certificate of the foregoing character, is not in- tended to conclude the underwriters as to the facts required to be certified to, the loss and the amount of it, but is introduced into the policy as an additional protection against the fraud of the insured. And as it is a stipulation for. their own security, they may, of course, waive it, or their acts in relation to it may be such that it would be inequitable to set up the want of it as a ground of defence to an action, and in such cases they are estopped from doing so. In the first case the question of waiver is one for the jury, and in the other, a question of law for the court.^ But a certificate from a magistrate who is not most contiguous to the fire is not a compliance with the condition, when the nearest furnishes a certificate which is almost the re- verse of what is required by the terms of the policy.^ In other words, a sufficient certificate from a magistrate who is not nearest the fire will not cover the defects of an insufficient cer- tificate from a magistrate who is nearest. ' Noonan o. The Hartford Fire 2 Ibid. Ins. Co.. 31 Mo. 81. PEELIMIIfAET PROOFS. 593 Waiver of preliminary proofs. 22. The insurer may waive, in whole or in part, ally of the preliminary proofs.^ Their re- quirement is a formal condition introduced solely for his benefit, and their waiver in effect strikes the condition out of the contract. The waiver need not be express. It may be inferred from the acts of the insurers which evidence a recog- nition of liability, or from their denial of obliga- tion exclusively for other reasons.^ That is, if the refusal to pay the loss is put upon grounds other than the insufficiency or defectiveness of the notice or proofs furnished, the insurers will ' This may be done by the di- to be furnished within thirty days rect action of the insurer, or it after the fire. The assured claim- may be done by his general agent, ed that this condition had been who, by virtue of his authority, waived. 8harswood, 3 ., "To con- may waive compliance with the stitute a waiver there should be condition. Posts. .lEtna Ins. Co., shown some ofiacial'act or declara- 43 Barb. 351 ; Tayloe v. Mer- tion by the company during the chants' Fire Ins. Co., 9 How. 390 ; currency of the time, dispensing Phillips V. Protection Ins. Co. , 14 with it ; something from which the jlo. 220. assured might reasonably infer 2 Owen V. Farmers' Joint Stock that the underwriters did notmean Ins. Co., 57 Barb. 518; Inland to insist upon it. . . . After the Ins. and Deposit Co. v. Stauflfer ; thirty days had expired without The Commonwealth Ins. Co. v. any statement, nothing but the ex- Sennett, 5 Wr. 161. In Beatty press agreement of the company v. Lycoming Co. Mut. Ins. Co., could renew or revivify the con- 16 P. F. Smith, 9, the condition tract." required the particular statement 38 594 riRE INSURANCE. be held to have waived objections of that charac- ter/ And they will be held too, and for the same reason, to have waived the provision -that the loss is payable in a certain time — sixty days for instance — -after notice and preliminary proofs. It is absurd to say that they still retain the right to have sixty days within which to pay a loss which they declare they will not pay at all.^ The refusal to recognize the existence of any claim, or a genei'al refusal to pay, renders the delivery of notice and proofs a useless ceremony, and is treated as waiving a strict compliance with the condition as to preliminary notice and proofs, both in respect to form and time.* ' Peoria M. and F. Ins. Co. v. Co., 34 Conn. 561 ; Philips®. Pro- Whitehill, 25 111. 466 ; Tayloe v. tection Ins. Co., 14 Mo. 320; ^tna Merchants' Fire Ins. Co., 9 How. Ins. Co. v. Maguire, 51 Ills. 342. 820 ; ^tna Fire Ins. Co. v. Tay- ' See Post v. uEtna Ins. Co., 43 lor, 16 Wend. 385 ; O'Neil v. Buf- Barb. 351-; Clark v. N. E. Mut. faloFire Ins. Co., 3 Comst. 182; F. Ins. Co., 6 Cush. 343; Min9, Clark fl. N. E. Mut. P. Ins. Co., Ins. Co. v. Tyler, 16 Wend. 385 ; 6 Cush. 342 ; Underhill ». Agawam Graves v. Washington M. Ins. Co., Mut. F. Ins. Co., Ibid. 440. The 13 Allen, 391 ; Norwich and N. T. Clobe Ins. Co. v. Boyle, 31 Ohio, Transportation Co. «. Western St. Rep. 119 ; Franklin F. Ins. Mass. Ins. Co., 34 Conn. 561 ; Co. v. Chicago Ins. Co., 36 Md. Charleston Ins. and Trust Co. 8. 103. Neve, 2 McMullen (S. C.) 337; ■* The Norwich and N. Y. Trans- Protection Ins. Co. v. Harmer, 23 portion Co, v. Western Mass. Ins. Ohio, 453. PBBLIMINAET PROOFS. 595 Insurer hound to point out defects in the proofs. 23. Fair dealing requires reasonable frankness and candor from the 'insurers. When, therefore, what are in good faith presented to them as pre- liminary proofs, are in any respects defective, common fairness requires that such defect be suggested, and that it be not held in reserve, to be used afterwards to obtain further delay of payment, or to defeat a suit brought for the money.^ But, it seems, that if the insurer ap- prises the insured that his papers are in fact no proofs, and refers him to the policy to ascertain what proofs are necessary, he is not bound to go further and specify the particular defects.^ And ' Peacock «. The New York the recovery. The company told Life Ins. Co., 20 N. Y. 293 ; Mtaa. Van Tuyl, in very explicit Ian- Fire Ins. Co. V. Tyler, 16 Wend, guage, that his proofs were worth- 385. See also Wyman o. People's less, and they should resist pay- Equit Ins. Co., 1 Allen, 301. meut How could the company 2 Kimball v. The Hamilton Fire be deemed to have acquiesced in Ins. Co., 8 Bosw. 495. See also what they reject and declare to Spring Garden Mut. Ins. Co. «. be insufficient ? How did their Evans, 9 Md. 1. officers in any way mislead the "No case," said Soffman, J,, party when they told him to look in Kimball ®. The Hamilton Fire to his policy and to himself to find Ins. Co., "has decided that if he defects which they avowed to ex- apprises the assured that he will ist ?" But does not fair dealing, rely on the defect of proofe, he in a case of this kind, require waives this objection by taking the insurer to state frankly the others which he insists will defeat specific defect in the proofs, so 596 riRE iNSURAisrcE. a waiver cannot be implied from the letter of the secretary of the company, informing the insured that the proofs of loss furnished by him are wholly unsatisfactory, as to the amount of his claim, and while denying all responsibility, by reason of misrepresentation as to title and pro- perty, reserves all objection to the insured's right to recover in any form; and without waiving any rights under the policy, leaves the insured to pursue such course as he should deem expedient.^ Although it is a condition of the insurance that no act or omission of the company, or any of its officers, shall be deemed a waiver of a full and strict compliance with the requirements concern- ing preliminary proofs of loss^ except it be by a waiver in express terms, in writing, signed by the president or secretary of the company; yet it has been held that such a condition is in conflict with the settled rules of law established for the government of this class of cases ; and that before such an implied surrender of the rights of that the insured may remedy it ? that his proofs are no proofs, and When there is nothing wrong that he must find out for himself originally in the insurance, it is where the defect exists 1 See p. hard that the insured should be 597. deprived of the benefits of his • Citizens' F. Ins. Co. v. Doll, policy by some defect in his proofs 35 Md. 89 ; Edwards v. The which the insurer refuses to point Balto. F. Ins. Co., 3 Gill, 176. out to him except by telling him PRELIMINARY PROOFS. 597 the insured can be allowed, something clearly evincing his purpose to renounce them must ap- pear, something to show that his attention was called to the condition, and something from wliich his assent thereto might be inferred.^ In the case of Insurance Company of Iforth America v. Hope,^ the rule was said to be, that if the proofs of loss are insufficient when pre- sented, it is the duty of the company, or its agent, to give notice to the assured of the specific defect, and if the companj'^ or agent fail to point out wherein the proofs are defective, such proof, notwithstanding a general objection, will be deemed sufficient. It was also held in the same case that in the absence of any provision to the contrary, the delivery of proofs of loss to the' local agent will be taken and considered as a delivery to the company for all the purposes of the policy, and if the local agent fails to forward the same to the home office, or to the office of the general agent, as required by the usage of its business, the negligence cannot be charged to the assured.* t ' Pitney v. Glen's Falls Ins. ' Herron v. The Peoria M. and Co., 61 Barb. 335. P. Ins. Co., 39 111. 225, to the 2 58 111. 75. See also Great same effect. Western Insurance Company v. Staaden, 26 lU. 365. 598 FIRK INSURANCE. l^ect of failure to point out defects in the prooj. 24. If the insurers, as before stated, intend to rely. upon the insufficiency of the preliminary proofs, they should request further proofs, and failure to do this is a waiver of the right to re- quire such proofs at the trial.^ For example, where a building was insured in the name of the mortgagee, the mortgagor paying the premium, upon a loss occurring, the latter served the no- tice of loss and the preliminary proofs in his own name. He stated, however, the facts relating to the insurance, referred to the policy, and described the building, and verified his statements by an affidavit of the mortgagee. It was held, no ob- jection being taken to the notice and proofs until after suit brought, that the insurers could not object at the trial that they were not in the name of the insured;^ When insurer estopped to set up defective proofs. 25. If after receiving defective proofs of loss the insurers proceed to negotiate with the in- sured, without adverting to the defects; if, still further, they put their refusal to pay on other I Walker s. Metropolitan Ins. ^ Kemochan v. The New York Go., 56 Me. 371; Great Western Bowery Fire Ins. Co., 17 N. Y. Ins. Co. ». Staaden, 26 111. 360. 428. PEELIMINARY PEOOP8. 599 and distinct grounds, they are estopped to set up and rely upon the defective notices, and this, notwithstanding a clause in the policy, by which it is " agreed and declared by the parties that no condition, stipulation, covenant, or clause herein- before contained shall be altered, annulled, or waived, or any clause added to these presents, except by writing indorsed hereon or annexed hereto by the president or secretary, with their signatures affixed thereto.'" Waiver of delay in furnishing proofs. 26. In Tayloe v. Merchants' Fire Insurance Company- the fire occurred in December, 1844, and the preliminary proofs were not furnished until November, 1845. This delay would under ordinary circumstances have entirely defeated the assured's right of recovery, for it was his ' Blake «. Exchange Mut. Ins. provisions of the policy which Co., 12 Gray, 265. In Pranlslin enter into and form a part of the Fire Ins. Co. n. Chicago Ins. Co., contract of insurance, and are 36 Md. 102, the policy provided essential to make it a binding con - that "nothing but a distinct, tract between the parties; and specific agreement, clearly ex- that it had no reference to those pressed, and endorsed on this pol- stipulations which are to be per- icy, shall operate as a waiver of formed after a loss has occurred ; any printed or written condition, such as giving notice and furnish- warranty, or restriction therein ;" ing proofs of loss. Ante, p. 596. and it was held that this clause ' 9 How. 390. referred to those conditions and 600 FIRE INSURANCE. duty to have furnished the proofs within a reasonable time after the happening of the loss. But inasmuch as the insurers put their refusal originally to pay the loss on the ground that they never incurred an obligation to insure, the eon- tract being incomplete at the time of the fire, they superseded the necessity of producing the proofs. In other words, the court held that the insurers waived the preliminary proofs by refus- ing to issue a policy and denying their responsi- bility altogether.^ Waiver of- proofs and notices hy an agent. 27. When the general agent of the insurer de- clares that his principal is not responsible, is not on the risk; this is a waiver of preliminary proof.^ But where a person described as a "travelling agent," in a conversation with the ■ See also Noyes «. Washington Ide v. Phoenix Ins. Co., 2 Bissell, Co. Mut. Ins. Co., 30 "Vt. 659. 333; Grant v. Lexington Ins. Co. ' Franklin F. Ins. Co. ». Coates, 5 Indiana, 23 ; Coursin a. Pa. Ins. 14 Md. 285. A local agent of an Co., 10 Wr. 323 ; Ames ®. N. Y. insurance company whose poli- Ins. Co., 14 N. T. 258. And it cies contain provisions requiring amounts to a waiver where the written and formal proofs of loss company cause delay in bringing within a specified time,'"and bar- a suit by holding out hopes of a ring all suits not. brought within a settlement, or by promising pay- certain period after a loss has oc- ment after the expiration of the curred, has sufficient authority to time. See foregoing cases ; also waive these formalities of proofs, Curtis v. Home Ins. Co., 1 Bis- and to bind the company thereby, sell's R. 485. PEELIMINAET PROOFS. 601 • assured, said, " the matter would be all right with the company;" this does not amount to a waiver of preliminary proof, nor any other obli- gation of the policy.^ And a waiver of the notice of loss by an agent of the company does not include a waiver of the particular account or proof which the insured is required to furnish.^ The local agent of an insurance company was notified verbally immediately after the fire, and he suggested delay until the arrival of the adjusting agent of the company, and shortly after this agent arrived and made an exami- nation of the books and accounts of the insured, expressed himself satisfied, and took the aflSda- vits of. the parties. He told them no more was required of them, but that he would present the claim to the company. Subsequently the com- pany addressed a letter to their local agent near the scene of the fire, in which they placed their refusal to pay the claim upon the sole ground that gunpowder was kept in the building at the time of the fire, but made no objection to the in- sufficiency of the preliminary proofs. This was held to be a waiver on their part.^ ' Boyle ®. Ins. Co., 7 Jones' lor, 5 Minn. 492. See also Lewis Law (N. C), 373. "• Monmouth Mut. F. Ins. Co., « Desilver v. State Mut. Ins. 53 Me. 492. Co., 3 Wr. 130. Where the agent immediately 3 The Phoenix Ins. Co. ■b. Tay- after the fire occurred, without 602 riEE INSURANCE. And it is well settled that the officers and agents of the insurance company may in any par- ticular case waive or modify the stipulations of the policy as to the preliminai'y proofs of loss, or the form and mode in which the liability of the company shall be ascertained and made known.'^ waiting for a formal preliminary In Ins. Co. of N. A. ®. Mc- notice from the insured, called for Dowell, 50 111. 120, it was held his books and papers for the pur- that there was waiver of defective pose of malting an inventory, and or insufficient proofs, where the ascertaining the amount of goods company retained them without destroyed, which request was pointing out specific objections to complied with by the insured, and them. "By such action," said the agent made an examination of the court, "they waived any ob- the books and papers, and all that jections that may have existed." the agent required was done by ' Eastern R. R. Co. v. Relief the insured ; these facts constitute Ins. Co., 105 Mass. 570; Brown evidence from which a jury may v. Chelsea Ins. Co., 14 Gray, 203 ; presume a waiver of the formal Blake v. Exchange Ins. Co., 12 preliminary proofs, and the pre- Gray, 265 ; Columbia Ins. Co. a. senoe of a regular adjusting agent Cooper, 14 Wr. 331 ; Franklin v. was not essential to make the Atlantic P. Ins. Co., 42 Mo. 456 ; waiver binding. Security Ins. Viale v. Germania Ins. Co., 26 Co. V. Pay, 22 Mich. 467. Iowa, 9. CHAPTEE XX. PAYMENT OF LOSSES. I. The assured indemnified for his loss. 3. Bule of damages. 3. When there is a total loss. 4. Restriction of insurer's lia- bility in cases of total loss. 5. Goods lost or damaged. 6. Goods, when estimated at their cash value. 7. Criterion of cash value. 8. Cash value to be paid al- though duties have not been paid. 9. Apportionment of risk and liability. 10. When losses paid for by contribution. II. Rule -when insurer restricts his liability to a certain propor- tion. 13. When whole loss to be paid and not proportioned. 13. Restriction as to amount of insurer's liability in valued policy. 14. Revaluation. 15. Valued policy cannot be impeached, except for fraud. 16. Goods held on commission. 17. Vendor recovers whole amount of insurance, notwith- standing agreement to convey. 18. Extent of recovery .by mort- gagee. 19. Rule of indemnity in cases of property insured abroad. 20. Whether agreement to pay losses in gold implies that divi- dends shall be paid in gold. 21. Whether garnishees are liable for interest. 22. How interest is computed on losses. 23. Whether insurers have a right to rebuild, etc. 34. Measure of damages when insurer fails to rebuild. 35. When insured must con- tribute towards rebuilding. 26. Insurer must pay damages for failure to rebuild, although prevented from rebuilding by the public authorities. 37. Evidence by insurer of what he has done under his election to rebuild, etc. 38. Insurance contract, when converted into building contract. 39. If insured prevents insurer from rebuilding, he ceases to have any claim. 30. Rebuilding in case of double insurance. The assured indemnified for his loss. 1. When a loss has occurred, the assured re- covers the whole lose, if within the amount in- 604 PIEE INSURANCE. eured, -without regard to the proportion between the amount insured and the value of the pro- perty at risk ; but the insurers generally reserve the option, in case of partial or total loss, to repair with all convenient speed in the one case, or pay the estimated value of the loss ; or in the other case to rebuild with all convenient speed, or pay the estimated value of the building at the time of loss, provided such value does not ex- ceed the amount insured.^ Rule of damages. 2. The loss paid by the insurers is for the im- mediate, not the remote, consequences of the fire or burning; that is, they pay for the loss or damage to the building or goods, not for the loss of the gains or profits which might have resulted had the fire not occurred; in other words, for • Liscom V. Boston Mut. Fire tween Oil City and Pittsburg, and Ins. Co., 9 Met. 205 ; Underbill «. the loss having been brought Agawam Mut. Fire Ins. Co., 6 ■within the terms of each, except Cush. 440. Where two policies as the amount of it was greater were sued upon, both having been than the sum mentioned in either issued by the same company, at policy, but less than the aggre- the same time, and to the same gate of both policies, there was party, on petroleum oil in bulk or no error in ruling that the insured barrels .... laden or to be laden were entitled to recover the full on board the good barges trading amount of their actual loss. The between the wells on Oil Creek, Phoenix F. Ins. Co. v. Cochran, etc., and in barges trading be- 1 P. P. Smith, 143. PAYMENT OF LOSSES. 605 the loss resulting from the interruption or de- struction of the assured's business.^ But where the value of the building, at the time of the fire, is put in issue by the pleadings, evidence tending to show such value is relevant and* ad- missible; and, in estimating such value, the rental of the buildings consumed is not so re- motely circumstantial as to be excluded on that account.^ WTien there is a total loss. 3. The rule of damages, where the insured building is totally destroyed, is indemnity to the assured for his actual loss, and in estimating this loss there is no settled rule of deduction from the estimated cost of a new building, for the difference between the value of the new and old one, analogous to the deduction of new for old in adjusting losses on marine policies f nor ' Willis v. Boston Ins. Co., 6 rent. One mode of ascertaining Pick. 183 ; Niblo o. North Am. F. tliis would be to inquire how much Ins. Co., 1 Sanf. 551 ; Wright;®, would a stranger, having no in- Sun P. Ofllce, 1 A. & E. 631. terests or engagements pending 2 Cumberland Valley Mut. Prot. for its use, have given for the un- Co. V. Schell, 5 Casey, 31. The expired lease when the fire oc- lessee of a house for a year, upon curred. Niblo v. North Am. Fire a policy insuring it for its value, Ins. Co., 1 Sanf. R. 551. can recover only the value of such "See Miss. Mut. Ins. Co. v. house for occupation, subject to Ingram, 34 Miss. 315. 606 riRE INSURANCE. does the cost of rebuilding furnish the true rule of damages. Under such a rule, the amount recovered would be more than a fair indemnity. There is no rule of damages applicable to such cases; and where no rule of damages is estab- lished by law, the jury are to decide the ques- tion, and to their decision there can be no legal exception.^ ResiricUons of insurer^ s liaJdlity in cases of total loss. 4. If the insurer in cases of total loss restricts his liability so that he shall not be bound to pay more than two-thirds of the actual value of the building at the time of its loss, nor more than one-half the value of personal property, the re- striction " at the time of loss" is equally appli- cable, in the ascertainment of value, to the per- sonal property as to the real. "When, too, the insurer provides that partial losses shall be paid in full, not exceeding the amount insured, pro- vided the insured had on hand the lowest amount stated in the application, and the insurance is on merchandise to the amount of three thousand dollars, it is held not to be a case of partial loss because a small amount of goods, some twenty ' Brinley o. National Ins. Co., 11 Met. 195. PAYMENT or LOSSES. 607 dollars' worth, were saved from the wreck. That would be according to the literal reading of the contract, but the literal reading does not express the real sense and meaning of the parties.^ Goods lost or damaged. 5. Goods destroyed are to be paid for at their value at the time of loss ; if only damaged, the difference between their value in their sound and damaged condition.^ "Where the goods are so much damaged as not to be salable in the ordi- nary mode, upon reasonable notice given to the insurer, or with the insurer's knowledge, a fair sale at auction may be made by the assured. • Singleton «. Boone Co. Home of the risk, and tlie losses are to Mut. Ins. Co., 45 Mo. 250. be adjusted on the principle of 2 Hoffman u. The Western M. replacing the party assured, as and F. Ins. Co., 1 La. An. 216. nearly as may be, in the situation In the case of Marchesseau v. The he was in- at that time. The Merchants' Ins. Co. of N. Orleans, amount of insurable interest is the 1 Rob. (La.) 438, decided four market value of the goods at the years before the decision by the time and place of the commence- same court in Hoffman «. The ment of the risk, and the best, Western M. and Fire Ins. Co., though not conclusive, criterion iupra, the rule of damages was of this interest is the cost to the thus stated: "He (the insured) insured. This is the most satis- must, particularly in open policies, factory proof of value in case the take some of the chances of his goods were purchased near the speculation, and of the state of time when, and at or near the the market. The indemnity must, place at which the risk com therefore, refer to the beginning mences." 608 PIEE INSUEANOB. But if an auction sale is made by the assured, without notice to, or knowledge by the insurer, the mere returns of sale are not of themselves sufficient evidence of the damaged value.^ In fire insurance there is no right of abandonment, as sometimes in marine insurance.^ Goods, when estimated at their cash value. 6. Where the parties specify in the contract of insurance what shall be the mode and manner of ascertaining the value of the property de- stroyed by fire, the law will enforce their agree- ment, as when they agree that the loss or damage shall be estimated according to the true and actual cash value of tha property at the time the same shall be destroyed. The fact that the articles destroyed were patented is of no im- portance ; the criterion being, by the agreement of the parties, their worth at the happening of the fire.* Criterion of cash value. 7. Where the insurer is bound by the stipula- tion of his contract to pay the true a,nd actual cash value of the property at the time the loss ' Ibid. Henderson v. The West- " Ibid, ern M. and F. Ins. Co., 10 Rob. » Commonwealth Ins. Co. v. (La.) 164. Sennett, 1 Wr. 305. PAYMENT OF LOSSES. 609 happens, he is entitled to show the market price and value of other property — a steamboat, for example — similar, or nearly so, to that insured, at or about the time of the accident, as the criterion of the value of the property insured.^ When the policy provides that the sound or cash value of the property destroyed or damaged shall be what it may cost at the time of the fire to replace it, if the goods were those which the insured dealt in at wholesale, or manufactured, the price for which wholesale dealers and manu- facturers sold similar goods is one mode of aid- ing in arriving at their market value.^ Cash value to he paid although duties have not heen paid. 8. Where the contract of insurance was against all loss or damage by fire, such loss and damage to be estimated according to the true and actual cash value of the said property at the time the ' Grant v. M\,tl& Insurance Co., value of the articles damaged and Queen's Bench (L. C. ). their actual cost, the plaintiffs were 2 Hoffman ■». jEtna F. Ins. Co., •entitled to recover, because the 1 Robb. R. 501. In this case measure of their indemnity was Bobertson, J., said: "So far as present cash value, not original any loss in the business of the cost ; and by whatever name the plaintiffs, or of profits in the course difference may be called, the of their business, was embraced plaintiffs are entitled to it " in the difference between the cash 39 610 riEE INSUBANCE. same shall happen, it was held that the insured might recover the fall and actual value of the property, which was spirituous liquors, notwith- standing the greater part were in a public store, and the duties unpaid or unsecured.^ Apportionment of risk and liability. 9. Under a condition that the damage to pro- perty insured in this company, occasioned by re- moval from a building in which it is exposed to fire, shall be borne by the insured and insurers in such proportion as the whole sum insured bears to the whole value of the property insured, the rule is that the damage sustained by removal shall be borne by the parties according to their respective interests. If the property is insured for its full value, the insurer assumes all the risks, but if insured for one-half only, the in- sured takes half the risk, or, in other words, in- sures himself to that extent. If the insured, instead of taking any risk upon himself, insures to the full value of his property in different com- panies, the companies thus insuring would pay any loss in exact proportion to their several risks, and so, too, as to expenses and damages caused by removal.^ ' Wolfe V. The Howard Ins. ' Peoria F. and M. Ins. Co. v. Co., 3 Selden, 583. Wilson, 5 Minn. 53. PAYMENT OF LOSSES. 611 When losses paid for hy contribution, 10. As a general principle, a loss under a policy against fire is to be paid without contribution ; but in a case where the insured, with the appro- bation of the insurer, procured blankets, which, being wet and hung out of the windows, were of essential service in stopping the progress of the flames, and in the preservation of other goods in the building, it was held that the insured and the insurer shoiild contribute towards the loss of the blankets in proportion to the amount which they respectively had at risk in the store and its con- tents. In other words, the insurer was not liable under the policy, but it was a subject of general average.^ Hule when insurer restricts his liability to a certain proportion. 11. In a policy where the amount of insurance is twenty-five hundred dollai-s, and where there is a condition that the company will settle and pay all losses and damages, not exceeding said sum, which shall or may happen to the insured property, by means of fire, during the term of the insurance ; and also that the said losses or damage be estimated according to the true and ' Willis V. Boston Ins. Co., 6 Pick. 132. 612 I'IKE INSURANCE. actual value of the prqperty at the time the same shall happen, and be paid at the rate of two- thirds of the actual loss ; the true construction of the insurers' liability is not to limit it to two- thirds of the actual loss. Their undertaking under such a policy is to pay all losses by fire sustained by the insured within said sum of twenty-five hundred dollars, and not exceeding two-thirds the value of the entire stock of goods so insured. If the stock were only of the value of three thousand dollars, the insured would only be entitled to two-thirds its cash value, although the amount of the policy is twenty-five hundred dollars. But if the value of the stock were ten thousand dollars, the insured would be entitled to receive all losses or damages not exceeding said sum of twenty-five hundred dollars, such losses or damages being within the " rate of two-thirds" of the risk of the entire stock of goods which the company assumed.^ "When the condition is that the insurer will pay a certain proportion of the actual cash value of the property at risk at the time of the loss ; the loss must be determined by the value of the property at the time of the fire, independent of its value at the time of the insurance.^ ' The Ashland Mut. Ins. Co. o. ' Huokins v. People's Mut. F. Houslnger, 10 Ohio St. E. 10. Ins. Co., 11 Fost. 338. PAYMENT OP LOSSES. 613 When whole loss to he paid and not proportioned. 12. When insurance is effected on cotton to the amount of twenty thousand dollars, stored in seven different warehouses, and cotton to the amount of seventeen thousand dollars is destroyed by fire in one of the warehouses, the assured is entitled to recover the full sum lost, and not an average sum, proportioned to the sum insured as compared with the whole property at risk. "Looking alone to this contract," said Mathews, J., "could it be said in truth that its obligation may be discharged by the payment of a sum less than all the damage and loss suffered by the in- sured? Their intention was evidently to cover the risks in all and every, or any parts or parcels of the cotton insured, to the extent of twenty thousand dollars, or under that sum, as loss might happen ; and there is nothing on the face of the policy which shows that the insurers did not acquiesce in this intention. A different in- terpretation would not afford complete indem- nity, although such would be required in con- formity with rules as laid down in Boudousquie^ s Treatise on Insurance against Fire ; but they are not the rules of construction which seem to pre- vail in the United States ; and the latter, we think, may be justly adopted in the decision of 614 FIRE INSUBANCE. the present case, without entering into any dis- cussion of the weight of arguments which might be urged in. opposition.'" In Hex V. Mutual Insurance Company^ insur- ance was effected upon the plaintiff's house and sheds to the amount of $1200 ; furniture therein, $250; on his barns, $250; on his barn and shed** in the meadows, $250 ; and on his hay and grain therein, $400. " The word therein," said Qilclirist, J., " may refer to the barn and shed in the mea- dow, or it may refer to all the barns and other buildings named, capable of containing hay and grain. It is immaterial to the determination of this case which construction is given to the policy. If thie whole of the hay and grain, in all the buildings named, is insured, and the loss is equal to the sum insured, the plaintiff is entitled to recover that sum. But there is no principle of construction by which the sum insured on all the hay and grain can be so apportioned to the different parcels, that no greater sum can be re- covered for the present loss than a sum that shall bear the same ratio to $400 that the value of the hay and grain, in the barn on the meadow, bore to the value of all the hay and grain in all the buildings named." ' Nicolet V. Ins. Co., 3 La. 371. « 30 N. H. 198. PAYMENT OF LOSSES. 615 Restriction as to amount of insurer^s liability in valued policy. 13. Where the by-laws provided that the com- pany would in no case pay more than two-thirds of the actual value of personal property at risk at the time of the loss, and the insured valued his goods and obtained an insurance thereon of fifteen hundred dollars, it was held that if the assured had goods on hand at the time of the fire to the amount of twenty-two hundred and fifty dollars, he might recover fifteen hundred dollars insured, if that amount had been destroyed by fire.^ And this would follow, notwithstanding at the top of the application was a memorandum that no more than one-half the value of personal property should be insured. Such memorandum is not embraced within the assured's signature, and if it were, it would not control the charter and by-laws and the policy issued by the com- pany.^ Hevaluation. 14. "Where the charter and by-laws provide for a revaluation of the property at the time of the fire, the insurers will only be held liable for one- I 1 Huckins v. People's Mut. F. ' Ibid. Ins. Co., 11 Fost. 338. 616 FIRE INSURANCE. half of the goods on hand at the time of the fire (the charter not permitting them to have at risk more than one-half the actual value of the pro- perty) ; and not for one-half of the whole valua- tion at the time of issuing the policy.^ Valued policy cannot be impeached except for fraud. 15. It is well settled that it i« not competent for the underwriter to introduce evidence to show that the actual value of the property insured is less than the amount stated in a valued policy, except for the purpose of showing fraud in the assured.^ " If the representation of the value of the plaintiffs interest in the mill and machinery was made without fraud," said Tenny, J., in Cushman v. JSTorthwestern Insurance Company,^ " it is not easy to perceive on what principle the evidence otfered was competent. The defendants were so satisfied with the plaintiff's estimation, that they adopted it, and had the benefit of the premium. And they could not change the value by proving simply that others would have fixed upon a different estimation. To allow them to • Atwood a. The Union Mut. Ins. Co., 10 Cush. 850 ; Post v. F. Ins. Co., 8 Fost. 234 ; Post v. Hampden Ins. Co., 12 Met. 555 ; Hampshire Mut. F. Ins. Co., 13 Harris a. Eagle Ins. Co., 5 Johns. Met. 555. 368. 2 See Philips a. Merrimack Mut. ' 34 Me. 487. PATSENT OF LOSSES. 617 introduce the evidence offered for other purposes than to prove a fraud, would be permission to vary a written contract by parol testimony." Goods held on commission. 16. If the policy insures " goods, as well the property of the assured as those held by them on commission," and also agrees to make good to the insured all loss and damage, to be estimated according to " the true and actual value" of the property at the time the loss shall happen, the assured has the power to insure the property as his own, and may recover the whole value of such property, and not merely the amount of his lien.^ But if the condition of the policy is that "goods held in trust or on commission" shall not be covered, unless they are insured as such, no recovery can be had against the underwriters for the loss of such goods, where they were not specified in the policy as being held in trust or on commission.^ In Parks v. The General Interest Assurance Company,^ the assured, as commission merchants, took out a policy from the underwriters for " ten thousand dollars, on merchandise in their store ' De Forrest v. The Fulton F. ' Brichta v. N. T. Lafayette Ins. Co., 1 Hall, 84. Ins. Co., 2 Hall, 373. 3 5 Pick. 34. 618 PIKE INSURANOE. and by them held in trust." At the time of effecting the insurance they represented to the company that they were in the habit of receiving goods for sale; that they had made advances on some of them, and upon some they had not ; that the goods on hand were constantly changing by sales and new consignments ; and that they wished a policy on such goods, to secure them- selves against loss by fire, as the consignors might not be able to repay the advances. These representations by agreement of the parties were made part of the case. It was held that the policy covered only such goods held in trust as advances had been made on, and not the whole property in those, but only so far as the lien or advances of the assured extended. In other words, the policy secured no interest but their own. Vendor recovers whole amount of insurance, not- withstanding agreement to convey. 17. "When a vendor of real estate, after agree- ment to convey, but before actual conveyance, effects insurance upon the building and not upon the debt of the vendee for unpaid purchase- money, he is entitled to recover the whole amount of the insurance, notwithstanding a part of the purchase-money was paid before the insurance, PAYMENT or LOSSES. 619 and another payment was made before the loss. But he holds the surplus beyond the amount of the unpaid purchase-money, under a trust for the benefit of the vendee. And in such a case, it seems, the underwriters are .not entitled to a cession of the vendor's title or claim upon the vendee.^ Extent of recovery Tyy mortgagee. 18. When the mortgagee insures solely on his own account, it is but an insurance of his debt, and- the insurer is only liable to the amount of that debt. But if the mortgagor procures a policy on the property against fire, and assigns it as collateral security to the mortgagee, the entire loss may be recovered.^ In Foster v. Equitable Mutual Fire Insurance Company,^ the mortgagor, with consent of the insurers, assigned his policy to the mortgagee, and the latter gave his note for payment of assessments. The legal eflfect of this transaction, said the court, was to create a new, substantive, and distinct contract of insurance with the mortgagee. He had a separate interest, as mortgagee, to be protected by the policy, and the relation between the parties ' Ins. Co. V. Updegraff, 9 Har- ' Carpenter v. Washington Ins. ris, 613. Co., 16 Peters, 495. » 2 Gray, 316. 620 FIBE INSTTBANCE. was that of insurer and insured. Consequently, the property having been injured by fire, the mortgagee was held entitled to recover the amount of said injury, notwithstanding the mort- gagor, before the commencement of the suit, had repaired the property, and made it as good as before. " The plaintiffs," said Bigelow, J., " had an insurable interest in the property ; the defend- ants agreed to insure it against a loss by fire; and a loss has occurred. The contingency con- templated by the contract has therefore arisen, and the defendants are bound to pay the amount of the damage. It is wholly immaterial to them, and constitutes no valid defence to^this suit, that the property has been since repaired." Where a mortgagee holds other securities for the same debt, and effects insurance on the mort- gaged property, and subsequently parts with any of his securities, or a part of his mortgage debt is paid, the insurer, it seems, will only be liable on his policy to the amount remaining unpaid. But if the mortgagee parts with his other secu- rities, or receives payment of part of his debt after a suit has been commenced, he is entitled to recover the full amount of his insurance. Ifothing else being put in issue by the plead- ings, the right of the parties must be determined as they existed at the time the suit was insti- PAYMENT OF LOSSES. 621 tuted. If the mortgagee has been paid the debt to protect or secure which the insurance was eflfected, or if he has impaired the rights of the insurer in any securities to the benefit of which the insurer was entitled, the latter must resort for relief to a court of equity ; his equitable claim not being a proper subject for a jury.^ Sule of indemnity in cases of property insured abroad. 19. In case of a partial loss of property situ- ated in another country and insured here, in com- puting the sum to be recovered, nothing is to be allowed for the expense of transmitting to that country the sum of money, which, paid there, would furnish an equivalent for the value of the property destroyed by fire. In other words, nothing can be added for the cost of exchange in transmitting the funds which are of intrin- sically equal value in this country with those which represent the pecuniary measure af the loss in the country where it occurred.^ The mode of indemnity adopted in such a case is to estimate the loss at the place where it occurred, in the currency of that country, and ' Ins. Co. t). Woodruff, 3 Dutch. ^ Burgess v. Alliance Ins. Co., 541, 10 Allen, 331. 622 riEE INSUEATTCE. then to find the equivalent in the country where suit is brought, by determining the actual in- trinsic value of the currency of that country as compared with that of the other, thus computing the value according to the real par of exchange. If the market value of exchange be regarded, the amount to be paid to constitute an indemnity would depend on the rate of exchange when the debt should finally be collected on the exe- cution. This seems a practical and reasonable rule, and is founded in substantial justice.^ Whether agreement to pay losses in gold implies that dividends shall he paid in gold. 20. Where the insured pays the premiums in gold coin, and in consideration of such payment the insurer agrees to pay the losses, if any, in gold coin, he is bound by his agreement, and, upon losses occurring, he must pay them in the stipulated coin. But he is not bound to pay any contingent dividends on profits to which the insured may be entitled, by virtue of the charter under which the insurer issued the policy, in gold coin. In the first case the insurer was bound to pay in gold coin by contract; but in the second case the law will imply no such ' Burgess v. Alliance Ins. Co., 8 Pick. 260 ; Hussey ». Farlow, 9 supra. See also Adams v. Cordis, Allen, 263. PAYMENT OP LOSSES. 623 agreement independently of the understanding or contract of the parties.^ Whether garnishees are liable for interest. 21. It is a general principle that a garnishee is not liable for interest while he is restrained from the payment of his debt by the legal opera- tion of a foreign attachment; and this principle is applicable to insurers where there has been no fraud or collusion, nor unreasonable delay on their part, as in answering interrogatories.^ And the garnishees may retain of the sum due the insured, sufficient to meet the amount of the several assessments made upon the deposit note.^ Sow interest is computed on losses. 22. Unless the contract of insufance, expressly or by implication, prescribes another rule, in- terest should be computed on the actual loss, under a fire policy, from the time when it hap- pened. But by the provisions of many policies the insurers are not bound to pay until sixty or ninety days after they receive notice of the loss. ' Luling V. Atlantic Mut. Ins. -well, 3 Dallas, 215. See Nevins Co., 50 Barb. 530. Afflnned by «. Kockingham Fire Ins. Co., 5 Court of Appeals, 51 N. Y. 207. Fost. 22. I Oriental Bank v. Tremont Ins. ' Swamscot Machine Co. «. Co., 4 Met. 1 ; Fitzgerald v. Cald- Partridge, 5 Foster, 369. 624 PIKE INSUBAXOE. Accordingly, if within such limitation of time they "settle and are ready to pay the amount of loss, no interest is allowed.^ Whether insurers have a right to rebuild, etc. 23. An insurance company have no right to rebuild or replace articles lost, unless such right is expressly given in the policy; otherwise they would have the right to change the contract and substitute one mode of performance for another," But where the right to rebuild is reserved, it is not waived by the insurer assenting to an order, indorsed on the policy, "to pay the loss under the within policy" to a third party. If the in- surer rebuilds, no action for the loss in money can be maintained.^ If the company is bound by the policy to elect, within a definite time, thirty days for instance, whether it will rebuild or repair, it must make such election within the designated period, and give the assured notice. If the election is not made in the proper time, the company has no right to go on making repairs. If it does so, such unauthorized expenditure of work and materials will not be deducted from the ' Kevins v. The Rockingham ^ Tolman v. Manufacturers' Ins. F. Ins. Co., 5 Foster, 32. Co., 1 Cush. 73. ' Wallace v. Ins. Co., 4 La. 389. PAYMENT OF LOSSES. 625 amount of loss occasioned by the fire, on account of such work.^ Measure of damages when insurer fails to rebuild. 24. Where the insurers reserve the privilege to repair or replace the property, this is a reser- vation for their benefit, and they may replace or repair or not, as they see fit. If they do not, then the measure of damages is not vrhat it would cost to replace or repair, but the payment of a sum which will be a fair indemnity for the loss.^ When insured must contribute towards rebuilding. 25. Where the insurer reserves the option "to make good the damage by rebuilding, replacing, or repairs, the insured to contribute one-fourth of the expense of rebuilding or repairing," and, in case of a partial loss, the former makes sub- stantial repairs, though not so perfect as fully to make good the loss, the insured is entitled to recover the difference between the value of the buildings as repaired in fact, and what the value would have been had the repairs been full and complete. In such case the insurer, under the ' Ins. Co. of North America v. ' Common-wealth Ins. Co. e. Hope, 58 111. 75. Bennett, 1 Wr. 365. 40 626 PmE INSURANCE. contract, must bear not one-fourth the cost of repairs, but of their value to the estate/ Inswrer must pay damages for failure to rebuild, although prevented from rebuilding by the public authorities. 26. Where a contract provides for an election, the party making the election is in the same position as if he had originally contracted to do the act which he has elected to do. Hence, where the condition of a policy is that the insurer will, in case of fire, either reinstate the premises or pay the loss in money, and he elects to do the former, he thereafter occupies the same position as if the policy had been simply to reinstate the premises. He is bound by his election, and if he fails to reinstate by reason of its having become impos- sible to perform this undertaking, as where the municipal authorities cause the building to be taken down as dangerous, he must pay damages for not performing it.^ ' Parker v. Eagle Fire Ins. Co., building consists in its adaptation 9 Gray, 152. to use, as well as in the materials 2 Brown n. Royal Insurance of which it consisted, and if it Co., 1 Ellis & Ellis, 853. See also cannot be restored to use after the Brady v. Northwestern Ins. Co., fire, from causes beyond the con- 11 Mich. 425. In the latter case trol of the parties, the loss is total, it was said the value of the insured less the value of the materials res- PATMEKT OP LOSSES. 627 Evidence hy insurer of what he has done under his election to rebuild, etc. 27. Under a provision in a policy by which the insurer may pay the damages in money, or "furnish the insured with the like quantity of any or kll the said goods, and of the same quality as those so injured by the fire," the extent of his obligation under the latter clause is to place the insured in as good condition as he was before the fire occurred, and this may be done by renewing or repairing the insured articles so as to make cued. Hence, where insurance than $100. The charter and or- ■was effected on a three-story dinances were in existence at the wooden warehouse, situated with- time of the last renewal of the in the fire limits of Detroit, with- policy. Whether, therefore, in in which limits the reconstruction case of damage or partial loss, the or repair of any wooden building common council would peymit a injured by fire was prohibited, repair of the building was a risk unless by leave of the common which the insurer took upon him- council; and where, on a fire oc- self, because the loss and injury curring, the common coimcil, un- to the assured might depend in der the charter and ordinances of amount upon such action of the the city, refused to permit the re- council, yet they would be in fact pair of the building injured, it the consequence of the fire ; and was held to be a case of total loss, because, too, by the terms of the and the insurer liable for the full policy the insurer reserved the amount of the insurance. The right to repair or not at his option, value of the building before the thus taking the risk of the power to fire was $4000 ; it was insured for repair, and of all loss which might $3000. Without leave to repair, accrue, if, from any cause, repair- its value after the fire was less ing should be impossible. Ibid. 628 FIRE IKTSUEAIirCE. them as good as they were before the fire. Any evidence, therefore, which would tend to show that this had been done is admissible tinder an action of covenant on the policy.^ In defence to such an action he may also show that, after his liability to repair occurred, by his election to repair, and before the expiration of the specified time, he made a valid arrangement with the as- sured, by which the time for making the repairs was extended beyond the time; and his perform- ance of this agreement discharges the covenant.^ Insurance contract, when converted into huilding contract. 28. Where there is a provision in a contract of insurance, making it optional with the com- pany to rebuild gr to repair the building within a resonable time, giving notice of their intention to do so within twenty days after having received the preliminary proofs of loss, etc., and where such notice is given, and the insurer proceeds to erect and repair the building in accordance with the plans and specifications furnished by the as- sured, at the request of the insurer, this converts > Franklin Fire Ins. Co. n. ' Franklin Fire Ins. Co. v. Hamill, 5 Md. 170. See also Ell- Hamill, supra. maker a. Franklin Ins. Co., 5 Barr, 183. PAYMENT OP LOSSES. 629 the contract of insurance into a building con- tract. And if the insurers only partially per- form this contract, the rule of damages in an action for its non-performance is the amount it would take to complete the building by making it substantially like the one destroyed, independ- ently of what had already been expended thereon. Under the building contract the amount named in the policy ceases to be the rule of damages.^ • Morrell v. Irving Fire Ins. more than suflBoient to pay pro- Co., 33 N. Y. 429 ; Beals v. Home bable current losses, and -with a Ins. Co., 36 N. Y. 583. But see right to a pro roito return at the Harkins c. Hamilton Mut. Ins. end of the time, if, upon a state- Co., 5 Gray, 433 ; Commonwealth ment of an account of all the losses Ins. Co. V. Sermett, 1 Wr. 205 ; which have occurred during the Trull «. Roxbury Mut. Ins. Co., whole of such time, the premium 3 Cush. 363. In the latter case it and deposits have not been ab- was held that if the insurer re- sorbed in the payment of losses. builds, and the cost is less than He also njakes himself liable to pay the amount insured, he remains assessments to a limited amount insurerof the new building during in order to pay losses to other the life of the policy for the dif- members, should any occur with- ference. Shaw, C. J., in deliver- in the time, which the sums re- ing the opinion of the court, stated ceived for premiums and deposit the reason of this rule as follows : might not be sufficient to cover. " The assured.is a member of the Such being the contract between company so long as the policy the parties, there seems to be no exists ; and the insurance is for a ground to hold that it is termi- term of time, usually for seven nated by the payment of any loss. years. He pays a sum in the out- The assured, by his deposit note, set as a premium and deposit, is liable to assessment, according estimated at a rate somewhat to the terms of the policy, during 630 riRE IN-SITEANCE. If insured 'prevents insurer from rebuilding, he ceases to have any claim. 29. When the insurer gives notice that he elects to rebuild, and the insured refuses to permit him to do so, he can recover nothing from the insurer as damages for non-performance. The insurer having elected to pay his loss by restoring the building burned, he cannot be required to pay in any other way. This is the contract between the parties. That is, where the insurer gives notice of his election to rebuild, he ceases, as already stated, to be insurer, and becomes a party to a contract by which he agrees to erect for the insured a building substantially like that de- stroyed.^ Hebuilding in case of double insurance, 30. If there was double insurance, and both insurers united in the election and Undertaking the whole term ; and the land on Partridge, 5 Foster, 369, to the which the buildings stand is sub- effect that, notwithstanding a total ject to a lien for its security, loss, assessments may be made on Were it not for the express limita- the premium-note during the en- tion in the policy as to the amount tire period mentioned in the policy of the sum insured, we do not see of insurance, why the company might not be ' Beals v. Home Ins. Co., 36 liable for successive losses." See N. Y. 523 ; 8. C, 36 Barb. 611. also Swamscot Machine Co. •». PATMKKT OF LOSSES. 631 to rebuild, the insured will be entitled to recover the damages which he has sustained by a breach of the contract or agreement as in other cases of breach by the builder of his agreement to rebuild. And the insured may maintain his action against either insurei* and recover full damages ; and the insurer who pays nothing and does nothing, is liable to the other for contribution.^ > MorreU v. Irving Fire Ins. Co., 33 N. Y. 439. CHAPTER XXI. EEMEDT OF THE INSURED. 1. Stipulation as to arbitra- 8. When assignee may sue in tion. Ms own name. 2. Stipulation as to time when 9. Suit must be in the name of action may be brought. assignee whenever there is a new 3. Limitation as to time may be contract with him. waived. 10. The appointee of the in- 4. Stipulation requiring suit to sured may sue in his own name, be brought in a particular court. 11. Loss payable to mortgagee. 5. Right of executor to bring 12. Where there is a sale of the suit on a policy of insurance. property and assignment of policy. 6. Vendee may sue although 13. Who must sue where there sale merely colorable. is a joint policy. 7. Who may sue where policy 14. Where underwriters become is assigned. subrogated to rights of insured. Stipulation as to arbitration. 1. If the loss incurred by the insured is not paid, he may sue for the amount, notwithstand- ing a stipulation in the policy to refer all dis- putes to arbitration ; such a stipulation being held invalid as an attempt to oust the courts of jurisdiction by excluding the assured from all resort to them for his remedy. That is, a stipu- lation which in effect says that the parties shall never be heard in court, is against the liberty and dominion of the law, and void. REMEDY OF THE INSURED. 633 If the contract, however, is in such terms that a reference to a third person, or to a board of directors, is a condition precedent to the right of the party to maintain an action, then he is not entitled to maintain it until that condition is complied with; but if, on the other hand, the contract is to pay for the loss (or other matter in question), with a subsequent contract to refer the question to arbitration, contained in a dis- tinct clause collateral to the other, then that contract for reference does not oust the jurisdic- tion of the courts, or deprive the party of his action. In Scott v. Avery,^ the condition was that "the sum to be paid by this association to any suffering member for any loss or damage shall, in the first instance, he ascertained by the committee." The House of Lords in that case held that the ascertainment of the loss by the committee, or by arbitration, was a condition precedent, and that without such ascertainment the plaintiff had no cause of action. In Elliott V. E. E. Assurance Company,^ the words were that the loss, " after the same shall he adjusted, shall be immediately paid," and these words were held to be a condition precedent, and ' 5 House of Lords Cases, 811,- ' 3 Law Rep. (Ex.) 337; Brown 25 L. J. (Ex.) 308. v. Overbury, 11 Exclieq. 715. 634 PIEE INSURANCE. that without such adjustment there was no cause of action. In other words, if the parties agree that it should be necessary before bringing any action that there should be a preliminary inquiry, this condition is lawful and must be complied with. But if the contract be merely that, if a dispute arises, it shall be referred to arbitration, this is invalid ; and if the stipulation in such contract were accompanied by a declaration that no action should be brought, it would be none the more invalid and ineffectual.^ That is, if two persons agree to refer the matter upon which a liability arises to arbitration, that agreement does not take away the right of action. If an award be actually made, it will be a bar to an action ; or if the parties have submitted their difficulties to arbitration, and the reference be still pending, it would also appear to be a bar." ' Elliott V. E. B. Assurance Co., arbitration, and the court held that tupra. when the claim was made hj the ' Angell on Fire and Life Ins., insured for the loss, if the insurers sec. 354. See also Kill v. Hollis- had offered to refer the question ter, 1 Wil. 129 : Goldstone v. Os- to arbitrators, the insured would bom, 3 Oarr & Payne, 550 ; 1 E. have been bound to accept it. But & G. 825. See too Millaudou s. At- on their refusal to pay, they must lanticlns. Co.,8La. 557, whereit be considered thereby to have was claimed that the insured before waived the right of arbitration, instituting suit was bound under Goldstone v. Osborn, 2 Carr & a clause of the policy to tender an Payne, 550. EEMEDT OF THE IN8UEED. 635 Stipxdation as to time when action may he brought. 2. A stipulation requiring the assured in case of loss to enforce his legal remedy within a pre- scribed period — six months, for instance — is per- fectly valid.^ Hence, when the policy declares that an action shall not be sustained unless such action shall be commenced within the time of twelve months next after the loss or damage shall occur, it is not a compliance with this con- dition that a suit was commenced within the pre- scribed period and a nonsuit suifered, and a new suit commenced within a year after the nonsuit. The action meant in the policy is the one prose- cuted to judgment, and that must be commenced within the twelve months.* ' Ripley o. JEtna Ins. Co., 30 Ins. Co., 31 Conn. 517. In the N. T. 136; Amesbury®. Bowditch latter case an action at law was Ins. Co., 6 Gray, 603 : Peoria M. commenced within the time limit- 6 F. Ins. Co. V. Whitehill, 25 ed. But it could not be sustained. HI. 466; The N. W. Ins. Co. v. Durlngitspendency, however, but The Phoenix Oil and Candle Co., after the time had expired, a bill 7 Casey, 448 ; Brown v. The Sa- in equity was filed for the correc- vannah Mut. Ins. Co., 24 Ga. 97 ; tion of the policy, and for an in- Peoria M. & F. Ins. Co. ■». Hall, junction against the defence set 12 Mich. 202 ; Patrick v. Farmers' up in the action at law. It was Ins. Co., 43 N. H. 621 ; Ames v. held that the equitable proceeding, New York Union Ins. Co., 14 N. being in aid of the suit, was not y_ 253. barred by the expiration of the 2 Eiddlesbarger v. Hartford Ins. time limited. Co., 7 Wallace, 886. See Wood- And in Harris «. Phoenix Ins. bury Savings Bank v. Charter Oak Co., 35 Conn. 310, it was held that 636 riEE INStTRANCE. Limitation, as to time m,ay he waived. 3. As the condition limiting the right of action is stringent, as it is in derogation of the rights of the assured as given by the statutes of limitation of the several States, as it is often not known or not considered by the assured, it is not permitted to prevent a recovery when the acts and declarations of the insurer may fairly be held to-have waived it.^ Again, the condition itself may be so inconsistent with the nature of the interest insured as to render a recovery un- attainable by the exercise of due diligence, and in that case it is said the courts will not enforce •when the amount due for a loss was upon the right of the assured, he attached hy a condition of the in- is in no better condition than he surance within twelve months (the could be were he prosecuting his limitation clause being for twelve suit for the damages caused by the months) on a process of foreign loss, and any defence that would attachment, and a suit of scire fa- defeat his claim would equally ciaa upon the judgment recovered defeat the claim of the factorizing in that suit was brought after the creditor. expiration of that time, the origi- ' The Mayor of New York r). nal suit saved the claim from the The Hamilton F. Ins. Co., 39 N. T. limitation of the policy. The scire 45 ; Ames v. N. T. Union Ins. Co. , facias was only auxiliary to the 14 N. Y. 253 ; Peoria M. and F. correction of the judgment ren- Ins. Co. b. Whitehill, s^4p?•a; Grant dered in the original action ; the v. Lexington Ins. Co., 5 Ind. 28 ; commerfcement of the whole pro- Gooden v. AmoskeagF. Ins. Co., ceeding was the commencement 20 N. H. 73 ; F. and M. Ins. Co. of the original suit. But as the ®. Chestnut, 50 111. 111. plaintiff in the latter suit stands REMEDY OF THE INSURED. 637 it.^ But it does not amount to a waiver of the condition that the insurers decline paying until certain attachments are removed.'^ On the other hand, where the policy provides that the action shall be commenced " within the term of six months after any loss or damage shall accrue," this is construed in connection with the other conditions of the policy ; and thus construed, means that the action shall be thus commenced within six months after the right to sue the company has accrued. Thus, when the fire oc- curred on the 5th of October, and the proofs of loss were not adjusted by the parties until the 12th of the following February, it was held that the limitation of six months did not commence to run until the expiration of sixty days from the latter date.^ Stipulation requiring suit to he brought in a particular court. 4i. A by-law of a mutual insurance company, requiring suit to be brought at a proper court in a particular county, is not binding on the assured;* although, as we have just seen, a ' Longhurst v. Star Ins. Co., 19 » The Mayor of New York v. Iowa 364. The Hamilton Fire Ins. Co., 39 2 Ripley ». JEtnalns. Co., supra. N. Y. 45. See also Schroeder v. Keystone * Nute v. Hamilton Mut. Ins. Ins. Co., 2 Phil. R. 286. Co., 6 Gray, 174. 638 FIEE INSUKAKCE. by-law requiring suit to be brought within a fixed time is binding.^ " The one," said Shaw, C. J., " is a condition annexed to the acquisiti'on and continuance of a legal right, and depends on contract and the acts of the parties ; the other is a stipulation concerning the remedy, which is created and regulated by law." BigJit of executor to "bring suit on a policy of insurance. 5. Where the contract of insurance is made with the assured, " his executors, administrators, and assigns," the right of action upon the policy at the death of the assured vests in his personal representative; but the insurance being on a building, which is real estate, the interest in the property insured belongs to the heirs at law. The executor or administrator is a trustee for the heirs, who alone are damnified by the loss of the building, and who alone are entitled to the in- demnity.^ " Amesbury ». Bowditch Mut. recover insurance procured in the Ins. Co., 6 Gray, 596. name of the executor as executor. « Wyman v. Wyman, 26 N. Y. In such case, it was said, the in- 353. In Colburn v. Lansing, 46 surance is for the benefit of the Barb. 37, it was held that the re- estate, and enures to it. siduary legatees may sue for and EEMEDT OP THE INSURED. 639 Vendee may sue although sale merely colorable. 6. Where there is a sale of the property and a transfer of the policy to the vendee, with the assent of the insurer, upon the terms specified in the by-laws, the vendee may maintain an action for the loss, although the sale may have been collusive and colorable merely.^ Who may sue where policy is assigned. 7. The assignee of a chose in action takes it subject to all the legal defences that could, at the time of the assignment, be set up against it in the hands of the assignor. He acquires by the assignment the rights of the assignor, and nothing more. The equitable interest of the assignee, however, will be protected against all persons having notice of the assignment.^ But the assignee cannot ordinarily maintain a suit in his own name. His rights must be enforced in the name of the assignor ; but if the debtor makes a promise to the assignee after the assignment, ' Crafts V. Union Mut. F. Ins. time the exact position of the in- Cc, 36 N. H. 44. In Bergson v. sured. See also Bibend v. Liver- Builders' Ins. Co., 38 Cal. 541, it pool Ins. Co., 30 Oal. 78. was said by the court that when '^ Thompson v. Emory, 7 Fost. both the policy and the subject are 269, and authorities there cited; assigned with the assent of the in- Bergson c. Builders' Ins. Co., 38 surer, the assignee takes from that Cal. 541. 640 riEE INSTJEANCE. to pay the debt to him, the assignee can maintain an action in his own name/ Otherwise the assignee of a policy of insurance cannot sue upon it in his own name, even though the transfer was made with the consent of the underwriters, pursuant to a provision contained in the policy.'^ A mutual insurance company, ' Ibid. Jessel v. The Williams- of the policy in his own name, burg Ins. Co., 3 Hill, 88; Shep- The question sought to be raised herd v. Union Mut. F. Ins. Co., is, whether it can be maintained 38 N. H. 233. in that form. The' assignment 2 Jessel V. The Williamsburg was' long anterior to the fire, Ins. Co., 8 Hill, 88; Beemer v. was assented to by the company, Anchor Ins. Co., 16 Upper Ca- and the premium note of the as- nada (Q. B.), 485; Compton v. signee received and substituted for Jones, 4 Cowen ; Innes v. Dunlop, the note of the assignor. Under 8 Tenn. R. 595 ; Granger «. The such circumstances, the assignee Howard Ins. Co., 5 Wend. 800, was by the terms of the act in- 302. But see, contra, Wilson v. corporating the company ' entitled Hill, 3 Met. 66 ; Bergson v. Build- to all the rights and privileges, and ers' Ins. Co., 38 Cal. 541. In the subject to all the liabilities, to absence of provisions in the char- which the original party was Ha- ter, or by-laws, or policy to that ble and subject to under the act.' effect, an assignee, as stated in the How far the rules of pleading text, cannot recover in his own might be in conflict with an effort name, though the company assent to declare for a breach of covenant, to the assignment. Barnes v. Ins. not made with the party suing, Co., 45 N. H. 31. In Lycoming but to which he had succeeded, Co. Mut. Ins. Co. V. Schreffer, and whether if declared as accord- 8 Wr. 269, Thompson, J., in de- ing to the facts of the assignment livering the opinion of the court, and the acts of incorporation said: "The first specification of seeming to recognize a substitu- error to be noticed in this record tion to the covenant of the in- relates to the suit of the assignee sured ; and how far the company, REMEDY OF THE INSURED. 641 however, by a by-law may provide that a mort- gagee, to whom a policy is assigned as collateral security, may have the policy ratified to him by the assent of the directors, and thenceforth have all the rights of the assured, and among them the right to sue in his own name.^ An agent, by reason of the act of incorpora- sent of the insurers, gives the as- tion, might be estopped from signee a right, upon the ground of taking advantage of any such de- a new contract with him, to sue feet, might be questions worthy of for and recover the loss in his own some consideration, but which we name ; but nevertheless the insur- need not decide now. I think a ance may be defeated by any acts fair and just answer to the objec- of the assignor in violation of the tion urged is, that if successful, it conditions of the policy. See would only abate the action at Macomber v. Cambridge Mut. F. most, and as this case was here Ins. Co., 8 Cush. 183 ; Fogg v, before, the parties standing on the Middlesex Mut. F. Ins. Co.,. 10 record just as they do now, the Cush. 337 ; Hale v. Mechanics' objection should have then been Mut. F. Ins. Co., 6 Gray, 169. made. Treating it, therefore, ' Rollins ». Columbian Ins. Co., somewhat in the nature of a plea 5 Fost. 201 ; The Peoria M. and in abatement, it comes too late F. Ins. Co. ■». Hervey, 34 111. 46 ; now. The objection should be Phillips v. Merrimack Ins. Co., treated as waived. Moreover, it 10 Cush. 350 ; Flanagan v. The is doubtless a case in which the Camden Mut. Ins. Co., 1 Dutch, record might have been amended 506 f Barnes v. Ins. Co., 45 N. H. by adding the name of the as- 21-, Stimpson «. Monmouth Mut. signor, if it were deemed essential. F. Ins. Co., 47 Me. 379. We do not, however, decide that In New England F. and M. Ins. it was or was not error, but over- Co. d. Wetmore, 32 111. 331, it was rule the exception for the reasons held that the assignee could not gjygjj I) bring a suit on a policy of insur- In Massachusetts the assign- ance in his own name, unless au- ment of a fire policy with the con- thorized by the act incorporating 41 642 riRE ITiTSUBANCB. too, who obtains insurance in his own name for the benefit of another, may maintain an action upon it.^ When assignee may sue in Ms own name. 8. Where the act incorporating the insurers provides that in case the insured assigns the sub- ject-matter he may also assign the policy, and that upon notice being given to the insurers, the assignee shall have all the benefit of the policy and may sue in his own name, the action must be brought in the name of the latter alone. Joining the assignor would operate as a bar both in assumpsit and covenant.^ "Where the act of incorporation thus provides, a ratification and confirmation of the policy by the insurer, for the assignee's own use and bene- fit, renders it thereupon a policy or obligation directly to the assignee himself. Thenceforth he claims as the assured, not as a mere assignee, and the action must be brought in his name.' the company. And this on the 2 Ferriss ®. N. Am. F. Ins. Co., ground that such instruments are 1 Hill, 71 ; Conover «. Mut. Ins. not assignable at common law, Co.,3Denio, 354 ; S. C, 1 Comst. nor by any statute of Illinois, so 290. as to give the assignee the right " Mann ®. The Herkimer Co. of action in his own name. Mut. Ins. Co., 4 Hill, 187 ; Fer- > Barnes v. Mut. F. Ins. Co., riss v. North Am. F. Ins. Co., 1 supra. Protection Ins. Co. «. Hill, 71 ; Conover v. Mut. Ins. Wilson, 6 Ohio St. 553. Co., 3 Denio, 254. REMEDT OF THE IKSUEED. 643 But where there is an assignment of part of the property by the insured to another, and an agree- ment by the company that the policy which had been issued to the insured alone, might stand and enure to the benefit of both the owners of the joint property, such assignment of the property with the agreement and assent of the company does not operate as an assignment of the policy, nor authorize an action at law in the name of the assignee. In such a case equity is the proper resort for relief.^ Suit must he in the name of assignee whenever there is a new contract with him. 9. Many charters and by-laws of mutual in- surance companies contain provisions for the alienees of property to have an assignment of the policy made, and by giving security for the payment of future assessments, and otherwise complying with the rules of the company, to become members of the same, and thereupon being eptitled to all the privileges and incurring all the liabilities of the institution equally with other members. The test then is, is the plaintiff a member of the company? Has the contract • Bodle V. The Chenango Co. Mut. Ins. Co., 2- Comst. 53. But see ante, sec. 18, p. 412. 644 riEB INSUEANOK. with the original insured ceased, and a new one been made with the assignee, by which he has become a member of the company?^ But the assignment of a policy, as collateral security to secure the payment of a debt, with the assent of the company, does not change the original contract of the parties ; and a suit to recover the loss must be brought in the name of the assured, with whom the contract was made, and with whom it still exists, unless there is a provision either in the charter or byJaws by which a mortgagee, for example, who has had assigned to him a policy as collateral security, becomes a member of the company.^ ' Folaom «. Belknap Co. Mut. performance of the condition of F. Ins. Co., 10 Fost. 331. the mortgage ; it was held "in case 2 Ibid. In Kingsley v. New of loss that such original assured England Mut. Fire Ins. Co., 8 may sue on the policy in his own Cush. 393, the owner of the as- name. Phillips v. Merrimacls Bured property having assigned Mut. F. Ins. Co., 10 Cush. 350. the policy, with the consent of the See, also, Crocker v. Whitner, 10 company, to the purchaser, and Mass. 316 ; and Wilson «. Hill, 3 having taken from the latter a Met. 69, where it is held that an mortgage on the premises to se- assignment with the consent of cure the purchase-money, and, the company to the purchaser of with the consent of the company, the assured property, operates as a reassignment of the policy to a promise to pay the loss to the hold as collateral security for the assignee. REMEDY or THE INSURED. 645 The appointee of the insured may sue in his own name. 10. The appointee of the insured, to receive the loss, if any is incurred, may maintain an ac- tion for the avails of the policy in his own name, and this, notwithstanding he has no insurable interest in the property insured.^ Loss payable to mortgagee. 11. It is held where a policy of insurance is made payable to a mortgagee, with the assent of the insurer, that this is not an assignment of the policy, and the mortgagee may maintain an ac- tion in his own name.^ Where the loss, if any, • Frfnk «. Hampden Ins. Co., has been held that an insurance 45 Barb. 384 ; Ripley v. .Sltna Ins. made payable to a mortgagee Co., 29 Barb. 553. Ehodes, J., in does not give the latter the right Bergson v. Builders' Ins. Co., 38 to sue in his own name ; the action, Cal. 541, said, there is no substan- it is said, must be brought in the tial difference between an assign- name of the mortgagor, he being ment of the policy alone, executed a member of the company and the in the usual form, and an indorse- contracting party. Blanehard ». ment upon the policy, directing Atlantic Mut. F. Ins. Co., 33 N^ the insurer to "pay the within, H. 9 ; Shepherd «. Union Mut. F. in case of loss, to C. D.," the as- Ins. Co., 38 N. H. 233 ; Morris ». signee. Rockingham Ins. Co., 5 Fost. 23. 2 Loring s. Manufacturers' Ins. Where an assignment is made Co., 8 Gray, 28 ; Lowell v. Mid- only as a security, and isnotcom- dlesex Mut. F, Ins. Co., 8 Cush. municated to the insurers, or as- 12. But, on the other hand, it sented to, or ratified by them, it 646 PIEE INSUEAKCB. is made payable by the words of the policy to the mortgagee, the latter has the same rights and interest in the policy as if the policy had been assigned to him, to be held as collateral security for his debt, with the consent of the in- surer.^ When the loss is made payable to the mortgagee for a certain proportion of the amount, the assured may sue in his own name, with the mortgagee's assent, even for a loss of less than such proportion; and if such assent was known to the company before the commencement of the action, he may also recover costs.* So long as the mortgage remains unsatisfied, the mortgagee is a necessary party to an action on the policy.' Where there is a sale of the property and assign- ment of policy. 12. If, after insurance, the insured executes a mortgage on the property, and with the consent operates only to'transfer an equi- assured, for the use of the table interest, and the assignee mortgagee, to whom the insur- can maintain no action on the ance, in case of loss, was made policy, except in the name of the payable. assignor. See Shepherd ». Union ' Grosvenor b. The Atlantic F. Mut. F. Ins. Co., 38 N. H. 232. Ins. Co., 17 N. Y. 395. In Illinois F. Ins. Co. v. Stan- « Jackson «. Farmers' Mut. F. ton, 57 111. 354, it was held that Ins. Co., 5 Gray, 52. the suit was properly brought in ' Ennis o. The Harmony Fire the name of the mortgagor, the Ins. Co., 3 Bosw. 516. REMEDY OP THE INSURED. 647 of the company assigns the policy to the mort- gagee, the action must be brought in the name of the mortgagor. It is otherwise where the property is absolutely sold, and the purchaser takes an assignment of the policy, in pursuance of the requirements of the insurer's charter, which gives to the assignee all the rights and privileges of the original insured. In such a case the action must be brought in the name of the assignee.^ WTio must sue when there is a joint policy. 13. Where a policy is issued to two persons in their joint names, both must join in an action for a breach of the contract, and the non-joinder may be taken advantage of either in abatement or under the general issue. It is no defence in such a case that the one has assigned all his in- terest in the policy to the other, unless he can show that the assignment was assented to by the company.'' But where there is a joint loss on an insurance of a joint interest, and the proof at the ' Conover v. Mut, Ins, Co., 3 charter, by-laws, or policy to that Denio, 254 ; S. C. , 1 Comst. 290. effect, would not generally per- 2 Tate v. Citizens' Mut. F. Ins. mit the assignee to recover in his Co., 13 Gray, 79. This assent, in own name. the absence of provisions in the 648 PIRE INSURANCE. trial is a separate insurance to one of the persons only, the variance is fatal, ^ Where underwriters hecome subrogated to rights of insured. 14. Where insured, property has been burned by the careless or wilful act of third persons, the insurers, upon paying the loss, become subro- gated to the rights of the assured, and may sue * the wrongdoers, not in their own name, but in the name of the owner of the property.^ ' Burgher v. Columbian Ins. Life Ins. Co. ■d. The N. Y. and Co., 17 Barb. 374. N. H. R. R. Co., 35 Conn. 365 ; 2 London Assurance Co. ■». Rockingham Mut. F. Ins. Co., Sainbury, 3 Doug. 345 ; Mason 39 Me. 358 ; Hart v. The Western V. Sainbury, 3 Doug. 60; Yates R. R. Co., 18 Met. 101; Peoria V. Whyte, 4 Bing. 373 ; Conn. Ins. Co. v. Frost, 37 111. 333. INDEX. ACTION, stipulation as to arbitration, 633 et seq. stipulation as to time when may be brought, 635. limitation as to time may be waived, 636. stipulation as to particular court in which it shall be brought, 637. by executor, 638. by vendee, 639. by whom may be brought when policy is assigned, 636, 640, 643, 646. by appointee of the insured, 645. by mortgagee, 645. by mortgagor, 646. in case of joint policy, 647. by underwriters in case of subrogation, 648. ADMINISTRATOE, insurable interest of, 385 — 890. AGENTS, when insured must take notice of their authority, 18. notice to, of other insurance, 49. mistake or fraud in declaring the interest upon which insurance is to attach, 103, 104. equity will correct mistakes of, when, 111 — 114, 181. when principals chargeable with acts of, 115, 174 — 191, 383, 373. when principals chargeable with knowledge of, 345, 346, 383. when acting for insurer and not for applicant, 115. principal cannot withhold approval of their contract, unless, 191 et seq. if only authorized to receive applications, cannot make a contract of insurance, 131. change of policy by, 133. agreement to insure by, 130. countersign of, 138 — 140. whether may waive condition requiring prepayment of premium, 155—163. when acts of construed as waiving prepayment, 163—168. 650 INDEX. AGENTS {continued), power of, to bind their principals, 174, 177, 181, 190 et seq. principals liable for fraud of, 178. fraud of, on their principals, 179. liable for want of skill, 179. not bound to insure without instructions, 179, 180. powers of, when acting for the insurer, 181 — 191. powers of, when acting for the insured, 179. general powers of, 174 — 233. whether may insure in mutual company, 191. waiver by, 193—194, 313—333. when insurer estopped to deny act of, 203 — 310. of both insurer and insured, 310 — 333. misrepresentation by, fatal to policy, 334 — ^326. waiver of proofs and notices by, 600 et seq. when may bring suit in their own name on a policy of insurance, 641. ALIENATION (see Mortgage),' dissolves insured's relation to the company, except, 38 note 1. effect of, upon premium note, 150. effect of, upon insurance, 441. what amounts to, 443. Whethei* executory contract of sale amounts to, 443 et seq., 473 note 3. effect of conveyance and deed held in escrow, 446. mortgage not alienation, 447. by assignment of equity of redemption, 450 — 456. by decree of court, 449. conveyance and reconveyance back, 458. whether equitable mortgage is, 461. . whether assignment as collateral security is, 463. nominal, will not avoid policy, 463, 474. whether lease of premises is, 466. clause of, does not apply to goods kept for sale, 468 — 471. of one of several estates, 473. whether mortgage of chattels is, 473. by partner or co-tenant, 475. by assignment to trustees, 478. decree of bankruptcy is, 479 note 1. partition is, 480. clause of, not applicable where policy was assigned previously with assent of insurer, 506. AGREEMENT TO INSURE, when binding, 130 — 138. how enforced, 180. INDEX. 651 AGREEMENT TO INSURE {oontinued), remains in force until delivery of policy, 132 et seg. what is proof of, 133. offer and acceptance by mail, 134, 135, and note 1. whether premium must be paid in order to its completion, 189, 153 notes 2 and 3. ALTERATION (see Risk), increase of risk by reason of, 514 note 1. when increases the risk, 516. burden of proof as to, 528. APPLICATION, mistake of agent in making out, 111. mistake in, as to the title of the assured, 112 — 115. when amounts only to a proposal for insurance, 121. when a warranty, 212, 333—236. whether written required, 244 et seq. waiver of answer to question in, 245, 291. knowledge of agent of facts omitted in, 245, 246, 291. signed in blank, 247. whether to be considered warranty or representation, 249. ambiguity in, 250. referred to in policy as representation, 250. when policy sustained notwithstanding errors in, 383. must make fuU and true answers to the questions, 362 note 2. ARBITRATION, • stipulation as to, 682. ASSESSMENTS, '' may be made on deposit note, although, etc., 20, 85. riiust be in accordance with charter, 33, 142 — 145. on premium notes, 147 — 150. ASSIGNMENT, consent to, by secretary, 197. of policy, 441, 481. of equity of redemption, 450. prior, of mortgage debt, 457. as collateral security, 463. of title bond held by assured, 468. to trustees, eflfect of, 478. insurer's assent to, 482. assent to, by the secretary binds the company, 483. when assent of insurer to, creates a new contract, 484 et seg. 652 INDEX. ASSIGNMENT {continued), loss payable to a third person does not amount to assignment of policy, 488. when vendee agrees to make, effect of, 491, 493 note 1. what amounts to equitable, 491. of policy without transfer of insured estate, 500 — 503. effect of assignor's acts after, 503 note 1, p. 503. . of policy after loss, 504, 505 note 1. of policy and subsequent sale of the property, 506. effect of general, 508. of voidable policies, 509. ASSIGNEE, when new contract arises with insurer, 504. may give notice of loss, 565. of policy of insurance, when may sue upon in his own name, 639, 643, 643. ASSIGNOR, insurance by, 430. effect of acts of, after assignment, 503 et seq. ASSIGNS, meaning of, in policy of insurance, 64 et seq. BANKRUPTCY, is alienation and avoids insurance, 479 note 1. BY-LAWS, when not binding on the assured, 31. when they become warranties, 343 — 344. requirements in, with respect to notice of loss, 571. CERTIFICATE, ' of loss, 586. formal accuracy of, 587. by whom given, 587, 588 note 1. insurer must point out defects in, 589. when must be.produced, 590. waiver of defective, 590. does not conclude insurer, 593. COMMISSION, goods held on, 339 CONCEALMENT, what is, 361. effect of, 366. character of, that avoids a policy, 367. INDEX. 653 CONCEALMENT {continued), what facts must be disclosed, 368. •what facts need not be disclosed, 370. of incendiary attempts to destroy the property, 870, 871. kind of concealment that is fatal, 871. of encumbrances, 373. of intention to erect a contiguous building, 373. of arrangement between mortgagor and mortgagee as to payment of premiums, 374. of pending litigation, 374. of mode of heating, 374. CONDITIONS, when they become a warranty, 336—243. insurer may prescribe, 340. must be complied with, 363. CONSTRUCTION (see Policy), of fire policy, 83 — 84. in case of ambiguity, 349. COUNTERSIGN OP AGENT, when necessary, 138 — 139, 188. DAMAGES (see Losses), rule of, 604. measure of, when insurer fails to rebuild, 635, 636. DAYS OF GRACE, whether policy subsists during, 168, 173. DECLARATION OF INTEREST, mistake or fraud as to, 104, 109, 113. DEPOSIT NOTES, when maker of, liable, for full amount, 33. negotiable promissory note given to an insurance company may be negotiated, 33 note. distinction between deposit and premium notes, 28. liability on, continues, although premises are destroyed, 38. alienation of insured premises discharges, unless, 38, 39. cannot be discharged by agent of the company, unless, 31, 33. fraudulent representations with respect to, 213. DESCRIPTION, inaccurate, 259 — 368. of locality, 369. of nearest buildings, 270—381. 654 INDEX. DIRECTORS OF INSURAKCB COMPANY, power of, 194—201. notice to, 200, 202, 564. . DOUBLE INSURANCE, what is, 42, 44. what is not, 42, 43. whether union of two insured stocks of goods constitutes, 44, 45. no contribution for excess paid by co-insurers, 45. in case of rebuilding, 630. DWELLING-HOUSE, whether insurance on implies occupation, 283. ' effect of oral promise to occupy, 285 — 287. change of tenants, 284. construction of clauses as to occupation, 287. stipulation as to occupying and vacating, 297 — ^299. whether pursuits of occupants need be disclosed, 299—304. ENCUMBRANCES, effect of untrue answer as to, 806 — 321. policy cannot be avoided for, unless, etc., 372, 399. effect of, on insurable interest, 435 — 438. subsequent, 438. whether bond to convey the premises amounts to, 439. EXECUTOR, whether bound to keep up insurance of testator, 183. insurable interest of, 385 — 390. right of, to sue on policy of insurance, 638. EXPLOSION, losses by means of, 541 — 546. FACTORY, construction of the term in fire policy, 85. FORECLOSURE, of mortgage, 448 — 464. FORTHWITH AND IMMEDIATE, meaning of, with respect to notice of loss, 561—563, 568 note 4. FULL PARTICULARS, meaning of, 580. GAMBLERS, occupation of insured premises by, 371. INDEX. 655 GARNISHEES, whether liable for interest, 623. GOLD, agreement to pay losses in, 633. GROCERIES, insurance of, includes what, 341, 343 note 3. HAZARDOUS ARTICLES, prohibition of, 198, 353—354. when insurance sustained, although kept in violation of printed condition, 91, 343, 344^347. insurance on, excludes extra-hazardous, 335, 336 note 1. indorsement on policy permitting them to be kept, 348. or goods kept in violation of law, 354 — 357. stipulation as to illegal articles, 357. stipulation respecting, may be waived, 358. HEAT, whether insurers liable for loss by, 536 — 538. INSURANCE (see Instjbable Intebbst), definition of, 17. restriction upon amount of, 68. when complete, 116—118, 134. when incomplete, 121 — 133, subsequent to loss, 134 — 130. by correspondence, 134. by part-owner, 176. not invalidated by fraud of agent on his principal, 178. on the application of a third party, 248. of a trade or a business, 91, 334. of hazardous goods, excludes extra-hazardous, 385 — 389. particular persons who may insure, 378 — 381. by mortgagor and mortgagee, 396 — 413. for benefit of whom it may concern, 416 — 418. for the benefit of another, 419. by assignor of personal property, 430. officers, when competent witnesses, 533. time of payment of, 583. by lessee, 430, 431—434. by vendee under executory agreement, 434. by vendor, 436—430. by lessor, 431. by stockholders, 433. 656 INDEX. INSURANCE {continued), by trustees, 433—434. not defeated by sheriffs levy, 465. when converted into building contract, 638. INSURABLE INTEREST, what is, 17. insured entitled to return of premium if he has no, 170. insured must have, otherwise policy void, 876. what is included in the term, 377. particular persons who may insure, 378. in rents and profits, 383. of husband in estate of his wife, 383 — 385. of executors and administrators, 385 — 390. of railroad corporations; 390. of partners, 891, 394, 395. of mortgagor and mortgagee, 396 — 411. of whom it may concern,'416. of assignor, 430. of a lessee, 430—434. of vendee under executory agreement, 434 — 435. of vendor, 436—430. of lessor on ground-rent, 431. of stockholders of an incorporated company, 482. of trustees, 433—484. effect of encumbrances on, 435 — 438. INSURED, when he becomes member of a mutual company, 18, 317. cannot deny validity of insurers' charter, 19. cannot allege his want of insurable interest, 30 by-laws in conflict with charter not binding on, 31. whether he may change the designated business, 96. whether he may adopt new mode of carrying on his business, 96. agent of, 178—180. who may become, 378 — 381. for what losses may recover (see Losses). required to give notice of loss, 557 — 558. payment of losses to, 603. when may recover foi: goods held on commission, 617. effect of preventing insurer from rebuilding, 630. INSURERS, usually incorporated, .18. when restricted as to amount of insurance, 68. IKDEX. 657 INSURERS (^coniinued), cannot arbitrarily withhold approval of their agent's contracts, 119. agent of, 181—191. when estopped to deny act of agents, 202 — 210. whether they can make their agent also agent of insured, 212 — 222. insurance on faith of their own knowledge of the risk, 234, 365, 366. deemed to know the incidents of the insured business, 347 — 849. when competent witnesses, 874. subrogated to rights and remedies of insured, 400, 402, 555. verbal assent of, to assignment of policy, 483. what is sufBcient assent by, 482. for what losses responsible, 536. not objecting to defective notice of loss, 566. duty of, with regard to notice of loss, 567. duty of, with regard to preliminary proofs, 589, 595, 596. when estopped to set up defective proofs, 598. liability of, in case of total loss, 606. restriction by, as to amount of liairility, 611, 615. whether may rebuild, 624. measure of damages when they fail to rebuild, 625. when insured must contribute towards rebuilding, 635. INTEREST, when garnishees liable for, 633, how computed on losses, 623. JOINT STOCK COMPANIES, capital of, and how made up, 18, LESSEE, insurance by, 420. LESSOR, insurable interest of, 431. LIEN, upon insurance money, when it arises, 491, LIGHTNING, losses by, 541. LOSSES, adjustment of, 79. for what, insurer liable, 536. by heat, 586, 537. 42 658 INJDEX. LOSSES (continued'), by removal of goods and otherwise, 538^541. by lightBing, 541. by explosion, 541. by steam, 543 note 1. partly by fire and partly by explosion of gas, 544. wholly by explosion, 545. by coals and sparks from a steamboat or locomotive, 546 note 1. by fire and water, 548. from usurped power, mobs, etc., 549. by falling of buildings, 550. by negligence, 551 — 553. by misconduct, 553. by acts of tenants and others, 554 — 555. when payable, 583. valuation of, 583. when interest allowed on, 584. certificate of, 586—592. payment of, 603. assured indemnified for, 603. when total, 605, 606. goods, how paid for, 607. goods, when estimated at their cash value, 608. criterion of cash value, 608. to be paid on goods although duties are unpaid, 609. apportionment, 610. when paid for by contribution, 611. the clause as to payment of two-thirds of, 611. whole to be paid and not proportioned, 613. revaluation, 615. of goods held on commission, 617. by vendor, 618. by mortgagee, 619. where insured property is situated abroad, 631. whether agreement to pay in gold implies that dividends must also be paid in gold, 633. how interest is computed on, 633. MANUFACTURING ESTABLISHMENTS, insurance of, 91 — 96. MARINE AND FIRE INSURANCE, distinction between, 363. MEMBERSHIP, of mutual company, when it begins, 18, 315. INDEX. 659 MERCHANDISE, * what included in the term, 85. MISREPRESENTATION, what is, 360. effect of, 361. opinions do not constitute, 361. false answers and omissions, 363. distinction between marine and fire as to, 363. insurance on insurer's knowledge of the risk, 364. by mortgagee, 398. as to encumbrances, 435 — i38. MISTAKE, equity will reform a policy on account of, 97, 111, 114. MOBS, Etc., losses by, 549. MORTGAGE, when conveyance of property treated as, 397. not alienation, 447. is alteration of title, 447. is encumbrance, 448. foreclosure of, invalidates policy, 448. effect on insurance of equitable, 461. whether mortgage of chattels is alienation, 473. MORTGAGEE, stipulation to assign mortgage debt, 340. may insure the mortgaged property, 396, 400. insurance by subsequent, 397. cannot effect insurance at expense of mortgagor, 398. when may add premiums to original debt, 398. has the legal estate, 399. payment of mortgage debt before loss, 403. general and special insurance by, 404, 453. insurance at expense of mortgagor, 410. loss payable to, 413, 508. of personal property, 414. acquiring equity of redemption, 453, 463. loss payable to, does not amount to assignment of policy, 488— 491. payment of assessments by, 507. extent of recovery by, 619. when may sue in his own name on a policy of insurance, 639— 645. 660 INDEX. MORTGAGOR, insurance on the interest of, by mistake, 108, 109. may insure his interest, 396, 407. insurance eflFected at his request by mortgagee a charge upon the estate, 399. payment of premiums by, on mortgagee's policy, 402. when insurance by, inures to mortgagee, 408. may insure although equity to redeem has been sold, 407, 408, 415, 416. insurance by, and assignment of policy to mortgagee, 449. assignment by, of equity of redemption, 450. alienation by, avoids insurance payable to mortgagee, 456. executory agreement by, to insure, 486. when must insure in his own name on policy of insurance, 646. MUTUAL COMPANIES, capital of, and how made up, 18. member of, bound to take notice of its rules, etc., 18, when membership begins, 18. member of, estopped to deny validity of charter, 19. NEGLIGENCE, losses by, 551 — 553. NOTICE OP LOSS, insured required to give, 557. how communicated, 558. condition precedent, 558 note 3, 563. delivering in statement of loss, 559. must be given " forthwith," 561 et aeq. to what officer must be given, 564. surplusage does not invalidate, 565. assignee may give notice of, 565. failure of insurers to object to defective notice, 566. duty of insurer with regard to notice of loss, 567. waiver of defective notice, 569. when time of giving may be extended, 570. by-laws with respect to, 571. OCCUPATION, construction of clauses as to, 383—299. OPEN POLICY, 76. OTHER INSURANCE, notice of, required, 48. notice of, relates to other insurance by the insured, 48. when notice of, dispensed with, 49 note 3. IKDEX. 661 OTHER INSURANCE (continued), when prior insurance does not affect the policy, 50. when subsequent insurance does not affect the policy, 50 ei seq., 50 note 3. effect of written clause permitting, 51. clause as to amount already insured, 53. effect of a change in, 53. waiver of, 54. whether renewal of policy is obtaining, 55. vendee need not give notice of, unless, 56. effect of invality of, 57 note 3. when insurer estopped to deny notice of, 58, 60. additional insurance on goods, whether it invalidates insurance on building, 61, 63. subsequent insurance by assignees of insured, 64 et seq. when procured by mortgagee, 66. waiver of, 66. knowledge of, by insurer, 49, 109. in case of mortgagees, 397. OVER-VALUATION, effect of, 68. must be fraudulent to avoid policy, 69 note 1, 70 note 3, 75. effect of, fraudulent, 79. PAROL CONTRACT (see Instjrance, Agreement to Insure, Policy, Agents). PAROL TESTIMONY (see Policy), when admitted to vary policy, 96, 103. when admitted to correct mistakes in the execution of powers, 103—106. whether admissible to exclude a warranty, 104 note 3. when inadmissible as in other insurance, 109 — 111. when admissible to show real state of the title, 111 — 114. by agent to show what property was intended to be covered by insurance, 178. admissible to show the practice of agents, 300. when admissible as to increase of risk, 531. PARTITION, change of title by means of, avoids insurance, 480. PARTNERS, may effect insurance, when, 176. each has insurable interest, 891. sale of insured property by, effect of, 475. 42* 662 INDEX. PAET-OWNER, insurance by, 176. POLICY (see Assignment, Alienation), of insurance, what is, 17. when void and voidable, 57 note 3, 60 note 1. whether, must be in writing, 73—75. open and valued, 76, 77. ■whether transferable, 83, 481. construction of, 83--84, see p. 83 note 1. effect given to the intention of the parties, 84, on "merchandise" covers what, 85. on a "house" includes -what, 85. on a "factory" includes what, 85, 86. on a "baker's stock" covers virhat, 87. on goods "in the dwelling-house," 88. on a "steam saw-mill," 88. on a " starch manufactory," 89. on the stock in a "pork -house," 89. on a "steam flouring-mill, 89. what covered by, 90. construction of, as to manufacturing pursuits, 91—92, note 1, p. 93. on goods usually kept in a country store, 93 — 96. whether, may be varied by parol, 96 — 103. whether warranty may be excluded from, by parol, 105, 106. when to be construed accurately, 106 — 108. delivery of, not essential to complete contract of insurance, 116 —118. transfer of risk on goods so as to cover them after removal, 134. when executed subsequent to loss, 134-,-130. premium must be paid or policy inefl'ectlve, 141, 154. premium note independent of, 145. ' may extend beyond the term of the charter, 153. when delivery of, implies credit for the premium, 165. whether acknowledgment by, of payment of the premium con- . elusive, 167. takes effect from what tjme, 189. on hazardous articles, 335 — 347. when it is an entirety, 353. stipulation in, as to illegal articles, 857. stipulation respecting illegal articles may be waived, 358. void, unless there is insurable interest, 376: transfer of, to purchaser of the estate, 413. transfer of, to a purchaser under executory agreement, 413. INDEX. 663 POLICY (contimied), effect of assignment and alienation upon (see those titles). holding as collateral security, 493. made out in the wrong name, 507. avoided by acts of tenants and others, 553. when avoided by change of use, 510. avoided when property is not in the class described, 512. PRELIMINARY PROOFS, when must be furnished, 573. material mistake in, 573. insured's aflfadavit, when sufficient, 574. what may be omitted in, 575. questions for the jury and for the court with respect to, 576. not evidence per se for a jury, 576. a condition precedent, 578. how clause with respect to construed, 579. meaning of full particulars, 580. question of particularity of, for the jury, 583. particular requirements in, 585. of certificate as to loss, 586 — 593. waiver of, 593, 596. insurer bound to point out defects in, 595 note 1. effect of failure to point out defects in, 598, 599. tpaiver of proofs and notices by an agent, 599. PREMIUM, meaning of the term, 17. distinction between premium and deposit notes, 33. reinsured may cover in his reinsurance, 37. whether agreement to'insure complete without payment of, 139. when must be paid, 139. payment of, by note, 141 payment by cash, 152. prepayment of, 153 — 154, 189. oral promise of insurer's agent to pay, 154. mode of payment, 154. prepayment may be waived, 155. when delivery of policy implies a credit for, 165. whether receipt for, conclusive, 167. return of, 170—173. when paid by mortgagee, 398. payment of, by mortgagor on mortgagee's policy, 403. when rate of, test of increased risk, 530. 664 INDEX. PEEMIUM NOTES, liability of malcers of, 23, 143— 14o. cannot be treated as stock notes, 34. when liability on, ceases, 36, 146. assessments on, must be according to charter, 33. meaning of, 141. payment of premium by, 141. independent of policy, 145. eflfect of alienation upon, 150. void when policy is void, 166. PRESIDENT OF INSURANCE COMPANY, powers of, 194 — 301. RAILROADS, insurable interest of, 890, 391 note 1. REBUILDING, whether insurers have a right to rebuild, 634. measure of damages when insurer fails to rebuild, 635. when insured must contribute towards, 635. evidence by insurer with respect to, 637. insurer prevented from, 630. in case of double insurance, 631. RECEIPT, for premium, whether conclusive, 167. RE-INSURANCE, what is, 37. extent of re-insurer's liability, 38. effect of re-assured's insolvency, 39. re-insurer liable for costs and expenses, when, 40. first insured no claim on re-insurer, 40. re-inaurer may make same defence as the original insurers, 40. RE-INSURED, must disclose character of the insured, 38. must prove extent of his loss, 38. this proof may consist of the proofs supplied to him by original insured, 38. entitled to recover what he has become liable to pay, 39. RENTS AND PROFITS, insurable interest in, 383. REPAIRS, effect of, upon insurance, 533—534. INDEX. 665 REPRESENTATION, wliat is, 223—226. ■when it becomes warranty, 233 — 236. wlien application and survey treated as, 250, 351. construction of, 252—256, 387. as to nearest buildings, 270 — 381, 387. proviso as to untrue statements, etc., 382. oral promise to occupy premises, 385 — 287, 290 Tiote 3. promissory and affirmative, 386 noie 1. clauses in policy as to occupation, 387. oral, 390 note 2. descriptive and executory stipulations, 291 — 296. •whether pursuits of occupants need be disclosed, 399 — 304. ■with respect to title, 305—827. substantial truth of, 327—331. variance between verbal and written, 332 — 333. insurance on faith of assured's representation, 864. insurance on faith of examination by insurer, 365. when not required, 867. as to encumbrances, 435 — 439. RISK (see Losses), change of, 356—258. alteration of use does not affect policy, 287 — 291. descriptive and executory stipulations as to, 391 — 296. of hazardous articles, 335 — 347. knowledge of underwriters respecting, 347, 365, 367. extraordinary, not undertaken unless brought to the notice of the insurer, 368. increase of, by change of use, 510. increase of, when fatal, 514 note 1. increase of, when no warranty, 515 noie 1. increase of, by alteration, 516. by erection of contiguous buildings, 530, 532. parol testimony as to increase of, 521. when insurance officers competent witnesses as to, 533. stipulation as to giving notice of, 543 — 556. apportionment of, 610. when rate of premium test of, 530. effect of repairs upon, 533 — 534. SALE (see Alienation), of insured goods, 468—471. 666 INDEX. SECRETARY OF INSURANCE COMPANY, powers of, 194—201. assent of, to assignment of policy binds insurer, 483 notice of loss to, 557. SHERIFF) insurable interest of, 191, 380. whether bound to insure, 191. effect of levy by, on insurance, 465. STATEMENT OF LOSS, must be delivered in, 561. STOCK IN TRADE, meaning of, 93, 341. STORING, meaning of, in insurance, 388 note 3, 3^1. SUBJECT OF INSURANCE, meaning of, 17. SUBROGATION, rights of insurer with respect to, 400, 401, 647. SURVEY, meaning of, 349. vsrhen referred to in policy as representation, 250. TENANT, occupancy by, 396 note 1. change of, 297—399. •whether pursuits of, need be disclosed, 299 — 304. by the curtesy, insurable interest of, 383. sale of insured premises by co-tenant, 475. when policy avoided by acts of, 554. TITLE, representation as to, 305 — 321. when true title must be expressed, 331 — 337, 435. of mortgagee, 400. TRADES, prohibited trades and unlawful uses, 349 — 352. TROVER, will lie for policy of insurance improperly withheid, 118. INDEX. 667 TRUSTEES, whether bound to keep tip insurance of testator, 181. not obliged, but may insure, 433 — 434. effect of conveyance to, 435. USE (see Risk), change of, 510. VALUE, I goods, when estimated at their cash value, 608. criterion of cash value, 608. to be paid althou^ duties are unpaid, 609. revaluation, 615. VALUED POLICY, 76. restriction of insurer's liability on, 615. revaluation, when it takes place, 615. cannot be impeached except for fraud, 615. VENDEE, notice by, of other insurance, 55. insurance by, under executory agreement, 424. effect of agreement by, to insure for benefit of vendor, 492 note 1. when may sue on policy of insurance, 638. VENDOR, insurable interest of, 426 — 430. effect of verbal contract by, for sale and purchase, 431. executory agreement by, to insure, 486. recovers whole amount of insurance, notwithstanding agreement to convey, 618. WAIVER, of other insurance, 54, 57, 66. of condition restricting amount of insurance, 68. of prepayment of premium, 154 — 165. by operation of law, 165 — 166. by acts of agents, 165—166, 19(3—194. of answer to application, 245. of stipulation as to hazardous articles, 358. of forfeiture by reason of misrepresentation, 375. whether receiving assessments amounts to, 477. no waiver of rights without a knowledge of them, 477. of forfeiture of policy, 534. of particular account of loss, 560. of notice of loss, 567 note 4, 569. 668 iifDEx. WAIVER {continued), of defective certificate of loss, 590. of preliminary proofs, 593, 599. of delay in furnisliing proofs, 599. of proofs and notices by an agent, 600. of time when action may be brought, 636. WARRANTY (see Parol Testimony), inserted in policy by mistake, 105, 106. ■what constitutes, 236. insured only held to literal compliance, 327 — 331. proof of performance rests upon assured, 331. when application becomes, 333 — 336, 245, 346. when conditions become, 386 — 343. construction, when doubtful, whether representation or, 349. construction of cases of, 358 — 356. change of risi, 256—258. inaccurate description, 259 — 368. as to nearest buildings, 270 — 281, 287. whether insurance on a dwelling implies occupancy, 283. descriptive and executory stipulations, 391 — 396. as to title, 305—331. as to hazardous goods, 339. printed clause of, when repugnant to written, 343 — 347. when prohibition of hazardous goods amounts to, 353—354. stipulation respecting hazardous articles may be waived, 358. stipulations as to increase of risk, 524 — 530. WATCH, stipulation as to keeping, 341.