(5nrtt?U ICam f^rijool ICibtaty Cornell University Library KF 1196. W87 1886 V.I A treatise on the law of fire insurance 3 1924 019 198 401 The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924019198401 A TREATISE ON THE LAW OF FIRE INSURANCE ADAPTED TO THE PKESENT STATE OF THE LAW, ENGLISH AND AMEEICAN. COPIOUS NOTES AKD ILLUSTRATIONS. I2f TWO VOLUMES. VOL. I. By H. G. wood, AUTHOR OF "the LAW OP NUISANCES," " THE LAW OF MASTER AN1> SERVANT," ETC., ETC. BANKS & BROTHERS, LAW PUBLISHERS. NEW YORK : No. 144 NASSAU STREET, ALBANY, N.Y. : 473 AND 475 BROADWAY. /A /plS^ ^' ^ Entered according to Act of Congress, in the year eighteen hundred and eighty-six. By banks & BROTHERS, In the office of the Librarian of Congress, at Washington. }]% u)57 cl PREFACE TO FIRST EDITION. The preparation of this work was undertaken at the suggestion of several members of the profession, who assured me that there was room for a work covering the topic in its practical aspects, and adapted to the present state of the cases. I have attempted to perform this service, and discharge the duty incident thereto, fully ; and if I have failed to do so, the result is not due to any lack of effort on my part. In my division of topics, I have selected as leading ones, those that I regarded as of the most practical utility, aiid in reference to which, in- vestigation is most likely to occur. I have, in many instances, in the citation of cases, referred as well to the original reports as to Bennett's PMre Insurance Cases, as I thought this would often be found con- venient ; particularly to those who have Mb. Bennett's excellent re- ports. I have also referred to the American Reports, as they have found their way into the libraries of so many lawyers, both in this country and England, as to be entitled to recognition as a distinctive series. In numerous instances, when their importance seemed to war- rant it, I have given, in the form of notes, all that portion of leading cases bearing upon difficult and important topics, believing that this will often prove of great service to members of the jirofession who are not so fortunate as to possess a full set of the i-eports of all the States. This method has not decreased my labors, or diminished the body of the text, as it will be seen that the work is a very lai'ge one, and that it contains more tlian a third more matter than the average modern text-books. The law controlling many features of insurance contracts, has been essentially modified in the last three years. Particularly is this the case in reference to the powers and functions of agents, im- -V Preface. plied waiver, estoppel, and the scope of the risk. I have endeavored to give the very latest and freshest cases upon these points, and, as will be seen, have been able to give the gist of many important cases considerably in advance of their publication in the reports. I have labored faithfully to give the very latest phase of the law covering each topic, and to present to the profession a work, that will lighten their burdens in a small degree, and aid them somewhat, at least, in their investigation of questions , arising under the topics treated. I have endeavored to bring together the main body of the cases, and eliminate their doctrines. Of course, there are many that have been purposely omitted, because they do not express the law as now held ; while, doubtless, many others have been omitted through inadvertence, although I have endeavored to make the latter class very small. Hoping that the work may be found useful, and may tend, in a meas- ure, to lighten the burdens of those members of the profession having occasion to investigate the questions discussed, I submit it to their criti- cism. H. G. WOOD. Albant. January 22nd, 1878. PREFACE TO SECOND EDITION. In the nine years which have elapsed since this work was originally issued, a large number of cases involving questions of insurance law have been decided, and while no material changes in the rules ad- vanced in this work have been wrought thereby, yet many new ques- tions have been raised and decided, which render a new edition desira- ble ; and to meet the multifarious forms in which questions have arisen under this class of contracts, and to keep up the practical character of the work, it has been deemed advisable to issue it in two volumes, and thus save the necessity of striking out from the notes a large amount of matter which is of great value to lawyers who have not the good for- tune to possess a full line ot reports. I have the satisfaction of know- ing, that upon some leading questions, this work has had a marked in- fluence with the courts, and has helped somewhat to soften and har- monize the sharp conflicts of doctrine that at one time existed upon some important points relating to this branch of the law. It would be an easy matter for insurance companies to devise policies which, while they would more carefully protect their interests than those now in gen- eral use, would also at the same time protect the interests of the assured. There is no reason why organizations v/hose purpose is so beneficent, and so essential to the manifold business interests of the country, should not be popular with the people, except the circumstance that by their con- tracts, and by the litigious conduct of some of them, they have created a feeling in the minds of the people that they are constantly attempt- ing to overreach and cheat their unwary patrons. I do not believe that many of these companies are actuated by any such motives, but rather, that they have adopted their form of contracts under the VI Pbeface. impression that these conditions are necessary to protect them against fraud on the part of the assured, but as a result of this course the courts are compelled to look for reasonable grounds upon which to defeat the unjust operation of their contracts, instead of giving to them the effect which is given to ordinary contracts. The doctrine of waiver, and estoppel, is invoked in nearly every case in which these companies are parties, and in a great majority of instances is very justly made an effectual agent in defeating them. Where an insurance company issues a policy on a " woollen mill and machinerj'," knowing that it is being operated as such, and at the same time incorporates a condi- tion into its policy, which, if given effect, would defeat a recovery in case of loss, if the mill was in fact operated, there is such an evident inconsistency between the subject matter of the contract, the surround- ing circumstances and the contract itself, that the courts would not be justified in giving to the contract a literal construction. And yet, in a great majority of cases this conflict between the contract and the nature of the risk is as sharply defined, as in the case stated. All this could be easily avoided, and it is surprising that these companies do not take the necessary steps to avoid it, and jjut their contracts upon such a basis that the courts will be compelled to interpret them accord- ing to their letter and spirit, and so that the true intent of the contract will be effectuated. H. G. WOOD. 140 Nassau St., New York, May ls<, 1886. TABLE OF CONTENTS. (FOE EXTENDED TABLE OF CONTENTS SEE VOL. U.) CHAPTER I. FiEE Insukance — Pahol Agebement foe 1—90 CHAPTER II. The Policy, Risk aj^d its Incidents 90 — 347 CHAPTER III. Application, Waeeanties, etc 348 — 421 CHAPTER IV. Peomissoey Waeeanties — What aee 422 — 458 CHAPTER V. Waeeanties and Repeesentations 459 — 503 CHAPTER VI. Miseepeesentation and Concealment 504 — 577 viii Table of Contents. CHAPTER VII. Alteration or Change of Risk 578 — 611 CHAPTER VIII. Insurable Interest, Who may be Insured. . . 612 — 694 CHAPTER IX. Alienation 695 — 152, THE LAW OF FIRE HSrSURANCE. Sec. 1. Sec. 2. Sec. 3. Sec. 4 Sec. 5. Sec. 6. Sec. 7. Sec. 8. Sec. 9. Sec. 10. Sec. 11. Sec. 12. Sec. 13. Sec. 14. Sec. 15. Sec. 16. Sec. 17. Sec. 18. Sec. 19. Sec. 20. Sec. 21. Sec. 22. Sec. 23. Sec. 24. Sec. 25. Sec. 26. Sec. 27. Sec. 28. Sec. 29. Sec. .30. Sec. 31. CHAPTER I. FIRE INSURANCE. Who may be insurers. Contract, one of indemnity. STature of the contract — leading characteristics of. Contract need not be in writing. Contract must be complete. Elements requisite to establish complete agreement. Effect of failure to notify applicant of rejection of the application. When company is left discretionary with agent. As to powers of agent to bind company. Distinction between contracts for insurance and to insure. Agreements to insure will be enforced in equity. Equity will compel specific performance. How proved. All conditions precedent must be complied with. Plaintiff must establish contract — binding receipts. Policy may be renewed by parol. Burden extends to showing authority of the agent. Application and acceptance of risk by mail. Liability may exist, where property is destroyed, when contract is made. Acceptance of risk binds company ; what constitutes. When notice of acceptance is placed in the mail, the risk attaches. When policy is conditionally delivered. When conditions precedent are imposed on assured. Substitution of policies. When company is not agreed on. When presumptions come in aid of the insurer. May be complete contract when rate is not agreed on. Pre-payment of premium not always essential ; may be waived. Usage to collect premiums when policy is delivered ; effect of. Payment of premium not essential unless required. Agent to whom policy is sent, bound to deliver. 1 2 FiEB Insurance. Sec. 32. Policy not absolute evidence of contract, unless delivered and accepted. Sec. 33. Insurer bound to make policy conform to agreement—cannot impose different contract on assured. Sec. 34. Insurer must execute contract although mistaken as to value. Sec. 35. Omission of formalities in policy does not defeat it. ■Who may be insurers. Section 1. Any person, by the common law, may be an in- surer, and may enter into a valid contract to indemnify another against loss from any cause, unless prohibited from so doing by some positive law, or because it contravenes public policy. Thus, an individual, for a legal consideration, may contract to indemnify another against the loss of a debt, from the dishonesty or negli- gence of a servant, from fire, from accident, from the perils of the sea, or indeed from any cause, when the contract is not prohibited by positive law, or when it is not malum in se.' Indeed, formerly the business of insurance was done by individuals or firms, and the contract was by parol, the assured trusting to the integrity of the insurer to carry out in good faith the terms and conditions of his agreement. And that this was generally done, is evidenced by the fact, that, until within the last century, very little litigation, growing out of insurance contracts, was indulged in. But at the present time the business of insurance is generally, indeed we may say entirely, done by corporations, created and formed for that purpose, who assume the position of insurers, while those con- tracting with them for indemnity take the place of- the assured. Insurance companies exist for many purposes, generally confined to a particular class of casualties, as life insurance, marine, accident, fire, etc., although they sometimes unite the whole in a single company. The same general principles control in reference to the liability of the insurers, and the rights of the assured, against whatever casualty indemnity is contracted for, except so far as the same are modified by the subject-matter, peculiar usages and customs, and the contracts themselves. In this work we propose to deal only with contracts of fire insurance, although cases arising under other branches of insurance will often be cited, to sustain a principle common to all. An insurance com- pany can enter into a valid contract to insure only against such casualties as it is authorized to insure against, by its charter or the articles of association under which it is formed. Thus, cor- 1 Park on Insurance, p. 5 ; Angell on Insurance, 48. Who may be Insured. 3 poration, authorized by its charter to insure against casualties from iire, alone, cannot enter into a valid contract oi insurance against ■" the perils of the sea," against " accident," or other casualties, but is restricted to the class of hazards against which, by the law under which it exists, it is authorized to transact the business of a,n insurer. Therefore it follows that the contracts of such com- panies are only valid and binding upon the corporation when they :are inter vires, and are absolutely void when they are ultra vires, -or in excess of the powers of the corporation.^ The question, as to whether a contract of insurance is inter vires or otherwise may often arise under policies ; and, in determining this question the charter articles of association, and the general laws applicable thereto, are the only touch-stones by which the question of au- thority can be tested and ascertained. How far the charter of a com- pany can be regarded as modifying the terms or conditions of the ■contract of insurance, or as imposing conditions upon the assured, depends largely upon the circumstance whether it is a public or j>rivate statute. If, in terms, it is made a public act, the assured is bound to know its terms and provisions, and ignorance thereof will not excuse him ; ^ but, if it is a private act, he is not bound to know its provisions, and is not affected thereby, except they are specially referred to and made a part of the policy, or are specially recited in the policy itself. It may often be important, in determining the liability of an insurer, to keep this distinction in mind. As in cases where the charter of a company provides that the application, survey, etc., made by the assured, shall be a a part of the policy, the question whether they are so or not may depend entirely upon the question whether the act creating the company is public or private. If the former, the assured is bound to know its provisions, and the contract embraces not only the policy, but the papers made a part thereof by the law creating the company. If, however, it is a private statute, the policy alone expresses the contract, and the application, survey, etc., are no part of the contract, unless expressly referred to and adopted as 'An insurance company is not estopped from setting up the fact tliat a con- tract of marine insurance made through its agent is ultra vires, though its agent had led the other contracting party to beheve, and he did believe, that tl e com- -pany had power to make it, and though no pretense was set up by the company or its agent that the contract was ultra vires until a loss thereunder was known by all parties to have occurred. The company cannot be bound by coiilract which it ]ias no legal authority to make, and the assured is presumed tn know ihe extent ■of its statutory authority. Webster v. Buffalo Ins. Co., 7 Fed. Eep. 399. 2 III. etc., Co. V. Marseilles Mfg. Co., 6 111. 236. 4 FiBB Insurance. such ; or, as is required in some States, unless they are embodied in the policy itself: These general remarks will be fully illustrated under proper heads in succeeding chapters. There are two classes of companies — stock and mutual. The former take the entire risk, and assume the entire liability, and the assured is not bound to know the condition of their charters; while in the latter, the assured becomes a member of the company, and liable to contribute to the payment of all its losses, his own included, and is bound to know, not only the conditi*is of its charter, but also of its by-laws.^ Contract one of indemnity. Sec. 2. Fire insurance is a contract entered into between the parties thereto, by which one party — the insurer — undertakes, for a certain consideration, to make good to the other party — the insured — such loss or damage as he may sustain from an injury to, or destruction of, certain property specifically provided for in the contract, by fire, to an extent not exceeding the amount stipulated in the contract itself.'^ The consideration received ' Satterthwahe v. Ins. Co., 14 Penn. St. 893 ; Ehinehart v. Allegany, etc., Ins. Co., 1 Perm. 332 ; Liscomb v. Boston, etc., Ins. Co., 9 Met. (Mass.) 205 ; Abbott v. Hampden, etc., Ins. Co., 31 Me. 2.52; Susquelianna Ins. Co. \. Perrine, 1 W. S. (Penn.) 348; Mitchell v. Lyoming Ins. Co.. 51 Penn. St. 402 , F. Ins. Co. v. Mayor, etc., 8 Barb. (N. Y.) 450; Diehl v. Adams Co., etc., Ins. Co., 59 Penn. St. 443. But lie is not bound by any by-law that conflicts witli the charter, Gi-eat Falls, etc., Ins. Co V. Haney, 45 N. H. 292. Nor is he a member of the company unless he gives a deposit note. If tlie company accepts a gross sum in cash for his premium, he stands in the same relation that he would to a stock company, unless the charter provides otherwise. III. Ins. Co. v. Stanton, 57 111. 354. An insurance policy is a contract of indemnity, and in the absence of any thing to the contrary in the contract, or in the course of dealing between the parties, covers the entire proprietary interest of the assured. A policy upon whisliy in bond, without reference to the government tax, entitles the assured to include the tax in his recovery, in case of loss, if the assured is liable for the tax. Hedger v Union In- surance Go.,11 Fed. Rep. 498. 2 " Insurance is a contract by which a person, in consideration of a gross sum, or of a periodical payment, undertakes to pay a larger sum on the happening of a particular event," Smith's Common Law, 299 ; " a contract whereby, for a stip- ulated consideration, one party undertakes to indemnify the other against certain risks," 1 Phillips on Insurance, sec. 1 ; " by our law, it is regarded as a guarantee or contract of indemnity." Addison on Contracts, Phil. Am. Edn. 5.5.3, " a wager," says CoLBBiDGB (afterwards judge), in his argument in Patersonv. Powell,^' Bing. 322, " is a contract for the payment of an absolute value ; but a policy of insurance is essentially a contract of indemnity ; for every policy of insurance must insure something or person ; from some risk to which that thing or person is liable. That IS, must indemnify the assured from the consequences attendant on the happening of that risk ; and the risk insured against ought to be one in which the insured has an interest." « Mr Pmi.LiPS, in Iiis every excellent work upon Insurance, vol. 1, sec, 4 savs : As to the essential part of this contract, it does not differ from a bond of indem- nity, or a guaranty of a debt, since the obligor takes upon him certain risks t» which the obligee or creditor would otherwise be exposed. The only difference is m name, and the form of the instrument." ' The contract of insurance," says Ellswoeth, J., in GlendaleMfg. Co. v. Pro- CONTBACT AN INDEMNITY. 5 therefor is denominated the premium and the instrument that evidences the contract is denominated the policy. The term policy seems to have been derived from the Italian vford poliza, which signifies a schedule and security, and has been adopted into our legal nomenclature by various statutes, and indicates a contract or security against loss or damage from casualties named therein. The system of fire insurance now existing, is of comparatively modern origin, and a legitimate outgrowth of marine insurance, and in many respects, indeed, in all respects so far as applicable, is governed by the same general principles — the distinction, so far as there is any, arising from the difference in the contract, the nature of the risks, and certain special usages and customs that have grown up and identified themselves with marine insurance. This species of insurance was received with great disfavor, in early days, upon the ground that it encouraged carelessness on the part of property owners, and induced such a relaxation of care and diligence in the protection of property as operated disastrously to the public generally. It appears from Pothieb^ that it was not introduced into Paris until 1754, when a marine insurance com- pany obtained permission to make insurances against fire. But that author informs us that it was but little resorted to at the time when he wrote. But in England it was in use at a much earlier date, and Mr. Makshall, in his Treatise upon Insurance,^ informs us that it was in use there considerably over a century teetion Ins. Co., 21 Conn. 31, " Is a contract of indemnity upon the terms and conditions specified in ttie policy of insurance, * * Tiie insurer undertalies for a comparatively small premium to guarantee the insured against loss or damage upon the exact terms and conditions ar/reed upon, and no other." Pothibr, in his ■' Contrat d' Assurance," No. 4, calls it a species of contract of sale, the assured being the vendors, and the assurer the vendor, and the thing sold is the risk at- tached to the thing insured. And different authors have given various, and entirely different definitions of the terra and tlie nature of the contract, some de- scribing it as a partnership, others as a mandate, and still others as a contract of letting and hiring ; and it may justly be said that by a process of subtle reasoning, either one of these definitions may be quite plausibly sustained ; but, wliatever may be the recognized nature of the contract elsewhere, by our law, it is regarded as a contract of indemnity, by which one party, for a legal consideration, under- takes to indemnify the other against loss from casualties within the scope of the risk assumed. But there are Instances in wliich the contract assumes a different character, and becomes something more than a mere indemnity, as will be seen by reference to matters liereafter stated in the text. It is believed, however, that the class of cases in which the effect of policies has been so extended, are wide departures from principle, and that the interests of both the insured and the insurer would be better protected by a strict adherence to the doctrine that such contracts are mere contracts of indemnity, personal in their character, and not available except to the insured himself or those holding the contract by proper assignment. 1 Contrats d'Assurance, 3. ■2 Page 681. 6 FiEE Insurance. before he wrote, which was in 1802, and that, notwithstanding the heavy stamp duties imposed on such insurances, it had been, brought into very general use. Indeed, he says, " I might almost have said, into universal use, particularly in London and other cities and large towns." And at the present time, in this country a man is regarded as exceedingly improvident and reckless, if he neglects to protect himself, by an insurance upon his property against loss or damage by fire. Thus it will be seen that, in spite of the burdens imposed upon the insurance companies of this class by the government ; in spite of the hostility of wiseacres who seemed to think that the whole world would be destroyed by fire,, if this species of insurance was encouraged, it has now come to be regarded' as one of the most efficient aids to business, and a beneficent institution that is indispensable to the healthy growth of cities and towns, and the development of industrial interest. Few people would be inclined to risk the capital essential for the ' As illustrative of the views entertained in reference to these institutions in the early part of the present century, I copy the remarks of Mr. Marshall in his Treatise upon Insurance, p. 681. He says : " I do not find, however, that this species of insurance is much in use in other countries. It was not till the year 1754 that it came into use at Paris. In that year, one of the companies instituted there for marine insurances, obtained from the government permission to make insur- ances against fire. But they have never, as Pothier infoi-ms us, become general even at Paris. In Holland, though insurance against fire is not altogether un- known, few people seek its protection ; perhaps because the people of that country can rely so much on their own caution, that they think it unnecessary to pay for any greater security. Indeed I have heard it confidently asserted, by persons well acquainted with the cities both of London and Amsterdam, that after making all fair allowances, there is, upon an average, more property destroyed by fire in the former in one year, than in the latter in seven. " It cannot be denied that this species of insurance affords great comfort to indi- viduals, and often preserves whole families from poverty and ruin. And yet it has been much doubted, by wise and intelligent persons, whether, in a general and national point of view, the benefits resulting from it aie not more than coun- terbalanced by the mischiefs it occasions. Not to mention the carelessness and in attention which security naturally creates ; every person who has any concern in any of the fire ofiices, or who has attended the cotirts of Westminster for any length of time, must own, that insurance has been the original cause of many fires- in London, with all their train of mischievous consequences. " On the other hand, the advocates for this species of insurance, though they admit it to have been sometimes the cause of intentional fires; yet they insist, that even as a national concern, the benefits vastly outweigh the mischiefs which pro- ceed from it. And when we recollect the precautions used by the different insur- ance companies, to prevent the spreading of fires, by providing a number of fire engines, which are kept in constant repair, and fit for immediate use, not only in all parts of the metropolis, but in every other considerable town in tlie kingdom ;. — by keeping in constant pay, a number of engineers and firemen, expert in ex- tinguishing fires, and porters for the removal of goods; — by employing a number of these in patrolling the streets at all hours of the night, in constant readiness to- fly to the spot from whence any alarm of fire may proceed. When we recollect tliat the courage, promptitude, and address of these people often stop tlie prog- ress of the most dangerous fires, and thereby rescue many valuable lives, and im- mense property from destruction — when these benefits, I say, are fairly considered, it is impossible to deny that they generally outweigh all the disadvantages that can be put in the opposite scale." Paeol Agkbembnts fob. 7 erection, maintenance and equipment of large manufacturing establishments, and the bringing together of the large amount of stock and property essential to keep them in operation, unless the protection afforded by these institutions could be made avail- able. Indeed, the credit, required in the prosecution of nearly all mercantile, manufacturing or other business where the capital employed by the owners is exposed to the hazards of fire, could not be obtained without, and is almost universally made depen- dent upon, the proper protection of the creditor, against this species of hazard and loss, by proper insurance. So that to-day, after more than a century of bitter opposition, both from the government and the people, these institutions, instead of being regarded as of doubtful and dangerous tendency, have come to be recognized not only as beneficent, but really indispensahle, and no greater calamity could befall any civilized country, than to be deprived of the advantages which these companies afford. Therefore they should be, as they are, regarded with favor by the courts, and afforded all the protection in the prosecution of their business, that is accorded to individuals.' The contract is largely, one resting upon the integrity of the insurer. Indeed it may be said to be the main reliance of the assured. Applying the strict rules of law, the instances are, perhaps, few, if proper objections are- taken, in which a recovery could be had upon ordinary policies. But it is a refreshing fact, that generally these companies conduct their business with a fair regard to the rules of morality and fair dealing and do not resist losses when the case is free from suspicion, upon merely technical or legal grounds. To do otherwise, tends to destroy their credit among business men, and to so impair their business that the loss to them is more serious than losses under their policies. Blackbtien, J. in a recent case before him," in which the insurer availed himself of his own neglect in omitting to stamp a policy, very aptly said : " When the history of this case is published it will frighten foreign houses from English business, and the statute will thus turn out impolitic, as well as harsh. And there appears to have been no desire to cheat in this case ; there was merely a mistake resulting in a loss to the revenue of some four or five shillings ; however, ' For a history of the origin and development of insurance, see " Beekman's History of Inventions." Tit. Insurance, also Anderson's History of Commerce, vol. 2, p. 102. ' Sassoo V. Harris. L. T., January 22, 1876, p. 216. 8; FiBB rcfSUEAifCE. the loss would be the same if the loss were a three-pence only. The legislature has enacted that the whole benefit of the insurance shall be lost in such a case. The penalty is wholly disproportion- ate, and the principle impolitic as well as immoral, for it holds out inducements to mean men to take mean advantages, and makes those who pass the law, guilty of the immorality of it." In an earlier English case ^ Bullbk, J., says : " The time was when no under- writer would have dreamed of making such an objection. If the solicitor had suggested a loophole by which he might escape he would have spurned the idea. He would have said : Is it not a fair policy ? Have I not received the premium ? And shall I not now, when the loss has happened, pay the money ? This would have been his answer and he would immediately have ordered his broker to settle the loss." In the case first named, immediately after Blackbtjkk, J., had delivered his judgment, the insurer sent for the plaintiff and adjusted the loss. The instances are rare in which a respectable insurance company will take a mean advantage of a policy holder, even though the law may warrant it ; but, in cases free from suspicion, or real, substantial defenses, will pay the loss although upon technical or trivial grounds the law would shield them from liability. Nature of the contract — leading characteristics of. Sec. 3. The contract is usually, although, as will be seen here- after, not necessarily, evidenced by a written or printed instru- ment, called a policy, and when a policy has been issued and accepted by the insured, he becomes bound by all its terms and conditions, unless they are contrary to the express provisions of the statute, or are in defiance of the principles of a sound public policy. "The parties," say the court, in a New York case,^ " may insert what conditions they please in a policy, provided there be nothing in them contrary to the criminal law, or public policy." But, it must be remembered that, in order to be obligatory upon the assured, the conditions must be assented to by him; and, while the acceptance of a policy with conditions written or printed therein is prima facie evidence of his assent thereto, yet, he is not thereby in all cases estopped from showing that he never in fact gave his assent to them. Thus, where the policy refers to papers ' Wolffs. Hardcastle, 1 B. & P. 3. 2 Beadle v. The Chenango, etc., Ins. Co., 3 Hill (N. T.) 161. Parol Agreements fob. 9 dehors the policy itself, as to an application or survey, and adopts it as a part of the contract, the insured may show that he never executed such papers, or authorized their execution,^ or that the matters therein stated are erroneous or incorrect, and were written by the agent of the insurer, to whom a correct statement was made,2 or that he signed the papers in blank and correctly stated the nature of the answers that should be made, and the agent of the insurer erroneously or fraudulently wrote incorrect or un- ^ Denny v. Conway, etc., Ins. Co. 13 Gray (Mass.) 491. 2 An exception is made in favor of the assured, where he correctly states the nat- ure, character, extents and incidents of the risl::, to the insurer or his agent, when insurance is applied for, and in such cases, even though the policy contains provi- sions inconsistent with the real condition and incidents of the risk, he may, at least in those states where courts of law also have equity powers, show the knowledge of the insurer, as to the true condition of the risk before the policy issued, to defeat the operation of such inconsistent conditions. Ins. Co. v. Wilkinson. 13 Wall. y a writing. No statute of Massachusetts contains such a requirement. Upon principle, therefore, we can find no authority in courts to refuse to enforce an agreement which the parties have made, if sufficiently proved by oral testimony.' This decision, being directly in point, and being made by the highest court of the State where the present contract was made, is entitled to the highest considera- tion. The Court of Appeals of New York held the same doctrine in 1859, in the <;ase of The Trustees of the First Baptist Churchy. Brooklyn Fire Ins. Co., 19 N. T. 305. Judge Comstock, delivering the opinion of the court, after briefly and accurately stating the history of policies of insurance, in regard to this point, says : ' The contract, as I have said, had its origin in mercantile law and usage. It has, Tiowever, become so thoroughly incorporated into our municipal system, that a ■distinction which denies the power and capacity of entering into agreements iu the nature of insurances, except in particular modes and forms, rests upon no foun- dation. The common law, with certain exceptions, having regard to age, mental soundness, etc., concedes to every person the general capacity of entering into con- = In Angel v. Hartford Ins Co., 59 N. Y. 171 ; 17 Am. Kep. 322, the plaintiff en- tered into an agreement with the agent of the defendant company to insure his "building for $1,000, for three years, for the sum of $30, and to make out and deliver a policy, the premium to be paid when the policy was deUvered. The agent did not make out the policy, and the premises having been destroyed by iire, the plaintiff -tendered the premium and demanded a policy. The defendant refused to execute or deliver the policy, and action was brought to recover for the breach of the con- tract to insure, and the court held that the measure of the recovery was the actual loss not exceeding the sum agreed to be insured. Grovee, J., in delivering the opinion of the court, said: " The counsel for the appellant is mistaken in suppos- ing that the action was based upon a parol contract of insurance for three years. There was not sufficient evidence to show that Carpenter was authorized to make such a contract by the defendant. It was alleged in the complaint, and the testi- mony tended to prove, that a preliminary contract was made by which it was agreed 16 Fire Insurance. Contract must be complete. Sec. 5. In order to make a yalM contract of insurance several things must concur. First, the subject matter to which the policy is to attach, must exist ; Second, the risk insured against ; Third, the amount of the indemnity must he definitely fixed ; Fourth, the dura- : tracts. This capacity relates to all subjects alike, concerning which contracts may- be lawfully made, and it exists under no restraints in the mode of contracting, except those which are imposed by legislative authority. There is nothing in the nature of insurance whicii requires written evidence of the contract. To deny, therefore, that parol agreements to insure are valid, would be simply to affirm, the incapacity of parties to contract where no such incapacity exists, accord- ing to any known rule of reason or of law.' Kelly V. Commonwealth Ins. Co., 10- Bosw. 82. We have been referred to the case of Cockerill v. Insurance Co., IS Ohio, 148, in whicli it is held that a parol contract of insurance is not recognized as valid by the commercial law, but must be expressed in a written policy. We have also been referred to Duer on Insurance, p. 60, and to Miller on Insurance, p. 30; which are to the same purport as the Ohio case. On examination of the books on maritime law, on which these authorities rely, we find that the re- quirement of a written policy, though almost if not quite universa^ in maritime codes, is always by positive regulation; and we find those regulations as far back as the subject of insurance is discussed or legislated upon. But while this is true, the considerations referred to by Judge Comstock, in the New York case last cited, are unanswerable. And the numerous cases in which a parol contract for a policy of insurance has been sustained, are conclusive that there is nothing in the nature of the subject whicli renders it insusceptible of a parol agreement. And while a. statutory regulation requiring a writing may be very expedient, in the absence of such a statute it cannot be held that a parol insurance is void." Not only is a. parol contract /or insurance, but a parol acceptance of a proposal for insurance is a valid contract, in the absence of any statute prohibiting it. Com'l Mut. Ins. Co. V. Union, etc., Ins. Co., 19 How. (U. S.) 318 ; Kohne v. Ins. Co., 1 Wash. C. C. (U. S. ) 93. And tliough the charter of the company requires the contract to be in. writing, equity will enforce a parol contract to insure. Constant v. Alleghany Ins. Co., 3 Wall. Jr. (U. S.) C. C. 87. that the defendant should insure the plaintiff upon the property against damage by fire, for a sum and at a rate agreed upon, for the term of three years from the time of making the contract, and that a policy of insurance should shortly there- after be made out, to take effect from that time, and delivered to the plaintiff by Carpenter, at which time it was agreed the premium should be paid. It was proved that Carpenter was the agent of the defendant, with authority to negotiate contracts of insurance in its behalf, agree upon tlie rate of premium, the terra of insurance, and, in short, to agree upon all the terms of the contract. That he was furnished with policies executed in blank by the president and sec- retary of the defendant, with authority to fill up and deliver the same to any party with whom he made a contract. This aixlhorized him to make a preliminary contract, binding upon the defendant, to be consummated by filling up, and delivering a policy pursuant thereto. The case comes directly within the principle upon which Ellis v. The Albany City Fire Ins. Co., 50 N. T. 402; S. C., 10 Am. Rep. 495, was decided by this court. The question whether suoli an agent was authorized to bind his principal by such a contract was fully considered in. that case. The only distinction between that and the present is, that in that case,, the premium was paid to tlie agent at the time of makingthe contract, and had been paid to the company, wliile in this, credit was given therefor until the policy should be delivered. This has no effect upon the validity of the contract. Trustees, etc., V. The Brooklyn Fire Ins. Co., 19 N. Y. S05; Audubon v. The Excelsior Insurance Co., 27 id. 216. A recovery of the amount insured was proper in the action for the breach of the contract. Ellis v. The Albany Fire Insurance Co., and cases cited, supra. The private instructions given by the defendant to Carpenter, by which he was to regulate his conduct in the transaction of the business, were not known to> the plaintiff, or her agent, and could not therefore affect the rights of the parties."' Parol Agkebments foe. 17 tion of the risk ; and Fifth, thepremium or consideration to he paid therefor must he agreed upon, and paid, or exist as a valid legal charge against the party insured where payment in advance is not apart of the condition upon which the policy is to attach. The ab- sence of either or any of these requisites is fatal, in cases where a parol contract of insurance is relied upon.' In order to make a contract of insurance, or an agreement to insure, binding and ob- ligatory, these elements must concur, otherwise it will have no validity, because indefinite, uncertain and vague,^ the minds of the parties have not met, and no agreement exists.^ 1 Tyler w. New Amsterdam, etc., Ins. Co., 4 Eobt (N. T.) 151 ; First Baptist Church V. Brooklyn Ins. Co., 28 N. T. 153 ; McCulloch v. Eagle Ins. Co., 1 Pick. (Mass.) 278. ^Frrst Baptist Church v. Brooklyn Ins.Co., ante. In Strohn v. The Hartford F. Ins. Co., 37 Wis. 625; 19 Am. Rep. 777, the plaintiff claimed to recover under a parol contract to insnre under the following circumstances. He called upon the agent of the defendant for insurance upon tobacco, three several times, and upon these three several contracts he claimed a recovery. The fact, as well as the rule adopted, will be found in the opinion of Cole, J., which I give, because it will often be found useful to the profession. He said: "The court below nonsuited the plaintiffs upon the ground that, as there was no time fixed for the expiration of the policy or continuance of the risk, no complete contract of insurance was en- tered into between the parties. The correctness of this view of the case is the main question before us; for, if sustained, it ends the cause. The complai]it states three separate parol agreements for insurance, made by H. N. Comstock for the benefit of himself and the plaintiffs, with O. .1. Dearborn as agent of the defendant company. These agreements, as set out in the complaint, are explicit and definite as to the amount insured, the continuance of the risk, and the rate of premium to be paid. And did the proof in regard to the contract come up to and sustain these allegations, there would be no doubt as to the plaintiff's right to recover under the former decision. Strohn v. The Hartford Ins. Co., 33 Wis. 650. But it seems to iis that the proof fails to show a valid contract of insur- ance. The verbal arrangement relied on to show a contract was in substance this: Comstock, who effected the insurance, if any contract was made, testified that in the spring of 1872 he contemplated establishing a tobacco warehouse for the storage of tobacco, and, when ready to receive it, and when he had received some, he went to Dearborn in relation to insurance. He told Dearborn that he had received some tobacco in his warehouse, and had advertised to receive and store tobacco for other parties, and keep it insured and sell it, or hold it subject to the order of the owners, as the case might be, and that he wanted to effect some in- surance. He says that Dearborn told him that an open policy would be best; the amount perhaps would be increasing or diminishing as time passed along, and he thought it would not be best to issue an ordinary policy of insurance, specify- ing the amount for a specified time, but that the witness had better have what was called, in insurance parlance, an open policy, allowing the amount to be increased or diminished as witness thought proper. Before the conversation closed, the witness said to Dearborn : ' Insure me $400. * * Insure JS400 on tobacco in my warehouse, belonging to me, and held by me in store for others. * * Finally he said he would give me $400 insurance in the Hartford in that way. * * Finally he said he would give me $400 upon any tobacco I had then in the warehouse ; I asked him what per cent. ? He said IJ. I said, ' All right; how about the pre- mium being paid?' Well, he said he didn't know how much it would be, be- cause we didn't either of us know how long the insurance would continue on that amount; and he said, ' I will call on you when I want thepremium; you can pay me when I call for it.' I said, 'AH right.' This is all that was said in regard " McCulloch V. The Eayle Fire Ins. Co., ante. 2 18 FlKE IWSUEANCE. Elements requisite to establish completed agreement. Sec. 6. In this class of contracts, as in all others, the contract must be definite and certain, and the parties must have agreed to the first contract, made on the 23d of April. On the 3d of May, the witness tes- tified that he went to Dearborn and said to him, ' that I wanted $1,500 more insur- ance on tobacco in the rink or warehouse; he said, 'Put it in the same open policy as the other; ' and I said, ' That will be satisfactory to me, with the same premium, yes, sir.' I asked him if that was all right. He said, ' Yes, make it the same as the other.' The conversatioa in regard to the third agreement was sub- stantially the same as that in respect to the second, except the witness did not re- member whether at that interview anything was said about the payment of pre- mium; but he testified that Dearborn said ' he would make the entries and issue a policy in proper time, or he would give me a policy; or would make out the papers.' In the conversation, when anything was said about payment of the pre- mium, the witness said tliat Dearborn told him he would call upon him for it when he wanted it; witness tendered no money, but said he would pay it if Dearborn wanted it. ' His excuse was, that he did not know exactly how much to take, and he would not take it just then.' And tlie witness closed his testimony witli the statement that ' there was nothing said between me and Dearborn as to how long this insurance should run.' This is really all the evidence in relation to the several contracts set out in the complaint; and, it seems to us, it fails to show that the negotiations resulted in a valid agreement, or that the parties came to an un- derstanding upon all the material conditions of the contract. The amount of pre- mium to be paid, and the continuance of the risk, are not agreed upon, nor is there any stipulation in the agreement from which these important elements of the con- tract could be fixed and determined. The rate of premium and continuance' of policy are certamly important terms in a contract of insurance. Perhaps a contract which either party could terminate at any time by a notice to the other, might be a valid contract, as intimated by Comstock, J., in Trustees of the Baptist Church V. Brooklyn F. Ins. Co., 19 K. Y. 805, until the notice was given. However this may be, the general rule is , that to constitute a valid contract of insurance, the minds of the parties must meet as to the premises insured, and the risk; as to the amount insured ; as to the time the risk should continue; and as to the pre- mium. Same case in 28 N. T. 153. Where parties verbally agreed upon all the terms of the insurance except the rate of premium, and a previous insurance was referred to in the conversation, upon the same kind of property in the same place as the property sought to be insured, nothing being said about any change of rate, it was held to be a fair inference of fact that the rate was to be the same as that paid for the previous risk, and that the minds of the parties met upon that amount. Audubon v. Excelsior Ins. Co., 27 N". Y. 216. In Kennebec Co. v. Augusta Ins. Co., 6 Gray, 204, where, under an open policy of insurance on property on board a vessel from New Orleans to Boston, the cotton was insured for the voyage, and also in addition, against fire from the time of its deposit in a warehouse until it was shipped, the objection was taken that the agreement fixed no certain time when the risk was to commence or terminate. But the court held that the risk commenced the day the cotton was first put in store by the plaintiffs at New Or- leans, and that the termination of the whole risk, which included both the hazard of fire on shore and the perils of the sea on the voyage to be performed, was to be upon the safe arrival of the cotton at Boston, the place of its ultimate destination. In marine insurance, where a cargo is insured for a particular voyage, the policy ' to continue on the property until landed ' {Mansur v. New England M. M. Ins. Co., 12 Gray, 520), tliei-e is no difficulty in determining when the risk terminates. In Walker v. Metropolitan Ins. Co., 56 Me. 371 where the evidence showed an application for a builder's risk, and a permanent yearly risk for a given amount, and that though no specific premium was agreed upon, yet it was understood that ■the amount of premium should be deducted from the sum due the plaintiff from the defendants, the court said enough was done to make a complete contract of insurance. But all these cases, and others of the same character which might be cited, are manifestly in their features distinguishable from the one before us. Here Comstock says the rate of premium was to be Ij per cent. ; yet this, it is admitted, had reference to the annual rate. But the more serious defect in the contract is, that no time was fixed for the continuance of the risk. Suppose a bill in equity Parol Agreements poe. 19 Tipon all its essential terms. If anything has been left open, no contract exists, because the minds of the parties have not met, and there is not an agreement that can be enforced by either party, and both parties must be bound, the one to insure, and the other to pay the premium.^ If anything is left open or undetermined, so that the minds of the parties have not met, no contract exists, and consequently no liability for a loss occurring.^ As where the rate of premium is left undetermined,^ or the time when the policy shall attach,* or had been filed, as is sometimes done, to specifically enforce the performance of the ■contract to issue a policy. How could the court determine the essential ■elements of the contract which it was called upon to enforce ? How long was the risk to continue, one month, two months, six months, or a year ? All is uncertain and indefinite upon that point. Again, suppose the company had "brought an action to recover the premium due on the contract: how much could it have claimed and recovered ? It seems to us it is impossible to say. The prop- erty was destroyed on the 21st of May, and it is assumed that this was tlie termi- nation of the risk. But suppose the property had been destroyed a month later, or not destroyed at all, what then would have been its termination ? Ihese tests clearly show, as it appears to us, that while the parties negotiated about insur- ance, still they did not agree upon all the terms, and that no contract was ever completed so as to become binding upon them. For this was a case in which the ■duration of the risk might and should have been fixed. It was not one where the period was left indefinite, as it is in a voyage policy. It is true the parties speak •of the policy as an " open policy." Precisely what meaning they attached to these words is not readily perceived. Mr. May, in his work on Insurance, defines an •open policy to be one in which the sum to be paid as an indemnity, in case of loss is not fixed, but is left open to be proved by the claimant in case of loss, or is to he determined by the parties. §30; Angell on Fire and Life Insurance, § 253. In Watson v. Swann, 103 E. C. L. 755, such a policy is spoken of as a " running policy; " hut we do not understand that such policies leaves the duration oftherisk indeflnite. There are elements by wliich tlie continuance of the policy can be ascertained. * * The continuance of tlie risk is an important element in deter- mining the rate of premium; and how can the company fix its rates when that "factor is left entirely indeterminate ? A parol contrar.t of insurance indefinite as to time, and as to rate of premium, is, as it appears to us, incapable of enforce- ment." 1 Train v. Holland Purchase Ins. Co., 62 N. Y. 598. 2 Seal Estate Mu. Ins. Co. v. Hoessle, 1 Gray (Mass.) 336; Mutual Life Ins. Co. V. Young, 2 Sawyer (U. S.) 325; Hughes v. Mercantile Mut. Ins. Co., 55 N. Y. 265. \Fotton v. Fire Ins. Assn., 20 Fed. Kep. 766. 3 In Orient Mut. Ins. Co. v. Wright, 23 How. (U. S.) 401. the court held that, where tlie insurer imposed a condition precedent to its liability under tlie policy, -Such condition must be complied with, before a binding contract exists, and that if tlie assured refuses to comply with such condition, no contract exists. Therefore, wliere the policy covers a shifting risk, and the policy in terms, provides that the rate shall be fixed at the time of indorsement, the assured cannot recover if he re- -fuses to pay the rate so fixed, because a new contract arises under each indorsement, and, if the assiu-ed refuses to pay the rate fixed, tlie minds of the parties have not met, and no contract exists. Hartshorn v. Slioe and Leather Ins. Co., 15, Gray (Mass.) 240; Sun Mut. Ins. Co. v. Wright, 23 How. (U. S.) 412. In First Baptist Church V. Brooklyn F. Ins. Co., 28 N. Y. 153, an attempt was made to charge the •defendants for a loss, upon the ground that they had agreed to renew the policy un- til notice to the contrary should be given. But it appearing that, prior to the loss, the defendants refused to renew the policy unless an increased rate of premium was paid, which was acceded to hy the plaintiffs, it was held, that the variation of the contract in this respect, annulled the contract for indefinite renewal, and that a new * Mutual Life Ins. Co. v. Young, ante. 20 FiKE iNSUEAIfCE. the apportionment of the risk has not been agreed upon,^ or if the insured retains control over the premium note or any papers, the delivery of which is a condition precedent,^ or if anything remains to be done by the insured as a condition precedent, as the pay^ ment of the premium,^ or if the duration of the risk is not agreed upon,* or if any condition precedent has not been complied with,* assent of the parties thereto must be shown. Sun Mut Ins. Co. v. Wright, 23 id, 412. In Christie v. North British las. Co., 3 C. C. (So.) 360, the plaintiff averred and offered to prove, that his assignor, one Stead, applied to the Phenix Insurance Co., for insurance on his wire mill to the amount of £2,000, £3,000 to be placed elsewhere ; that the risk not being one for which there was a known rate, the determination of the rate was referred to the directors in London; and that he also applied to the defendant company for insurance upon the same risk, to the amount of £3,000, and delivered an order therefor, to the secretary. That the secretary agreed to take the risk at the same rate that should be fixed by the Phenix Co., and to make out and deliver a policy as soon as that was ascertained. That Stead offered on two occasions to deposit a sum sufficient to cover the premiums, but the secretary declined to receive it, as being unnecessary, and that afterwards a person employedt by the office surveyed the premises, and the Phenix and defendant company ex- changed notes of the terms of insm-ance; that the defendant company made an en- try of the insurance in its order book, and in its ledger, the number of the intended policy and its date, the columns for the intended premium being left blank. That prior to the loss, on the 30th of May, there had been two meetings of the directors of the defendant comi^any, and that although no premium had been paid, or policy issued; the Phenix Co. paid its proportion of the loss. It was held, upon these facts, that there was no completed contract, and no liability on the defendants' part for the loss "If," said Lord Justice Clebk, "the premium in this case had been agreed on, tlie insurance would have been effected, although no policy was delivered; but the premises cannot be held to have been insured, the premium never having been determined on, and never having been fixed by the Phenix. office. The pursuers (plaintiifs) rest very much on Stead having been told by the Secretary that he might hold himself insured ; but, without inquiring whether this may warrant a claim ia another form of action, it clearly cannot establish a contract of insurance with the company, which is the ground of the present process, nor can the subsequent action of the Phenix Co. affect the question with the North British." As to the latter point, relative to the action of the Phenix Co., see Buffum v. Fayette Ins. Co., 8 Allen (Mass.) 366; 4 Bennett's P. L C. 582. In Train v. Holland, Purchase Ins. Co., 3 T. & C. N". T.) 777, where a policy of insurance was never delivered and ac- cepted, nor received by the insured until after the loss, and no premium paid or rate agreed upon, and the court held that the contract was never consummated between the parties, that the delivery of the policy to the insured without payment of the premium, and after the premises insured had been destroyed by fire, was unau- thorized and the insurance void by the terms of the policy. The complaint alleged that the premium upon a policy of insurance was paid, and the answer denied that the plaintiff was insured by the defendant, and alleged that the policy was not de- livered: Held, that this was sufficient to make an issue upon the question whether the premium was paid. > Sandford v. Trust F. Ins. Co., 11 Paige Ch. (N. Y.) 547. J^ Thayer Y. Middlesex Mut. Ins. Co., 10 Pick. (Mass.) 326; Belleville Mut. Ins. Co. V. Van Winkle 12 N. J. Eq. 333. J-?^&''^7- ^^Vette Mut. F. Ins. Co., 3 Allen (Mass.) .360; Brewer v. Chelsea Mut. Fire Ins Co., 14 Gray (Mass.) 203; Mulvey v. ShawmutMut. Ins. Co., 4 Allen {Mass.) 116- Walker V. Provincial Insurance Co., 7 Grant's Ch. (Ont.) 137; Wal- hngford v. Home Ins. Co., 30 Mo. 46. \ / i ^Strohn v. Hartford Fire Ins. Co., 37 Wis. 625. s Graham v. Barras, 5 Barn. & Adol. 101; Rose v. Medical Invalid Life Associa- Paeol Ageeements foe. 21 •and if, upon the whole evidence, it is left in doubt whether a binding contract was really made, a recovery will not be per- mitted, as the assured takes the burden of establishing all the elements requisite to make a completed agreement. The aggre- gatio mentium must be fully established and nothing must remain to be done but to deliver the policy. The details of the contract must be fixed, and if the agreement or understanding of the parties in reference thereto are not mutual ; that is, if one party under- stands the matter one way, and the other another, the minds of the parties have not met, and no contract exists that can be enforced either at law or in equity .^ Where an agreement to insure was entered into, and the presi- dent of the company made a memorandum thereof upon the appli- cation-book of the company, but the assured gave notice to the company that he desired to have the risk differently apportioned, and the premium was not paid, and no policy made because of such notice, it was held that no contract existed, and the premises having been burned before the apportionment of the risk was determined, no recovery for the loss could be had.'' So, where the risk is not substantially as represented, as where the applica- tion was for insurance upon a stone house, when in fact it was part stone and part wood.^ So where the plaintiff applied for in- surance upon " his house," and the agent knowing that he resided the previous year in a house on the Cornwall road, and supposing that he still resided there, and that that was the house intended to be covered by the insurance, made the policy to cover that house. In fact, the plaintiff had removed to another house, which he then owned, and the latter house was the one which he desired to have insured. In an action to reform the policy it was held that there was no contract to reform, because the parties labored under tion Soe., 11 C. C. S 151; Walker v. Provincial Ins. Co., 7 Grant's Ch. 137; Chase V. Hamilton Ins. Co., ante ; Winneshiek Ins. Co., v. Halzgrafe, ante; Phlato v. Merchants' , etc.. Ills. Co., 38 Mo. 248; Wallingford v. Home etc., Ins. Co., 30 Mo. 46; Rogers v. Charter Oak Life Ins. Co. 41 Conn. 97; Schaefler v. Baltimore Marine Ins. Co., 33 Md. 109; Myers v. Keystone, etc., Ins. Co., 27 Penn. St. 268. ' In Hughes v. Mercantile, etc., Ins. Co , 55 If.T. 265, the policy covered " a bark called the Empress, or by whatever other name or names the vessel is or shall be called." The plaintiff claimed to recover upon the policy for the loss of the bark St. Mary, but the court held that, unless the insurer intended to take the risk upon that bark, no recovery could be had, because the minds of the parties had not mot, and therefore no contract existed. Watt v. Bitchie, F. D. (Sc. ) 43 ; Chase V. Hamilton Ins. Co., ante ; Meady. Westchester, etc., Ins. Co., post. 2 Sanford v. Trust Fire Ins. Co., 11 Paige Ch. (N. Y.) 547. ^ Chase V. Hamilton, 20 N. Y. 52. 22 Fire Insueancb. a mutual mistake and their minds had not met.^ But so far as the premium is concerned, where there was no special agreement as to what it should be, but all other matters were fixed, it was- held that, several former policies having been issued between the same parties upon the property, they were admissible to show that the new contract was upon the same terms. Indeed, from the fact that nothing was said as to rates, it is to be presumed that the former rates were intended.^ J- ^^^___^^^^^ 1 Home Ins. Co., v. Adler 71 Ala. 516. ^ In Mead V. Westchester, etc., Ins. Co., 65 N. Y. 454, Eapallo, J. said: "The power of courts of equity to reform written instruments is one in the exercise of which great caution should be observed. To justify the court in changing the language of the instrument sought to be reformed (except incase of fraud), it must be established that both parties agreed to something different from what is ex- pressed in the writing, and the proof upon this point should be so clear and con- vincing as to leave no room for doubt. Losing sight of these cardinal principles, in the administration of this peculiar remedy, would lead to the assumption of a power which no court possesses, of making an agreement between parties to which they have not both assented. We think that the General Term were right in holding that the proofs in the present case failed to come up to the required standard. It is reasonably clear that the plaintiffs intended to obtain an insurance upon the building which was afterwards burned. But the question is, whether it is shown that the defendant intended to insure that building. The policy was issued on the 1st of July,1871, to Thomas Foley, on his own application, loss, if any, payable to Mead and Taft, the phiintiflEs. The property insured was described in the policy as ' his two-story frame dwelling, situate,' etc. The policy was issued by Mr. Dales, the agent of the defendant. It appeared in evidence that Foley had occupied this dwelling-house for four years prior to the 1st of April 1871; and that the furniture therein had been insured by Mr. Dales on the applica- tion of Foley. Foley owned the adjoining building, which had also been insured by Mr. Dales, in the office of the Home Insurance Company, for $2,000, and this policy was outstanding when the insurance now in question was effected. In April, 1871, Foley removed from the dwelling-house into this building, but Dales testified that he supposed that Foley owned the dwelling-house also, though, in fact, he did not. Dales had on his books the descriptions of both buildings. The dwelling-house was described as a ' two-story frame dwelling, situate,' etc., and the adjoining building as a ' two and a-half-story frame building, and the additions attached, occupied as a dwelling and paint shop, with stable in the basement,' situate, etc. The established rate of premium upon this building, and that which was then being paid thereon, was two and a-half per cent, per annum; that upon the dwelling adjoining was one and a-half per cent. These were the circum- stances existing at the time of the application for the policy in question. The application was made in writing by Foley to Mr. D ales, and was in the following words : ' I would like you to make me out a policy of $800 on my house, in favor of Mead & Taft, in case of loss, in the cheapest company.' Thereupon, Mr. Dales made out a policy for $800 on the dwelling-house, charging premium at the rate of one and a-half per cent, which policy he delivered to one of the plaintiffs, who paid the premium. The adjoining building, in which the paint shop was kept, was afterwards burned, and the object of this action is to have the policv reformed so as to describe that building. " The only direct evidence to establish that the defendant intended to insure the building which was afterwards burned is the testimony of Mr. Dales, who, on his direct-examination, was asked: 'To what property do you understand this letter of Foley's referred?' To which he answered: 'To the property which he occupied,_which has since been burned, and described in my book.' On his cross- examination he was asked: ' At the time of isstiing this policy, and before it was issued, did you not suppose the application referred to the building Foley formerly occupied ? A. I was in doubt about it; the simple question was, if it was on the building m which he lived, it was two and a-half per cent., and if on the one he formerly occupied, one and a-half per cent. Question. You issued it for Parol Agreements for. 23 Both parties must be bound ; the one to insure, and the other to pay therefor. If the contract is not so far perfected that the insurer, upon delivery of the policy, could maintain an action for the premium, no perfect agreement exists, and the insurer is not liable.' Thus, if the policy is not accepted, and the assured is not bound to pay for it, no contract exists, and the assured cannot, after a loss, by signifying his acceptance, and offering to pay the premium, convert the policy into an operative contract, if he has retained it an unreasonable period before signifying his acceptance.^ The evidence of a contract must be conclusively established,^ and one and a/-half, which was it on ? Answer. My idea was on the one he formerly occupied.' The purport of this evidence, taken as a whole, is, we think, tliat at the time of the trial, and in view of the facts which had then been developed, the witness was satisfied that Foley intended by his letter, to refer to the building in which the paint-shop was; but that, at the time of issuing the policy the witness concluded that the dwelling-house was the one desired to be insured, and that he intentionally made out the policy to cover this building, charging the lesser rate of premium. These facts do not justify the reformation of the instrument. * * We cannot make a contract for the defendant which it did not in fact, make, even though the failure to make tlie insurance which the plaintiffs desired was owing to the plaintiffs' misapprehension of the application." See also, ifK(//ie.s- v. Merchants Ins. Co., 55 N. Y. 265 ; First Baptist Church v. Brooklyn Fire Ins. Co., 28 id. 161; Ledyard v. Hartford Fire Ins. Co., 24 Wis. 496; Kent v. Manches- ter, 29 Barb. (N". Y.) 595: Goddard v. Monitor Ins. Co., 108 Mass. 56; Watt v. Bitchie, Faculty Dec. (Sc.) 43. ' WoodY. Poughkeepsie, etc., Ins. Co., 32 N. Y. 619. 2 Wood, V. Poughkeepsie, etc., Ins. Co., ante. In Tarleton v. Stainforth, 5 T. K. 695, the agreement under which the plaintiffs were insured, contained a stipulation that they would pay half yearly, on the 10th of June and on the 10th of December, the sum of £7 10s., and that they would, as long as the managers agreed to accept the same, make their payments witliin fifteen days after the day limited. The in- surers were held not liable because tliey and the assured had not agreed for the next half year when the loss happened, and because it would be unjust that the assured should have the interval to consider whether or not he would insure for the next half year; if no loss happened during the fifteen days, he might not insure, but in the event of a loss during that period he would insure after it happened. In order to make the insurers liable, as on a contract, both the contracting parties must be bound; whereas, according to the construction claimed by the assured, only the insurers were bound for the fifteen days. One object of the insurers was to have the policy continued ; and to induce the assured to pay the premium at an early period within the fifteen days, he was to be at his own risk between the time when the former insurance expired, and the beginning of the new insurance. In a sub- sequent case, which was tried before Lord Elenbokough (Salvin v. Jones, 6 East E. 571), it was decided that where the rate of premium was altered by the insurers, and notice thereof given to the assured, and a refusal on his part to pay the increased premium, then a loss having happened within the fifteen days, and tender of the increased premium having been made after the loss, and within the fifteen days, the insurers were not bound to accept the premium; and that, by the former refusal and actual non-payment of the premium at the time of the loss, the insurance was deter- mined, and no sum recoverable for the loss. But in case there is no notice to deter- mine the policy, or to increase the premium, or in case the original policy was for a special period without any power of renewal (conditional or absolute), then the in- surance is considered as continuing for that special period, or from year to year. Wood V. Poughkeepsie Ins. Co., ante. ' McCann v. u^Stna Ins. Co., 3 Neb. 198 ; Nevill v. Merchants' etc., Ins. Co., 19 Ohio, 452. 24 Fire Insubance. the circumstance that a contract in writing was contemplated and has not been executed, is entitled to great weight in determining whether a complete and perfect contract has been made,^ but such evidence is not conclusive, and is entitled to weight in proportion only to the length of time that has elapsed since the contract is claimed to have been made ; and the distance between the insurer and the insured, the facilities for communication, and all the cir- cumstances surrounding the transaction, are competent to explain or excuse delay .^ Failure to notify assured of rejection of application. Sec. 7. The question as to whether a failure on the part of the insurer to notify the assured of the rejection of his application can be construed as an acceptance thereof, is largely dependent upon the circumstances of each case. An interesting question under this head came before the Su- preme Court of Pennsylvania,^ which resulted in an equal division of the court, one member being absent. A., the agent, secretary and director of a mutual insurance company, took the application for insurance, premium note, and note of hand for cash premium, of B., promising to notify him if the application was rejected, and, in that case, to return the note of hand. A by-law of the com- pany required the approval of two directors to every application. B.'s application was rejected by two directors, of whom A. was one. B. received no notice of the rejection of his application until after the premises were burned, seven months after application was made. The court below had held that the plaintiff could re- 1 Seed Estate Mut. F. Ins. Co. v. Boessle, 1 Gray (Mass.) 454; Hoab, J., In San- bom V. Fireman's Ins Co., 16 id. 454. 2 Insurance Co. v. Johnson, 23 Penn. St. 72; Belleville Mut. Ins. Co. v. Van Winkle, 12 N. J. Eq. 333; Ins. Co. v. Colt, 20 Wall. (U. S.) 560; Tayloe v. Mer- chants' Ins. Co., 9 How. (U. S.) 390. In Ide v. Phoenix Ins. Co. of Hartford, 2 Biss. (U. S.) 338, the plaintiff applied to the agent of the defendants for an insur- ance on Ills house for $ 1,000 for three years, and the agent agreed to insure it for a certain sum, which sum plaintiff immediately paid to the agent. The agent had not the policy ready then, hut promised to give it to the plaintiff in a few hours. The policy was demanded of the agent several times, but was never delivered. Dur- ing the term for which the insurance was sought to be effected, the house burned down accidentally. Notice of the loss was promptly given to the agent of defendants, who said that "the loss was all right," and that "the company would pay," etc. This action being brought for a recovery of the amount of insurance, held, that the parol contract for insurance upon complainant's house was valid, and could be en- forced without a policy; that the failure to issue a policy by the company after the payment of the premium could not be taken advantage of by it in a court of equity; that the action of the company's local agent amounted to a waiver of the provisions in their policies as to strict proofs and suit within one year. 3 Somerset Co. Mut. Ins. Co. v. May, 2 Weekly Notes of Cases (Penn.) 43. Parol Agbeembnts toe. 25 cover against the company upon the agreement to insure, and, the court being divided, that judgment was affirmed. Ordinarily, a j>roposal not answered remains a proposal for a reasonable time, and then is regarded as withdrawn.^ In the case last cited it was held that a proposal is not to be presumed to be accepted from a delay of near six months to re- fund the premium paid, and to notify the applicant that his offer has been rejected. The reason is, that delay cannot, of itself, make a contract. The applicant has in his own hands the power of cor- Tecting the delay ; and both parties are interested in the acceptance of the proposal, and both are expected to attend to it with reasonable diligence. But a neglect or delay that has properly a tendency to mislead another, and which is incompatible with honesty, may be charged as a ground of liability. In the Somerset case, there was not only a delay and neglect for nearly seven months to refund the premium and give notice that the application was rejected, but there was an express promise to notify the plaintiff if the applica- tion was rejected, and this promise was made by the secretary of the company, who was also one of its directors. The company put the plaintiff off his guard, and it would seem reasonable that it should therefore be liable. When company is left discretionary with agent. Sec. 8. The fact that the company in which the insurance shall be placed is left discretionary with the agent, is not material, pro- vided he has, in fact, decided in what companies to place the risk before a loss occurs, and an entry in his register is conclusive upon the company in which he determines to place the risk.^ If the liability of the company once attaches, it continues until legally discharged, either by the act of the assured, or of the insurer, and if a discharge therefrom is claimed, the burden of establishing it is upon the company.^ ^ Insurance Company v. Johnston, 23 Penn. St. 72. 2 Mlis V. Albany City Mre Ins. Co., 50 IST. Y. 402, was an action on an alleged contract of instirance. McC. was agent for several companies, iacluding defend- ant. Plaintiff applied for insurance upon a quantity of cotton ; the amount to be insured and the premium was agreed upon, and McC. agreed to insure as requested. Plaintiff left it with McC. to decide In what companies, and how much in each the insurance should be. He decided to place $6,100 with the defendant, and entered the contract to that effect In his register, received the premiiun and credited the amount to the defendant. It was held, that this was In substance a contract to issue a policy for the amount so placed, and was binding upon the defendant. ' Ellis V Albany City Fire Insurance Company, ante. 26 FiKB Insurance. As to powers of agent to bind company. Sec. 9. The fact that the agent, with whom the contract was made, had no power to make out policies, but only to issue thos& sent him by the company, upon applications sent to it by him^ does not, necessarily, evidence a want of authority on his part to make a valid contract for insurance. If he has authority to effect insurance,! his contracts therefor will be binding upon the com- pany,^ and the court will, in the absence of an express provision in the contract to the contrarj^ take judicial notice of the usaga to make such contracts date from the date of the application.^ Distinction between contracts for, and of insurance. Sec. 10. A contract /or insurance is one thing, and a contract of insurance is another. Even where a statute provides that policies of insurance shall be valid only when made in writing and attested by the signature of the president and secretary, yet a. valid contract to insure can be made by parol and the company will be liable thereon.* The fact that the charter of a fire insur- ance company provides that all policies shall be subscribed in a. certain way, does not deprive the company of the power to make a valid contract by parol to insure.* So, where the charter of an insurance company provided that all contracts, bargains, agreements, policies and other instruments, should be in writing, under the seal of the corporation, and attested by the signature of certain officers, it was held that this. did not prevent the making of a valid contract for insurance by parol, and that the charter only related to executed contracts.^ The fact, that the charter of the company requires that all con- tracts, bargains or agreements and policies shall be in writing, is held not to relate to a preliminary contract /or insurance, but only to executed contracts o/insurance. Hence, while in the case of companies where charters contain such a provision, a contract ' Sanborn v. Fireman's Ins. Co., 16 Gray (Mass) 44r-48. " Post V. ^tna Ins. Co., 43 Barb. (N. T.) 361. ^ Gbovbb, J., in Ellis v. Albany City Ins. Co., ante. 4 Cooke V. ^tna Ins. Co., 7 Daly (N. T.) 555. 5 Commercial Ins. Co. v. Union Mutual Ins. Co., 19 How. (U. S.) 318; Jones V. Provincial Ins. Co., 16 Up. Can., Q. B. 477. 6 Insurance Co. v. Colt, 20 Wall. (U. S.) 560; Security Fire Ins. Co. v. Kentucky Marine & Fire Ins. Co., 7 Bush (Ky.) 81; N. E. Ins. Co. v. Robinson. 25 Ind. 536; Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.) 448; Mills v. Albion Ins. Co., 6 S. & D. 409. Parol Agreements for. 27 of insurance would be invalid, yet an executory contract for insur- ance, is held valid and binding. In a quite recent case heard in the Supreme Court of the United States, this question was quite carefully considered.^ In that case the charter of the defendant company authorized its officers to make insurance against fire, and for that purpose to execute such " contracts, bargains, agreements, policies and other instruments^' as were necessary ; and declared that every such contract, bargain, agreement and policy should be in writing or in print, under the seal of the corporation, signed by the president and attested by the secretary or proper officer. The court held that the requirement of the charter had reference only to executed contracts or policies of insurance, by which the company is legally bound to indemnify against loss, and not to those initial or preliminary arrangements which necessarily precede the execu- tion of the formal instrument by the officers of the company. It is not essential to the validity of these initial contracts that they should be attested by the officers and seal of the company .^ Field, J., who delivered the opinion, in speaking of another point in the case, said : " There is no suggestion that the preliminaiy contract in this case was not made in perfect good faith on both sides, with full knowledge by the agent of the condition, character and value of the property insured. The credit allowed for the payment of the premium was an indulgence which the agent was authorized by general usage to give. Its allowance did not impair the pre- liminary contract ; that, being valid, could have been enforced in a court of equity against the company ; and having been enforced by the procurement of a policy, an action could have been main- tained upon the instrument ; or the court, in enforcing the execu- tion of the contract, might have entered a decree for the amount of the insurance. But no resort to a court of equity for specific performance was necessary in this case, by reason of the action of the agent in filling up the blank policy, which was duly attested, as he should have done immediately after the preliminary arrange- ment with the assured. The agent was authorized to do, after the fire, that which he had previously stipulated to do on behalf of the company. * * * * The filling up of the policy was a vol- 1 Franklin Ins. Co. v. Colt, 20 Wall. (U. S.) 2 The case of Security Fire Ins. Co. of N. Y. v. Kentucky Marine and Fire Ins. Co., 7 Bush (Ky.) 81; 3 Am. Kep. 301, relating to parol contracts for insurance •was approved. 28 FiKE Insukance. untary specific performance of the preliminary agreement. And when filled up, the policy was, by express stipulation, to be held by the agent, in his safe for the assured, and no actual manual transfer was, under these circumstances essential to perfect the latter's title. It then became his property, and upon a refusal of the defendant to surrender it, two courses were open to him: either to proceed by action to recover the possession of the policy, or to sue upon the policy to recover for the loss ; and in the latter case to prove its contents uponffailure of the company to produce the instrument on the trial.^ A contract of insurance may be changed by parol,^ or by in- dorsement upon the policy,^ and the parties thereto may thus be changed,* or the subject-matter of the risk ; ^ and such change 1 In support of these positions the following cases will he found confirmatory : JKohne v. Ins. Co., 1 Wash. C. C. 93 ; Sheldon v. Conn. Mut. Ins. Co., 25 Conn. 207; Zightbody v. N. America Ins. Co., 23 Wend. 18 ; City of Davenport v. Peoria Marine and Fire Ins. Co., 17 Iowa, 277. In Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.) 454, the court in a similar case adopted the same rule. Hoae, J., in a very able opinion in commenting upon this question, pertinently says: "We cannot think that a provision in the charter of an insurance company authorizing contracts authenticated by the signature of a particular officer, and without any words of restriction, should generally be construed to limit the power of the company, and to prevent them from making contracts within the ordinary scope of their char- tered powers. On the contrary, the phraseology of these statutes respecting the execution of policies should be regarded as consisting simply of enabling words, not restraining the power which they confer to make contracts, of which the poli- cies are the evidence." Commercial etc., Ins. Co, v. Union, etc., Ins. Co., 19 How. (U. S.) 321. And the learned judge discussed another important question in refer- ence to the powers of an agent, whose authority is limited to ' issuing policies ' made out by the company. Upon this question he said : " The objection that the agent had only power to issue policies, and not otherwise to make contracts bind- ing on the defendants, comes within the same rule of construction. His power of attorney authorized him ' to effect insurance,' and ' for this purpose to survey risks, fix the rate of premium and issue policies of insurance signed by the presi- dent, etc' We are of opinion that this gave him authority to make the prelimi nary contract, as well as to issue the policy. He was not a special agent, employed merely to receive and transmit proposals to his principal, but had power to do what- ever the company could do in effecting insurance." 2 Payne v. Marinelns. Co., 5 W. & S. (Penn.) 122 ; Kennebec Co, v. Augusta Ins., etc. Co., 6 Gray (Mass.) 204; Warren v. Ocean Ins. Co., 16 Me. 439; Cummings V. Arnold, 3 Mete. (Mass.) 486 ; Buncev. JBeofc,43 Mo. 266 ; Wagneb, J., Henning V. U. S. Ins. Co., 47 Mo. 425. ^ Salomes v. The Uutgers Fire Ins. Co., 2 Eeyes (N. T.) 416 ; Northrup v. The Miss. Valley Ins. Co., 47 Mo. 485. * In Salomes v. The Rutgers Fire Ins. Co., ante, the policy was, by the mistake of the insurer, made in the name of the husband, instead of that of the wife, who owned the property. Afterwards the insurers were notified of the mistake, and were requested to make the loss, if any, payable to the morgagee. An endorsement was made by the secretary upon the policy, making the loss payable to the mort- gagee ; and the court held, that this amounted to a new contract with the wife, by which the policy was made to cover her interest in the property. In Benjamin v. Saratoga Co. Mut. Ins. Co., 17 N. T. 415, a policy of insurance was issued to plamtiff as agent of the owners. Plaintiff had an interest in the property as mort- s Northrup v. The Miss. Valley Ins. Co., ante. Parol Agkeements foe. . 29 effected by any person -whom the company places in a position of apparent authority, will, prima facie, be binding upon it, as an agent authorized to make contracts of insurance,^ a clerk or per- son acting as secretary in the office of the company,^ or any per- son whom the company permits to act for it in such a manner as to indicate authority to act in such respects.^ An agent authorized to negotiate contracts of insurance, and to fill up and issue policies, has authority to bind the company by a parol contract to insure, and to give credit for the premium, and in an action upon such a contract, the plaintiff is entitled to re- cover as damages, the amount of his loss, not exceeding the sum agreed to be insured.* Such a contract is valid and binding upon the company,^ and is not within the statute of frauds.^ Agreements to insure •will be enforced in equity. Sec. 11. The distinction between a contract of insurance and a contract to insure, is, that the one is executed, and the other executory, and in the one case the action is upon the contract for the loss or damage sustained under the risk, while, in the other, the action is for a breach of the contract, for not insuring, and the measure of recovery is the loss sustained,'^ so that the effect is the same in either case. gagee, of wliich he informed the insurers. Afterwards he obtained title by fore- closure. He notified the insurers of this, and of the fact that he had agreed to con- vey to a third person. They consented that the policy should remain valid till the vendee's title was perfected. It was held that this agreement was equivalent to issuing a new policy to plaintiff. 1 Pechner v. Phenix Ins. Co. , 65 N. T. 194 ; Clark v. Manufacturers' Ins. Co. , 8 How. (U. S.) 2.35 ; Gloucester Manf. Co. v. Howard Fire Ins. Co., 5 Gray (Mass.) 497 ; Ilotchkiss v. Germania Fire Ins. Co., 5 Hun (N. T.) 90 ; Gait v. Ins. Co., ante ; Perkins v. Washington Ins. Co. ante ; Baubie v. ^tna Ins. Co., 2 Dill. (TJ. S. C. C.) 156 ; Washington Fire Ins. Co. v. Davidson, .30 Md. 91 ; N. E. F. & M. ln.i. Co. V. Schettlen, 38 111. 166 ; Viele v. Germania Ins. Co., 26 Iowa, 9. 2 Salomes v. The Rutgers Ins. Co., 3 Keyes (N. Y). 416 ; Conover v. Mut. Ins. Co., 1 N. Y. 290 ; Northrup v. The Miss. Valley Ins. Co., ante. ' Ilenning v. U. S. Ins. Co. , ante. Angell v. The Hartford Fire Ins. Co., 59 N. Y. 171 ; Ellis v. Albany Ins. Co., 50 N. Y. 402. 5 Audubon v. Excelsior Ins. Co., 27 N. Y. 216. 6 Dresser v. Dresser, 48 Barb. (N. Y.) 3.30, affi'd in Ct. of Appeals ; Fisk v. Cat- ienett, 44 N. Y. 538 ; First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 305. ' Angell v. Hartford Ins. Co., 59 N". Y. 171 ; 17 Am. Rep. 322 ; Shearman v. The Niagara Fire Ins. Co., 46 N. Y. 530 ; Kelly v. Com. In.f. Co., 10 Bos. (N. Y.) 82 ; Baxter v. Massasoit Ins. Co., 13 Allen (Mass.) 320 ; Hamilton v. Lycoming Ins. Co., 5 Peim. St. 339 ; Ellis v. Albany Fire Im. Co., 50 N. Y. 402 ; Palm v. Medina Ins. Co., 20 Ohio, 529 ; Suydam v. Columbus Ins. Co., J8 id. 659 ; Audubon v. Ex- celsior las. Co., 27 N. Y. 216 ; Perkins v. Washington Ins. Co., 4 Cow. (IST. Y.) 30 FiEB Insubance. Parol contracts to insure, will be enforced in equity, even though the charter of the company requires all its contracts to be ia writ- ing ;i the courts holding, in such cases, that there is a broad dis- 605 ; Brag don v. Appleton, etc., Ins. Co., 42 Me. 259 ; Pratt -v. N. T. Cent. Ins. Co., 64 Barb. (IST. T.) 589 ; Andrews v. Essex F. & M. Ins. Co., 3 Mass. (U. S.) 6 ; Davenport v. Peoria M. & F. Ins. Co., 17 Iowa, 276 ; Union Mut. Ins. Co. v. Com. Ins. Co., 19 How. (U. S.) 318 ; Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.) 448 ; Carpenter v. Ins. Co., 4 Sandf. Ch. (N. Y.) 408 ; Post v. ^tna Ins. Co., 43 Barb. (N. Y.) 361. A. applied to the local agent of an insurance company for a policy on a stock of goods. He notified the agent of the fact of there being other insurance. He paid the premium, which, with the application the agent forwarded to the company. Before a policy had been prepared A.'s goods were biimed. The company sent a man to examine the facts connected with the loss, who took A.'3 affidavit and prosecuted inquiries. The company refused to issue a policy. A. brought suit for a specific performance of their contract so to do. The company contended that a policy. If it had issued, would have contained a clause avoiding it in case of additional insurance without consent indorsed on the policy ; it contended further that such policy would have stipulated against incumbrances, and that A.'s goods were mortgaged ; it also contended that no proofs of loss had been furnished. The fact concernuig the mortgage was that A. had given it to serve a temporary pur- pose, and that it was discharged, though this did not appear upon the record. It was held that A.'s bill would lie, and that jurisdiction having been taken, judgment for the amount of the loss could be entered in the suit ; that the fact that the agent was informed of the additional insurance was enough to preclude the company's de- fence on that point ; that A. might show by parol that the mortgage was in fact discharged ; that the company had waived Its right to insist upon proofs of loss ; and that A. was entitled to a policy and to judgment for the amount of the loss. Baile v. St. Joseph Fire & Marine Ins. Co., 73 Mo. 371. When an application for insurance does not set forth all the provisions which the policy is to contain, and the agents represents that the policy will contaia certain lawful stipulations, it was held that the policy must contain them, or the insured will not be boimd to accept it, but immediately on receipt of the policy, he must notify the company of his refusal to accept the policy. American Ins. Co. v. Neir berger, 74 Mo. 267. 1 In Security Ins. Co. v. Kentucky Marine F. Ins. Co., 7 Bush. (Ky.) 81, this question was carefully considered, Kobbbtson saying: "In the summer of the year 1865, McFerren, Manifee & Co., owning a large quantity of cotton purchased in Georgia, for resale in Kew York — ^to be shipped from Columbus in barges down the Chattahooche to Appalachicola, in Florida, and to be thence transhipped in the Mary Lucretia and Metropolis, ships, to the city of Kew York — ^procured from the appellee an oral contract for insm'ance against the perils of navigation, which the appellant re-insured to the appellee ; and to fill up the uninsured gap between the landing and transhipment of the cotton at Appalachicola, the owners also ob- tained from the appellee, on the 10th of October, 1865, an oral contract for insurance against fire risks ' on cotton at Appalachicola awaiting shipment per Mary Lucretia and Metropolis.' On the same day the appellant made with the appellee a similar contract of re-insurance of the same cotton against the same risk. And, on the 17th of October, 1865, the appellant's agent, Muir, made in his book B, kept by him as evidence of insurances, an entry of the insurance and re-insurance, described as insuring against a 'fire risk on cotton at Appalachicola awaiting shipment' There is neither proof nor suificient presumption that, at the date of the entry in book B, owners or insurers knew that the cotton had reached Appalachicola ; but, as after- ward appeared, some of it (46 bales) had been consumed by fire at the wharf at Ap- palachicola on the 6th of October, 1865. On satisfactory proof, the appellee ad- justed the loss and paid the owners its portion of the liabiHty according to its con- tract of insurance, and thereafter brought this suit against the appellant for a specific execution of its contract of re-insurance and for indemnity in damages, and finally recovered a judgment, which by this appeal the appellant seeks to reverse on the following grounds, on which the action was unsuccessfully defended. 1. There was no retrospective insurance or re-insurance against fire bevond the date of the contract. Paeol Agkbements foe. 31 tinction between an executory and an executed contract, and that tlie charter provisions can only be held to ajjply to the latter. 2. An oral contract for insurance was not, according to the common law, binding and enforceable. 3. If such, a contract was valid at common law, the appellee's charter modified that law in that respect by requiring a written memorial signed by the president ; and, consequently, as the alleged insurance was not binding, the re-insurance was not obligatory, because it only insured the original insurer against an enforceable liability. Simple insurance, prima facie, implies the existence of the thing insured at the •date of the contract. But when, as in marine policies, the thing being distant and its status unknown to either party, an insurance ' lost or not lost ' may bind the in- -surer for a loss occurring before the date of the contract. Such a provision is quite usual in Are as well as marine insurances, and without these express words circum- ;stances may sufficiently imply the same intent. 1 Amould on Ins. 25 ; Phill. on Ins. § 925 ; Gen. Int. Ins. Co. v. Muggles, 12 Wheat. 403. The marine insurance -and re-insurance in this case were expressly retrospective, and the evident purpose of the owners and of the appellee was to protect the cotton from fire from the land- ing to the transhipment of it at Appalachicola. The testimony is conclusive to that effect. This authorizes the presumption that the insurance was co-extensively com- prehensive ; and the testimony, when carefully analyzed, preponderates decidedly that way, and does not conflict with the necessary construction of the entry in book B. Although a policy, as an executed contract of insurance, is defined to be docu- mentary and authenticated by the underwriter's signature, yet a contract to issue a 3)olicy as an executory agreement to insure may be binding without any written me- morial of it. ZSTo statute of frauds applies, and the common law does not require writing. This has been often adjudged ; but for the purpose of mere authority now the cases of Tayloe v. Merchants' Ins. Co., 9 How. 390 ; and of Commercial Ins. Co. V. Union Mutual Ins. Co. , 19 id. 318, are deemed sufficient. And in the case in •9 Howard the Supreme Court decided, as many other courts have also decided, not only that such an oral contract for a policy might be specifically enforced, but that a court of equity having jurisdiction for specific enforcement would, to avoid un- necessary circuity, adjudge the damages just as if a policy had been executed, and an action had been brought on it for the loss of the thing thereby insured. In our judgment the appellee's charter does not require such executory contract to be in writing. If it does, it is an anomaly, for we know of no other American charter that does so require. The seventh section of the appellee's charter recognizes the power of the corporation to insure all kinds of property against fire and marine risks, and to do all things respecting insurance which an individual might lawfully do, ' and all other thing necessary and proper to promote these objects.' As the <;onunon law allows an incorporated citizen to make contracts of insurance, and does not require written memorials of executory agreements to insure, and the ob- ject of an act of incorporation is only to give legal individuality to a multitude of persons, and to limit the natural rights and powers, this seventh section certainly concedes the right of this corporation to make initial contracts for insurance without any writing ; and we cannot presume that the thirteenth section was in- tended to curtail that right by providing ' that all policies or contracts of insurance which may be made or entered into by the said corporation shall be subscribed by the president or president pro tem., and signed and attested by the secretary, and being so signed and attested shall be binding and obligatory on the said corpora- tion without the seal thereof, according to the tenor, extent, and meaning of such policies or contracts.' Even according to its literal interpretation this section does not require all contracts- of insurance to be in writing, but only dispenses with the corporate seal for authenticating such as are in writing whenever signed and attested as prescribed, and which cannot be done as to oral contracts. It ap- plies to the authentication of written contracts, and does not purport to change the common law as to what contracts shall be written. If such a repeal of the common law had been intended, why did not the section expressly require that all contracts, executory as well as executed, for instance, shall be in writ- ing? 'AH policies or contracts of insiirance,' imports executed insurances, and not executory contracts for policies or for insurance. Such initial contracts for Insurance by policy are generally made by agents and neither could be conveniently 3ior, so far as we know, ever have been, signed by the president and secre- 32 FiEE Ibtstjeaitcb. That is, that a contract of insurance must be in writing, but that a contract to insure, may be by parol.^ tary. The policy only, in whatever form, is so signed. The fair inference is, that the object of the thirteenth section was to enlarge the common-law rights of the corporation and not to curtail them, and consequently the whole aim of that section was to dispense with the corporate seal in cases in which it was previously necessary for authenticating corporate acts in writing ; and such has been the judicial construction of the like provisions in charters in other States. A general statute of Massachusetts, applicable to all insurance companies, provides that all policies of insurance made by such companies shall be subscribed, etc., and be as obligatory as if certified by the common seal. The Supreme Court of that State construed that enactment as intended only to dispense with the corporate seal, and not as requiring writing not required by the common law, and that an oral contract to issue a policy was valid and enforceable. And this was aflSrmed by the Supreme Court of the United States in the case in 19 How, supra. Tlie slight difference in the language of the 13th section and in that of the Massachusetts act is not, in our opinion, such as to require a different interpretation of the object of the two provisions. In most of the States, as well as in the Supreme Court of the United States, executory oral contracts to Insure have been specifically enforced in equity, although executed contracts must be in writing. See Sandf. 40S ; 4 Cow, 646"; 17 Iowa, 278 ; 20 Ohio, f 29. And in a case published in 1 Am, Law Reg. (X. S) p. 116, Justice Gp.ieb adjudged in the western district of Pennsylvania, that equity would enforce an oral agreement for insurance even though the insurer's charter required that ' all policies, bargains, contracts, and the agreements for insurance shall be in writiivj or in print, and signed by the president and attested by the secretary.' This is a peculiar case, which may be somewhat questionable, as the charter expressly required writing in policies and all other contracts for insurance. But bis notion was that there was no purpose to repeal the common law, but that the legislative object was to require writing in policies and all other executed contracts ejusdem generis. However this may be, we are satisfied that the 13th section of the appellee's charter not expressly re- quiring writing does not modify the common law as to oral contracts for insur- ance. And we are also satisfied that Muir, as appellant's agent, had implied authority to re-insure against fire out of Kentucky as well as in it. The conse- quence is, that the appellee was entitled to judgment; and the appellant, re-insuring the fire risk taken by the appellee for the owner must be liable as for a fire and not a marine risk. The judgment, conforming the fire standard by which the appellee's liability was adjusted, does not therefore appear too high ; the amount does exceed the legal liability according to the law and the facts of the case." Commercial Union Ins. Co., v. Uninn, etc., Ins. Co. 19 How. (U. S.) 138 ; Sanborn. V. Fireman's Ins. Co., 16 Gray (Mass.) 448 ; Henning v. XI. S. Ins. Co., 2 Dill. (U. S.) C. C. 26. See also, Franklin F. Ins. Co. v. Taylor, 52 Miss. 441 ; Pheniz Ins. Co. v. Hoffheimer, , 46 id. 657 ; Franklin Ins. Co. v. Colt, ante. It has been held in Missouri, in Henning v. IT. S. Ins. Co., 47 Mo. 425, that where the charter requires the contract to be in writing, a parol contract to insure, orof insurance was invalid, and where, by law, as in Georgia, all contracts of insurance are required to be in writing, it has been held that an agreement to renew a policy when it expired, made by parol, is inoperative, even though the insurance is paid. Corghan v. N. Y. Underwrites' Agency. 53 Ga. 109, And in Arkansas it has been held that, where the charter requires the policy to be sealed, a policy not under seal cannot be enforced. Lindauer v. Delaware Mut. Safety, Ins. Co., 13 Ark. 461. 1 Commercial Union Ins. Co. governed by, certain express regulations which take it out of the general rule of the common law. The charter of the defendant company is referred to as restrain- ing Its power to enter into contracts of insurance in any other manner than by a written mstrument. The company was formed in 1856, under the general fire insurance companies' act of New York, passed in 1853, by which any association proposing to be organized under its provisions, was required to file a copy of its charter m the oflice of the comptroller, and therein ' set forth the name of the company, the place where its business should be located, the mode and manner Pakol Agreements foe. 33 Equity 'will compel performance, and enforce payment of loss. Sec. 12. Where a bill for specific performance is brought, the court will not only decree performance by a delivery of the policy, in which the corporate powers granted by the act are to be exercised, etc' Tlie company in this case filed such a charter, by the first article of which it was de- clared as follows : ' The name of this company shall be the Relief Fire Insurance Company. The principal office for the transaction of its business shall be in the city of New York. Its purpose and business shall be by instrument under seal or otliei-wise, to make insurance on dwelling houses, stores, and all other kinds of buildings, and upon household furniture, and other property against loss or damage by fire, etc' By article V. it is declared that ' the president or other officer appointed by the board of directors, for the purposes aforesaid, shall be authorized in the name and behalf of the company, and in and by policy of insurance in writing to be signed by the president or other oflicer and the secre- tary of the company, to make contracts of insurance with any person or persons, or body politic or corporate, against loss or damage by fire, etc' It is insisted that these articles are the company's law of existence, and that it would be ultra vires for it to make parol contracts of insurance. But it is manifest that the article last quoted is merely affirmative as to what may be done by the officers in the usual course, and contains no negative clause that an insurance made other- wise than by a written policy shall be void. And the clause in the first article which declares that the company's ' purpose «.nd business shall be by instrument ^lnder seal or otherwise, to make insurance,' admits of a wider construction than that contended for. Tlie words, ' by instrument under seal or otherwise,' may as well mean ' by sealed instrument, or otherwise,' as to mean ' by instrument — either under seal or otherwise.' The substantial power given by law to an association organized under it, is to make insurance against loss and damage by fire. The mode and form in which it shall make its contracts is not prescribed as an essential part of its being or mode of action. The expressions referred to are not of that character. They indicate, in language chosen by the company itself, and not by the legislature, the ordinary mode of conducting its business. After having, by its officers and agents, made a parol contract of insurance and induced the insured party acting in good faith to rely on its engagements, it cannot be permitted to shelter itself behind any such ambiguous expression in its charter and claim to have a special statute of frauds for its own benefit. Substantially similar provisions to those now relied on were contained in the charter of the Fireman's Insurance Company in the case of Sanborn, in 16 Gray ; but the court held that they were merely enabling in their character, and not restrictive of the general power to effect contracts in any lawful and convenient mode. ' We can- not think,' said Judge Hoae, delivering the opinion of the court, ' that a provision in the charter of an insurance company, authorizing contracts authenticated by the signature of a particular officer, and without any words of restriction, should generally be construed to limit the powers of the company, and to prevent them from making contracts within the ordinary scope of their chartered powers. On the contrary, the phraseology of those statutes respecting the execution of policies should be regarded as consisting simply of enabling words, not restraining the power which they confer to make contracts, of which the policies are the evi- dence.' 16 Gray. 454. Substantially the same views were expressed by the Court of Appeals of New York in the case of First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. .S09-.311. But, besides all this, it is not perceived how the insured can be affected by these verbal minutiae in the charter of the company without their being brought to his knowledge. The charter is a document on file in the office of the comptroller of New York in the city of Albany. A person dealing with the company in Massachusetts cannot be expected to know its precise terms. It holds itself out to be an insurance company, authorized to take risk agaiii.st losses by fire, and by its officers and agents assumes to act in the same manner: s other insurance companies do. However it may expose itself to be questioned by the government wtiich created it, for exceeding the precise limits of the powers granted, it is estopped from eluding its obligations, incurred toward those who, in ignorance of these limits, contract with it in good faith, and upon the 1 asis of the powers assumed by its recognized agents to exist. It is contended, however, that there is a statute of Massachusetts which, in effect, requires that all contracts of insurance shall be in writing, namely : chapter 1S6. section 1. of the acts of Mas- 3 34 FiEE Insfbancb. but will also adjudicate and compel the payment of the loss ; ^ and the fact that the party has a remedy at law, will not be sufficienf ' to oust the court of its jurisdiction, as the party has a right to have the contract enforced by a delivery of the policy, and the court having jurisdiction for one purpose, will, to prevent circuity of actions, compel a payment of the loss under the policy.^ In such cases, the assured has his election of remedies. He may proceed at law upon the contract to insure,^ or in equity to compel a de- • sachusetts for 1864, which provides as follows : ' In all insurance against loss by fire hereafter made by companies chartered or doing business in this Common- wealth, the conditions of insurance shall be stated in the body of the policy, and neither the application of the Insured nor the by-laws of the company shall be considered as a warranty or a part of the contracts, except so far as they are in- corporated in full into the policy and appear on its face before the signatures of its officers.' It is evident that the object of this statute was, not to prohibit parol contracts of insurance, but to prohibit the practice of referring to a set of condi- tions not contained and set out in the policy, but embodied in some other paper or . document. The statute was passed for the benefit of the insured, in order that they might not be entrapped by conditions to which their attention might never be called, and whicli they mijjht inadvertently overlook and disregard if they were not embraced in their policies. It applies in terms only to policies, that is, to written contracts of insurance ; and has no application whatever to parol insur- ances. It does not prohibit them nor affect them in any way. Other points were taken by the plaintiff in error, to the effect that there was no evidence that the agent ever had authority to make other than a written contract, or that a com- pleted oral contract was ever made as stated in the declaration, or that the insur- ance company ever authorized its agent to delegate to another the power to make insurance. An examination of the bill of exceptions shows that it does not contain all the evidence which was adduced. Whether the omitted portions would furnish any light on these points we are unable to say. But we think that the evidence which is spread upon the record was sufficient to go to the jury, and we see no error in the charge of the court in this behalf. The agent who acted in this case had been accredited as the general agent of the company in the Common- wealth of Massachusetts from the beginning of 1810, and had during all that time been transacting the business of the company as such agent in the city of Boston. His mode of doing business was not materially different from that of other agents or companies. He had during all that period been assisted by a clerk or clerks who attended to the business in his absence, which the company must have known. These and other facts sufficiently shown by tlie evidence entirely justify the charge of the court, and the finding of tlie jury is conclusive." ^ Lightbody v. JV". American Ins. Co. 23 Wend. (N. Y.) IS; Sallockr. Com. Ins, Co., 26 K. J. 26S; Carpenter v. Mut. Ins. Co. 4 Sandf. Ch. (N". Y.) 408; Union Mat. Ins Co. v. Com. Ins. Co., 2 Curtis (U. S.) 2.54; Perkins v. WasJdngton Im. Co., 4 Cow. (N. Y.) 645; Suydam v. Columbus Ins. Co., 18 Ohio, 659. Franklin F. Ins. Co., V. Taylor 52 Miss. 441 ; Moody v. Old Dominion Ins. Co., 31 G-ratt. (V. A.) 362; Putnam v. Hmne Lis. Co. 123. Mass. 324. A contract to issue a plain life in- surance policy upon the life of the applicant for $ 15,000, payable to his wife, ac- cording to the form in use by the company, is sufficiently certain to be enforced; and if there is any extrinsic reason why it shoiild not be enforced, as that it was procured by fraud or falsehood, it must be set up as a defense. Hebert v. Mutual Life Ins. Co. 12 Fed. Eep. 807. Perkins v. Washington Ins. Co. 4 Cow. 645. Carpen- ter V. Ins. Co. 4 Sandf. Ch. (N. Y.) 408; Brugger v. Ins. Co., 5 Sawy (U. S. C. C.) 304. Herbert v. Mu. Life Ins. Co., 12 Fed. Eep. 807. 2 Jones V. Provincial Ins. Co., 16 U. C. Q. B. 477; Ellis v. Albany City F. Ins. Co., 50 N. Y. 402. " 3 Jones v. Provincial Ins. Co., ante. ; Commercial Union Ins. Co. v. the Union Ins. Co. 19 How. (U. S.) 321; Trustees, ftc, v. Brooklyn F. Ins. Co 19 N T. 205; Andrews v. Essex F. M. Ins Co., 3 Mas. (U. S.) 6; Taijloe v. Merchants' F. Parol Agreements for. 35 livery of the policy, and a payment of the loss. Generally, it is helieved that the safest and best remedy is to be found in a court ■of equity .1 An agreement by parol to insure, and that the risk •shall attach pending the application, is good,^ or a parol agreement to make a policy by a person authorized to do so, is binding upon the company, and a court of equity will compel a specific perform- ance of the contract,^ and Avhere a definite time is agreed upon. Ins Co. 9 How. (U. S.) 390. In Ellis v. Albany City F. Ins. Co. ante Gboveb J., said: " Whatever doubts may formerly have existed as to the validity of parol con- tracts of insurance, made by insurance companies authorized by their charters to jnake insurance by issuing policies, it is now settled that they are valid. It is ■equally well settled that parol contracts of such companies to effect an insurance by issuing policies-, are valid, and will be enforced by compelling specific perform- ance by the company, or in an action for a breach of the agreement ; in either of which a recovery for a loss of the property agreed to be insured will be awarded to the plaintiff." Kentucky Mut. Ins Co. v. Jenks, 5 Ind, 96; Idey. Phenix Ins. Co., ■2 Biss. (U. S.) 333; Mills \. Albion Ins. Co., 4 C. C. (Sc.) 575; Angela. Hartford -F. Ins. Co., 59 N. T. 171; Shearman v. Niagara Fire Ins Co., 4S N. Y. 530: Kelly V. Com. Ins. Co., 10 Bos (N. T.) 82; Baxter v. Massasoit Ins. Co., 13 Allen (Mass.) 320; Hamilton v. Lycoming Ins. Co., 5 Penn. St. 339; Bray don v. Appleton, etc.. Ins. Co., 42 Me. 259; Davenport v. Peoria, etc., Ins. Co., 17 Iowa, 276; Audubon V. Excelsior Ins. Co., 27 N". Y. 216. ' Jones V. Provincial Ins. Co., ante; Dunning v. Phenix Ins. Co., 68 111. 414; Gerrish v. German. Ins, Co., 55 N. H. 355; Kelly v. Com. Ins Co., 10 Bos. (N. Y.) :82. ' In Audubon v. Excelsior Ins. Co., 27 (N. Y.) 216, the court held that a verbal agreement to insure property against fire is valid, where all the terms have been -agreed upon except the rate of premium, where a former rate had been fixed, and nothmg was said about any change therein, is valid and binding, the presumption heing that the same rate would continue, and the company under such a contract was held liable for a loss occiuring the next day after the contract was made, and before the policy had been delivered. In Franklin Inn. Co. v. Hewitt, 3 B. Mon. (Ky.) the defendant company agreed to deliver the plaintiff a policy covering cer- tain property, the terms and conditions of the insurance being agreed upon, but it sent a policy varying from the contract, and a loss occurring within the insm'ance contracted for, but which was not covered by the policy, it was held that a recovery might be had according to the contract agreed upon, it being shown that they had never seen the policy until after the loss, and were not aware of the variance be- tween the policy and the contract. In Davenport v. Peoria Ins. Co., 17 Iowa, 276, an agreement for insurance was entered into through the defendant's agent, and on the next day a policy was delivered and received by the plaintiff, dated as of the previous day. Before the policy was delivered a loss occurred, and the company was held liable therefor, although the charter of the company provided that all policies should be subscribed by the president and signed and sealed by the secretary, and that the premium was not paid imtil the policy was delivered. In Goodall v. N. E. F. Ins Co. , 25 N. H. 169, the secretary of the defendant company delivered to the plaintiff a memorandum, stating that the directors consented to continue in force a policy previously issued to him by the company, and that it might cover cer- tain property not embraced in the previous policy, and it was held that this certifi- cate was evidence of a valid contract of insurance, upon which the defendants were liable. See also. State etc., Ins. Co. v. Porter, 3 Grant's Cases (Penn.) 123, and Eureka Ins. Co. v. Robinson, 56 Penn. St. 256, in which it was held that in such cases it will be presumed that the contract entered into Js that ordinarily and usually expressed in the form of policy employed by the company at the time when the contract was made, and that the declaration may set forth the contract in accord- ance with such form. But if any special contract differing therefrom was made, it should be specially set forth. Davenport v. Peoria Ins. Co., ante. Patterson v. Ben Franklin. Ins Co., 81* Penn. St. 454. ' Kclleyv. Commonu'ealth Ins. Co., 10 Bos. (N. Y.)S2; Commercial Mut. Zlnrine 36 FlKE l2!fSURANCE. •within which it shall be issued, no demand therefor is necessary .1 In the absence of any averment as to the form of the policy agreed to be issued it will be presumed that it was to be in the usual form of policies issued by the company,^ with such changes, if any, as. were agreed upon. Ho'W proved. Sec. 13. A contract of insurance, or to insure, is established by the same class of proof required to establish any other contract. If there has been any correspondence between the parties, relative' to the matter, it is competent evidence either to prove or disproye the fact that a contract was made, but is not always conclusive. The burden of establishing it is upon the assured, and he must satisfy the jury that a complete and perfect contract was made ; * Ins. Co. V. Union Mut. Ins. Co., 19 How. (TJ. S.) -318; N. England, etc., Ing. Co. v. Robinson, 25 Ind. 536; 5 Bennett's F. I. C. 62; Union, etc., Ins Co.-v. Commercial, etc., Ins. Co., 2 Curtis (U. S.) 524. But in all such cases, in order to entitle the party to specific performance hy issuance of a policy, a valid contract must be estab- lished, and the party must show that he has comphed with all the conditions thereof. Thus, where the plaintiff did not establish a contract entered into with an authorized agent of the company, and payment of the premium, the relief was denied ; Dem- ing V. Phoenix Ins. Co., 68 111. 414; but payment of the premium, as well as other conditions, may be waived as a condition precedent, but the burden is on the; party applyingfor relief to estabUsh the waiver. Davenport v. Peorialns. Co., ante. In Gerrish, etc, v. Gennrin Ins. Co., .55 X. H. .355; 5 Bennett's F. I. C. 726, the plaintiff made a contract with the defendants' agent to insure a quantity of wool for S 3,500, for one year, commencing Sept. 30th, 1873, at noon, and the agent agreed to procure and deliver a policy therefor. Oct. 1st, 1873, the wool was de- stroyed by fire. Xo policy had been delivered. The plaintiff made preliminary proofs, and demanded a policy and payment of the loss, which was refused. A bill in equity was brought to compel a delivery of the policy, and for payment of the loss, and the court held that he was entitled to a decree of specific performance,, compelling a delivery of the poUcy, and to prevent circuity of action, to compel a payment of the loss. ^ West'n Mass. Ins Co. v. Duffy. 2 Kan. 347. 2 Smith V. State Ins. Co. (Iowa) 21 X. W. Kep. 145; Hubbarfi v. Hartford Ins. Co. 33 Iowa 125; De Grau v. Ins. Co. 61 X. T. 594; 2 Strohn v. Hartford F. Ins. Co., 37 Wis. 625 ; 19 Am. Eep. 777 ; 5 Bennett's F. I. C. 491 ; MrCullough v. Eagle Ins. Co., 1 Pick. (Mass.) 280 ; Trustees, etc., v. Brooklyn F. 7i<.s. Co., 19 X^. T. 805. In Ide v. Phenix /n.s. Co., 2 Biss. (U. S.) 333 f 5 Bennett's F. I. C. 318, the agent was familiar with the property, and offered to insure it for three years for a certain premiimi, which was paid to him by the ' plaintiff. The policy was not made, but the insured called for it frequently, and failing to get it, soon after left the State. Before the agent had remitted the- premium to the company, the property was burned. The agent appropriated the money to his own use, and never reported the risk. The loss was promptly re- ported to the agent, who promised that it should be paid at various times between the autumn of 1864 and 1866. In 1866 the agent notified the assured that the company- would not pay the loss. The court held that the contract was binding upon the defendants, and that the fact tliat proofs of loss were not made, or the actioa: brought within a year, was not fatal to a recovery, as the acts of the agent amounted to a waiver of compliance with the conditions. In Baubie v. ^tna Ins. Co., 2 DHL (U. b. C. C.) 156 ; 5 Bennett's F. I. C. 526, the defendants' agent, who was sup- pUed with policies signed in blank, entered into a contract with the plaintiff to in- sure certam property for him to the amount of §4,000, for six months, and issued a. Paeol Agreements tor. 37 that an agreement was entered into, and that nothing essential to the contract was left open for future determination,^ and the au- thority of the agent with whom it was made must be established,^ and the proof must be clear that such a contract was made, or an action will not be upheld upon it at law, nor will, it be enforced in equity.^ If the premium is not fixed, and there is anything to policy to him therefor, and renewed it for six months after the policy expired. An agreement, however, between the plaintiff and the agent was shown, by which the agent agreed to renew every six months and draw for the premium. He did not do so, however, and the property was burned. The court held that the contract was binding upon the company, and that the plaintiff could not be affected by any private instructions given the agent, or by any secret limitations upon his powers. See also, Taylor v. Germania Ins. Co., 2 Dill. (U. S. C.C.) 282 ; 5 Bennett's F. I. C. 454; also SotchkissY. Germania Ins. Co., 5 Hun (N. Y.) 90, in which, imder a very similar state of facts, a similar doctrine was held. See Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.) 448. As bearing upon the effect of secret instructions to the agent, the case of Citizen's Mut. F. Ins. Co. v. Sortwell, 8 Allen (Mass.) 217, is a strong one. In that case the directors issued instructions to their agents that distilleries were not insurable. The agent, however, in defiance thereof, issued a policy to the plaintiff upon his distillery, and received a premium note from him therefor. The court held that the policy was obligatory, notwithstanding the in- structions, and formed a good consideration for the note. See also, Franklin F. Ins. Co. V. Massey, 3.3 Penn. St. 221, where the agent was directed to cancel a policy, but neglected to do so, and the company was held responsible for a loss occurring ■thereafter. ' StrohnY. Hartford F. Ins. Co., ante; Neville Y. Merchants', etc., Ins. Co., 19 Ohio, 4.52 ; Eliasen v. Hurshaw, 4 Wheat. (U. S.) 228 ; Ocean Ins. Co. v. Carring- ton, 3 Conn. 357 ; Hallock v. Ins. Co., 27 N. J. 268 ; Belleville Mut. Ins. Co. v. Van Winkle, 12 N. J. Eq. 333. ^ In an action upon a parol contract of insurance alleged to have been entered into by defendant through its agent B, it appeared that B was not in fact authorized to make contracts of insurance, but merely to receive and forward applications, de- liver policies sent to him, and collect premiums thereon ; that when he took plain- tiff's application no money was paid, but the understanding was that the premium should be paid on the receipt and delivery of the policy ; that B then assured plaintiff that the insurance would take effect from the date of the application ; that lie was in fact authorized to make insurance take effect from the time of the appli- cation, subject to the approval of the general agent, upon a certain class of property, but that the property here in question was not of that class ; and that plaintiff's risk was not accepted by the general agent, but was rejected by him after the prop- erty was burned, but before he had knowledge of the fact. There was no evidence that defendant ever held B out as clothed with authority to take risks for it, or that it knew that he was acting beyond his authority ; and plaintiff knew that B had no authority to issue the policy, but that it was to be issued by the general agent, upon his approval of the application ; and he took additional insurance in another company in consequence of the delay in receiving a policy from def endent, although B assured him that his insurance with defendant was valid. It was held, that there was no valid contract of insurance between the parties. Fleming v. Hartford Fire Ins. Co., 42 Wis. 616. ^ Neville Y. Merchants' etc.. Ins, Co., 19 Ohio, 452. In Perkins y. Washington Ins. Co., 4 Cow. (N. Y.) 645 ; 1 Ben. F. Ins. C. 148, the defendants' agent was authorized to receive applications for insurance, and, with the premium, forward them to the insurer, when, if the company was satisfied with the risk, and recog- nized the rate of premium, a policy was to be issued binding as of the time of the agreement. The agent received a premium at the established rate of the plaintiff, imder an agreement to insure his goods, but before the application was forwarded T)y him, a loss occurred, and the defendants claimed that, as they had not assented to the premium, no perfected contract existed. But the court held that, as the rate was the usual rate charged by the company, it could not arbitrarily object thereto. 38 Fire Insurance. show that the amount was in dispute, so that the presumption as to former or customary rates does not apply, no contract exists ; ^ or if any essential details of the contract are not agreed upon,^ as if the apportionment of the risk is not determined,^ or if the risk is not as described by the assured,* or if the policy has not been accepted, or its terms assented to ; ^ if the duration of the risk is not agreed on,® if the premium has not been paid, when payment ' thereof is a condition precedent,^ or if the assured has once refused, to receive the policy, he canrfbt afterwards insist upon its delivery without the insurer's consent.* It is competent for the company, when the evidence is doubtful as to whether a contract by parol has in fact been entered into, to prove that it was the usual course of business of other insurance or reject the risk after a loss. Wood worth, J., in a very able opinion, discussed! the relative rights of the assured and the insurer, in such cases, and clearly illus- trated the rule, that a court of equity would, in all cases, enforce a contract entered into by the insurer's agent, within his apparent power, when there was no fraud on the part of the assured, and a loss had intervened, which was evidently the only ground which induced the action of the company. The court decreed payment of the amount of the loss. See also, to same effect, Woodbury Savings Bank v. Char- ter Oak Ins. Co., 31 Conn. 518 ; Leeds v. The Mechanics' Ins. Co,, 8 N. Y. 351 ;. Hallock V. Commercial Union Ins. Co., 26 N. J. 268 ; Lightbody v. N. American Ins. Co., ante, as to powers of an agent to bind the company by such contracts. 1 Orient Mut. Ins. Co. v. Wright, 23 How. (U. S.) 401 ; First Baptist Church v. Brooklyn F. Ins. Co., 28 K Y. 153. In Christie v. N. British Ins. Co., 3 C. C. (Sc.) 360, Lord Justice Clerke said: "If the premium in this case had been agreed on, the insurance would have been effected, although no policy was delivered ; but the premises here cannot be held to have been insured, the premium never hav- ing been determined on, and never having been fixed by the Phoenix office." 2 Phlato V. Merchants' , etc., Ins. Co., 38 Mo. 248 ; Mut. Life Ins. Co. v Young, 5 Ins. L. J. 17 ; Winnisheik Ins. Co. v. Holzgrafe, 53 111. 516 ; Bidwell v. St. Louis: Floating Bock Ins. Co., 4 Mo. 42. 3 Sandford v. Trust F. Ins. Co., 11 Paige Ch. (N. Y.) 547. In Khnball v. Lion Ins. Co. 17 Fed. Rep. 625 an oral agreement of an insurance agent to take fiv& thousand dollars insurance upon property, the apportionment of the amount to be placed upon the real estate and the amount upon the personal property, not having, been agreed upon, was held to incomplete. ■• Chase v. Hamilton, 20 N. Y. 52 ; Watt v. Ritchie F. D., {Sc.) 43 ; Mead v. Westchester Ins. Co., 64 N. Y. 423 ; Goddard v. Monitor Ins. Co., 108 Mass. 56 ; 5- Bennett's F. I. C. 377. s Wood-v. Poughkeepsie Ins. Co. .32 N. Y. 619; Bennett's F. I. C. 60; Lindauer V. Bel. Mut. Ins. Co., 13 Ark. 461 ; Rose v. Medical, etc.. Association Soc, 20 Scot'* Jurist. 534; Real Estate, etc., Ins. Co. v. Roessle, 1 Gray (Mass.) 335. « Strohnv. Ins. Co., ante; Tyler v. New Amsterdam Ins. Co., 4 Rob. (N. Y.) 151. ' Train v. Holland Purchase Ins. Co., 62 N. Y. .598; Berthoud v. Atlantic Ma^ rine & F. Ins. Co., 13 La. 539; St. Louis Mut. I^ife Ins. Co. v. Kennedy, 6 Bush (Ky). 450; Walker v. Provincial Lis. Co., 7 Grant's ch. (Canada) 137; Hieman v. Phcenix Mut. Ins. Co., 17 Minn. 153; Ilardie v. St. Louis Mut. /ns. Co., 26 La. An. 242; Collins V; Im. Co. 7 Phila. (Penn.) 201 ; Myers v. Keystone Mut. Life Ins. Co., 27 Penn. St. 268; Rogers v. Charter Oak Ins. Co., 41 Conn. 97. 8 Schwartz V. Germania Life las. Co., 18 Minn. 448; Ocean Ins. Co. v Carrirut- ton, 3 Conn. 357. ^ Paeol Agreements eob. 39 aompanies, acting through their agents in that place, to receive pro. positions for insurance hy parol, and that when accepted, the trans- action was entered and recorded on their books as an agreement between the parties for insurance, upon the terms and conditions of the policies in use by such companies, a policy to issue at any time on request, and that the parties contracted in reference to such usage. ^ All conditions precedent must be complied with. Sec. 14. In order to make a perfected contract binding upon the parties, all conditions precedent must be complied with. Thus, the plaintiff applied March 16, 1849, for |1,500 insurance upon his factory, etc., in the defendant company. The defendant's secretary accepted the offer at three per cent., to which com- plainant assented by letter ; but it miscarried ; and, subsequently, complainant saw the secretary, mentioned the fact that he had sent the letter, requested a policy, and offered to pay the premium. The secretary replied that he did not know then how much the balance would be ; that complainant might send it at any time, and also assured complainant that his property was then insured ; that he would make out his policy and send it right away. It was made April 18th, and on the 20th the secretary enclosed a premium note to complainant, requesting him to sign and remit it with $7.20 cash, promising to send the policy. The note was one of the usual printed blanks, requiring complainant to procure a surety for its payment. The letter and note were deposited in the post-office at Belleville, April 21st ; and on the 22d, before the note could be returned, the premises were consumed by fire. Complainant tendered the note and the money after the fire, but they were refused. The court held that there was not a completed contract, because the act of incorporation provided that " Every person who shall become a member by effecting insurance shall, before he receive the policy, deposit his premium note for such a sum as may be determined by the directors ; " and that there was no contract until the deposit of the note.^ Plaintiff must establish contract. Binding receipts. Sec. 15. So, too, the plaintiff must conclusively establish the 1 ^tna Ins. Co. v. If. W. Iron Co., 21 Wis. 458. s Belleville Mut. Ins. Co. v. Van Winkle, 12 N. J. Eq. 333. 40 FiKB Insurance. fact that a contract was made, and if the matter is left in doubt,, the insurer is entitled to the benefit of it.^ So long as the looug penitentice exists, that is, so long as the matter is in a situation that either party can recede from or withdraw his offer, no per- fected contract exists. Thus, it has been held that if the offer is made by mail, and is withdrawn before the other party has posted his acceptance of the terms, although he does not receive the letter withdrawing the offer until after the acceptance is mailed ; ^ or if the letter of acceptance is in the hands of the agent of the as- sured at the time of the loss, and is not seasonably forwarded, the insurer cannot be held chargeable for the loss.^ But this doctrine has been somewhat impugned by a later case in the United States Court,* and by several cases in the courts of other States,^ and the doctrine as established by the later cases would seem to be, that the locus penitentice is lost, if an acceptance ^ McCann v. ^tna Ins. Co. 3 Neb. 198. A receipt given by tlie agent of an in- surance company for a draft given by one claiming to have been insm'ed is not evi- dence of a contract of insm-ance, especially where the draft has never been collected, and was tendered back, and the authority of the agent to make a contract binding upon the company, denied. Parol evidence, in such a case, is receivable to explain the receipt. Todd v. Piedmont & Arlington Life Ins. Co. 34 La. An. 63. But clearly such a receipt is admissible upon the question as to whether a contract was made, and is entitled to considerable weight upon the question. If a contract was made, the fact that the draft was not collected, has no bearing upon the question, except where the contract was one which the defendant could rescind. If the policy ordinarily issued by the company provided for rescession then the offer to return the draft, and a refusal to deliver a policy would doubtless be equivalent to a cancella- tion of the policy. A fire-insurance company, having received an application for a Ijolicy, contracted to accept the risk for the term of thirty days from date, " unless the applicant is sooner notified of its rejection. If he receives no notice that the risk is rejected, the insurance will cease at the end of thirty days, unless a regular policy has been issued. After the expiration of the thirty days, a loss occurred, no policy having been issued nor notice of rejection given. It was held that the com- pany was not liable. Barr v. North America Ins. Co., 61 Ind. 488. ' In McCulloch v. The Eagle Ins. Co., 1 Pick. (Mass.) 211, the question as to what constitutes a perfected agreement, arose upon the following state of facts : " On the 29th of December, 1820, the plaintiff, who lived in Kennebunk, in Maine, wrote to the defendants requesting to know on what terms they would insure $ 2,500 on his brig Hesper, and cargo, from Martinico to the United States. The defendants, on the first of January, 1821, sent an answer, saying they would take the risk at two and a half per cent. This letter was received by the plaintiff the 3rd of January, on which day he wrote a reply requesting the defendants to fill a policy on the terms proposed by them. The defendants, on the 2d of January, wrote again to the plain- tiff, declining to take the risk, but the plaintiff had sent his letter of the 3rd before he received the last letter of the defendants. All the letters were sent by mail, and were duly received by the parties respectively. The vessel was afterwards lost on the voyage." The court held that there was no perfected contract between the parties, and that the plaintiff could not recover for a loss occurring thereunder. 3 Thayer v. Middlesex Mut. Fire Ins. Co., 10 Pick (Mass.) 326; 1 B. P. Ins. Cas. 329. * Tayloe v. The Merchants', etc. Ins. Co., 19 How. (TJ. S.) 390. 5 Hamilton Y. Lycoming Ins. Co., 5 Penn. St. 339; Hallock v. Commercial, etc., Jns. Co., ante. Parol Agreements foe. 41 of the offer is posted before the letter withdrawing the terms is re- ceived, even though it was posted before the letter of acceptance is mailed. It is perhaps questionable, however, whether the latter •doctrine can hold, if the insurer by his letter of withdrawal has placed himself in a position that Tie could not enforce the contract hy compelling the acceptance of a policy made according to the con- tract, and it wonld seem that such would be the position of the parties. The question may perhaps be regarded as an open one and its solution must depend largely upon the circusmtances of «ach case;^ If the evidence is conflicting, and it is not clear that a contract "was, in fact, made, a bill for specific performance will be dis- missed,2 and no recovery can be had at law.^ The proof may be ' It is proper to say that the weight of authority is opposed to the doctrine ■expressed in JfcOitHocft V. Eagle Ins. Co., ante, and the locus pemfeniioB is re- garded as ended when tlie offer or acceptance lias passed beyond the control of tlie party so that lie cannot recall it. Therefore, when he mails an offer or accept- ance, he cannot recall it, after the other party has accepted his terms; by himself having mailed a notice thereof before any notice of a recall of the terms has been received by him, although it may be on its way, by due course of mail. This ■question was discussed in Adams v. Lindell 1 B. & Aid. 681, and what would seem to be the true doctrine was announced. In that case the defendants, on Sept. 2d, by mail, offered to sell the defendants a quantity of wool. Their letter <;outaining the offer was as follows: " We now offer you 800 tods of wether fleeces, of a good fair quality, of our country wool, at 35s. 6d. per tod, to be ■delivered at Leicester, and to be paid for by two months' bill in two months, and to be weighed up by your agent within fourteen days, receiviivi your answer in ■course of post." This letter was misdirected, and inconsequence did not reach the plaintiff until the evening of Sept. 5th. On that evening the plaintiff wrote and mailed an acceptance of the wool on the terms proposed, and the answer did not reach the defendant until Sept. 9th. On the 8th of Sept. not having heard from the plaintiffs, the defendants sold the wool. The court, at nisi prius, told the jury that, as the delay in the receipt of the offer was due to the negligence of the defen- dants in directing the letter, they must take it ; that the acceptance was sent by ■due course of post, and that the defendants were liable for the loss sustained. Upon a rule for a new trial, the ruling was sustained, the court saying in reply to the argument of the defendant's counsel, that there was no contract imtil the acceptance was actually received by the descendants : " If that were so, no contract ■would ever be completed by post; for, if the defendants were not bound by their ■offer when accepted by the plaintiffs, till the answer was received, then the plain- tiffs ought not to be bound till after they had- received the notification that the •defendant had received their answer and assented to it ; and so it might go on ad infinitum. For the defendants must be considered in law as making during every instant of time their letter was traveling, the same identical offer to the plaintiffs ; and then the contract is completed by the acceptance of it by the latter." While the letter is under the control of the party, as if it is in the hands of an agent, it may be recalled, but when it is placed in th« public post, it cannot be, unless the the other party is notified in person, or by telegraph, before his receipt of the letter and the acceptance of the terms offered, that the offer is recalled. Xor then, •can he recall an acceptance, of an offer, when a loss has intervened 6e/ore the acceptance, or recall. Ilolbrook v. Commercial Union Ins. Co., ante ; Hamilton V. Lycoming Ins. Co., ante. ^ Suydam v. Columbus Ins. Co., 18 Ohio, 459; Binning v. Phenix Ins. Co., 68 111. 414. ' Strohn v. Hartford Ins. Co., ante ; Hartford Fire Ins. Co., v. Wilcox 57 111. 180; 5 Bennett's F. I. C. 321. 42 FiEE Insueastcb. by parol, but must be full and clear,' and proof of a mere offer oii the one hand without acceptance on the other, or of an incom- plete contract, that is, when anything is left open for future adjustment, either as to the amount, of the risk, the premium to be paid, or the duration of the risk, no contract obligation exists.^ The fact that an application has been made for insurance, and a. long time has elapsed, and the rejection of the risk has not been signified, does not warrant a presumption of its acceptance. In such cases there must be an actual acceptance or there is no con- tralct.^ But, where the insurer or his agent has done or said anything that induces the assured to believe that the risk is accepted, the insurer will be estopped frpm denying its acceptance. Thus, in a, Canada case,* the plaintiff applied for insurance, and the agent who took the application gave him a binding receipt for twenty- one days, pending the approval of the company. The receipt was. given October 27th, and on the 1st of December, the property was destroyed by fire. No policy had been issued, but prior to- the fire the plaintiff had applied to the agent for the policy, and the agent, relying upon the fact that the application had not been rejected, told the plaintiff that the risk was accepted. The company, however, after the loss, insisted that the risk had not been accepted, but the court held that the insurer, in view of what the agent had told the plaintiff, and the confidence thereby induced in the plaintiff, was estopped from denying its acceptance: of the risk. Where a permanent risk exists, and a policy is outstanding upon the property, and a builder's risk is applied for which is- granted by parol, it is good, even though the amount to be paid therefor is left open and indefinite. But this is rather in the nature of a license, than of a contract for insurance, and, even though nothing was paid therefor, if the insurers assented to carry the risk, with the increase of risk incident to the change in its- ' Mills Y. Albion Ins. Co., 6. S.&D. 409; N. W. Ins. Co. v. ^tna Ins. Co.r 23 Wis 160; N. E. Ins. Co. v. Bobinson, 2.5 Ind. 536; Kelly v. Com. Ins. Go. 10 Bos. (N. Y.) 82. •2 Strohn v. Hartford Fire Ins. Co., ante ; Kelly v. Com. Ins Co., ante ; McOul- loch Y. Eagle Ins. Co., ante ; Tyler v. New Amsterdam, etc., Ins. Co., ante ; Trus- tees, etc., V. Brooklyn Fire Ins. Co., 28 N. Y. 153, also 19 N. Y. 305; Audubon v. Excelsior Ins. Co., Tl N. Y. 216. ' Ins. Co. V. Johnson 23 Penn. St. 72. * Penley v. Beacon Ins. Co., 1 Grant's Ch. (Ont.) 130.. Pakol Agreements foe. 43 character, they would be estopped from setting up the increase of hazard in avoidance of liability .^ In an action upon an oral contract of insurance, the fact that the agent's book in which he enters risks does not contain "an entry of the risk in suit, does not tend to show that no such con- tract was made, and the book is not admissible as evidence upon that point.^ Policy may be renewed by parol. Sec. 16. A contract of insurance may be made or modified by parol ; consequently, a renewal of a policy may be modified by parol so as to express a different contract from that expressed by the policy. Thus, in a New York case,^ the plaintiff procured an insurance on stock, on the first floor of 39 Centre street, in New York city. Subsequently, the plaintiff removed the goods to an upper story of the same building and the same number ; after the removal of the goods, the policy was renewed. Previous to the renewal of the policy, the defendant's agent called upon the plaintiff, and then knew by actual observation, and was also in- formed by the plaintiff, that the insured property was moved " up stairs." The renewal receipt described the premises as 39 Centre street, N. Y., and omitted the words " first floor," and purported to renew and keep on foot the original policy. A loss having occurred, the defendant company denied all liability, because the goods were removed from the first floor, as described in the policy, to an upper story of the same number, but the court held, that, as the company had notice of the change of location before the policy was renewed, it would be presumed that they intended, by the con- tract of renewal, to modify the original contract so as to make it operative to cover the goods where they knew they were, and not to impose upon the assured by inducing him to believe that his property was insured, when in fact it was not^ ^ Walker v. Metropolitan Ins. Co., 47 Me. 361. ^ Sanbornv. Fireman' s Ins. Co., 16 Gray (Mass.) 448. It is suflBcient if a contract is established, and the fact that no record of the risk exists upon any of the company's books, win not defeat the claim. Warren v. Ocean Ins. Co., 16 Me. 439. 2 Ludwuj V. The Jersey City Ins. Co., 48 N. T. 379; BauUe t. JEtna Ins. Co., 2 Dill.(U. S'. C. C.)156. ^HuNT, C, in delivering the opinion of the court, said: " An insurance against loss by fire may be made by parol as well as by writing. Fish v. Cottenet, 44 "N". Y. 538 A written contract of insurance may be modified by parol without the pas- sage of any new consideration to support it. Trustees First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 305; Blanchard v. Trim, 38 id. 225. Every re- 44 Fire Insukancb. Burden extends to shov7ing authority of the agent. Sec. 17. The burden is upon the person seeking to enforce a parol contract of insurance, to establish not only the making of a contract, but also the authority of the agent to make it ; and if any waiver is relied upon, both the waiver and the authority of the agent to make it ; and it has been held that mere general ex- pressions, that do not clearly and necessarily import an assent or agreement, are not sufficient to establish either an agreement or a waiver. Thus, where the ddffendants' solicitor, simply empower- ed to solicit renewals, called at the plaintiff's place of business just before a policy, issued by his principals upon the plaintiff's property, expired, to renew it, and the plaintiff being absent, the solicitor was told, by the plaintiff's clerk, that the policy could be renewed, and that if he would carry the risk and send him the bill, he would pay upon presentation, to which the solicitor replied, newal of a policy constitutes a new contract, and the old contract may be modified in any of its parts at the pleasure of the parties. A contract is to be construed to mean: 1. What its terms plainly express; or, 2. What the promisor intended the promisee to understand, that it meant, liottsford v McLean, May, ISTO;' Here the insurance liad expired, or was about to expire. No loss had been incurred, and no liability existed. Both parties wished the contract to be extended. The plaintiff desired an insurance upon his goods in the upper stories of the building. He had none in the lower story. The company wished to insure liiin on his goods where they were, but not where they were not. Knowing exactly where they were, they receive the compensation for one year's insurance and deliver him the contract be- fore us. I doubt not that they intended to give him a valid insurance, and intended him to believe that he had received such. To suppose otherwise would be to im- pute to them a fraudulent disposition which there is nothing in the case to justify. The parties supposed that the paper delivered reached the case, and intended that it should. We can accomplish this intent by such a construction of the writing. It is as if the defendant had indorsed upon the policy a memorandura that the lo- cation of the goods had been changed, or as if notice of that fact had been verbally given and assented to. The contract would then have been for an insurance upon goods on the first floor, modified as to the floor or story. The modification is established in two modes: 1, by the new paper, which, referring to the policy, de- scribes also the goods as being simply in store No 39 Centre street; and, 2, by the fact that the defendant knew perfectly where the goods were, and insured them there, or intended the plaintiff to suppose that it did so insure them. BoUford v. McLean, supra. If the plaintiff had said to the defendant at its office, I have re- moved my goods to the third story, I wish to continue the insurance for one year, and had paid it thirty dollars, which it had received, it would certainly have "been liable in case of a loss. The reference to the first story in the original policy would have been deemed to have been modified by the notice and the acceptance of the premium. The plaintiff has lost nothing by taking a receipt which, so far as it goes, sustains his view of the case. The only support of this defense is the position that, when it gave the renewal receipt, thedefendant did not intend to make any further insurance. This cannot be sustained without an imputation on its hon- esty. It knew when it took the premium that something was expected of it. Men do not pay moneys to insurance companies gratuitously, without expectation of benefit or. return. It knew, also, that the plaintiff had no property on the first floor to be protected. The only possible alternative is the case claimed by the plaintiff, to wit : that the original contract was understood and intended to be mod- ified by applying the policy to the goods on the upper stories. Salomes v. The But- ger Fire Ins. Co., 3 Keyes, 410; Mayor v. Exchange Fire Insurance Co.. id 436- Plumh V. Cattaraugus Co., 18 N. Y. 392." Parol Agreements for. 45 " all right," and went away, and the policy was not renewed, nor the premium paid, or offered to be, until after a loss, it was held that this was not sufficient evidence either of an agreement to renew, or of the waiver, or of the authority of the solicitor to waive the pre- mium, and the bill to compel the making of the policy was dis- missed.^ If there is any doubt, the plaintiff is not entitled to have a specific performance,^ and in any event, in order to recover he must comply with the requirements of the policy, as to notice and proofs of loss.^ An unrestricted authority to insure premises by the issue of a policy, carries with it, by necessary inference, au- thority to bind the company by a preliminary contract to insure.* Applicaticn, and acceptance of risk by mail. Sec. 18. When application is made for insurance by mail, and the agent taking the application has no authority to bind the company during the pendency of the application, or there is noth- ing in the application itself that binds the company in the interim of time, the risk does not attach until it is actually accepted by the company. But as soon as the risk is accepted, and acceptance is signified hy the posting of a notice thereof the contract is complete ; ^ 'Eamiltonv. Home Insurance Co., 6 Biss. (TJ. S.) 9. See also, Neville -v. The Merchants' etc Ins. Co., 19 Ohio, 452. ^Neville v. Ins. Co., ante; McCann v. ^tna v. Ins. Co., 3 Neb. 198. ^Hoff V. Ins. Co., 4 John. (N. Y. ) 132; Columbian Ins. Co. ^..Lacorina, 2 Pet. (U.S.) 5.3. ■• Humphrey v. Hartford F. Ins. Co., 15 Blatchf. (U. S. C. C.) 504. *In Tayloe v. Merchants' F. Ins. Co., 9 How. U.S. 390, the complainant applied to the defendants' agent for $8,000, insurance upon his dwelling-house for one year, The agent was requested to fill up the application for him, and state the reason that prevented the plaintiff from signing it, and to send the company's answer to him. The agent did as requested, Nov. 25th. The company replied that the risd would be taken at 70 cents premium; and the agent, on receipt of the company's reply, giving their terms, stated: ">hould you desire to effect the insurance, send your check for $57, to my order, and the business is concluded." This was mailed to the plaintiff on the 2nd day of Dec, but being misdirected, did not reach the plaintiff until the 20lh of Dec. Upon the 21st of Dec. the plaintiff sent his check for $57 to tlie agent, but the letter was not received by the agent until Dec. 31st. On the 22nd day of Dec. a part of the premises were destroyed by fire, and the agent refused to effect the insurance upon the ground that the accept- ance came too late. The court held that the liability of the defendants was fixed by the acceptance of their terms by the plaintiff, and that the offer, under the cir- cumstances stated, giving the terms, was intended and was to be deemed a valid undertaking, on the part of the company; that they would be bound by the terms of the offer, if an answer should be given, in due course of mail, accepting them, which could not he withdrawn, unless the withdrawal reached the party before his acceptance of the terms had been posted. In reference to the delay in transmission, the court held that the plaintiff had a right to regard it as a continuing offer until the letter signifying the offer reached him, and was in due time accepted or rejected by him. Hallock v. Ins. Co., 26 N. J. 268; Eliasan v. Hurshaw, 4 Wheat. (U. S.) 228; Luncistrassy. German Ins. Co., 48 Mo. 201; Mactier y. Frith, Q Wend. {1^ . Y.) 104; Perkins \. Washington Ins. Co., 4 Cow. (N. Y.)64o; Hallock Y. Com. Ins. Co., 46 Fire Insueance. and has relation hack to the time when the application was made, or the time designated in the application — if any — when the risk should ■commence, and covers a loss occurring before the acceptance} As to whether the company is bound for a loss occurring " pending the application," depends, 1st, upon the question whether the agent had power to so bind the company, and 2d, "whether he so contracted with the applicant. If he had no power to bind the company, the fact that the premium had been paid to iim and had not been refunded when the loss occurred, and the application had been pending six months and neither been accepted or rejected, does not charge the company for the loss.^ So where an agent is authorized to bind the company pending advisement, the contract ceases to be operative after notice of its rejection has been mailed to him and has reached the post-office where he gets his mail, and the fact that he did not get it until after a loss, will not render the company liable, if his failure to get it resulted from his failure to go to the post-office seasonably.^ When the company has acted upon the application, and finally rejected it, and has mailed or sent a notice of its rejection hy the usual mode, its liability under a binding receipt is ended, after the lapse of a reasonable time^for 27 N. J. 268; Ocean Ins. Co. v. Carrington, 3 Conn. 357; Ins. Co. v. Colt, 20 Wall. (U. S. ) 560 ; Audubon v. Excelsior Ins. Co., 27 N. T. 216. Id Frieda. Boyal Ins. Co., 50 N. T. 243, the plaintifE applied for $5,000 Insurance upon the life of her husband. The application was made, the rate of premium was fixed, and paid by the plaintifE to the defendants' agent, and a receipt taken therefor. The pro- posal was duly forwarded and accepted by the company, and a policy forwarded to the agent to be executed and delivered. The agent executed the policy, but refused to deliver it, because he had ascertained that the health of the assured had failed. When the next premium became due, she tendered the premium to the agent, who refused to receive it. The assured died before another premium became due, and proofs of death were duly made, and an action brought to recover on the policy. The court held that a binding contract existed; and that the plaintifE was entitled to recover the loss. A similar doctrine was held in Cooper v. Pacific Mut. Ins. Co., 1 Nev. 116. In that case the plaintiff entered into a contract with the defendants' •agent to insure her husband's life, made an application therefor, and paid him $50, to apply on the first year's premium, in case the company should conclude to issue a policy. The application was sent, and a policy was issued and forwarded to the agent for delivery. It did not reach the agent until after the husband's death. The court held that by the acceptance of the risk, the contract became a valid con- tract as of the date of the application, and that she was entitled to recover the amount insured. Callaglian v. Atlantic Ins Co., lEdwards'Ch. (N.T.) 64; Rhodes V. Railway Pass Ins Co., 5 Lans. (N. T.) 71; Whitaker v. Farmers' etc., Ins. Co., 29 Barb. (N. Y.) 312; Post ^tna Ins Co., 43 id. 351. ^Lighthody v. N. American Ins. Co., 23 Wend. (X. Y.) 18; Kohn. v. 7ns. Co., 1 Wash. C. C. (U. S.) 93; Genl. Int. Ins. Co. v. Buggies 1 Wheat. (U. S.) 408. ^ Ins. Co. V. Johnson, 23 Penn. St. 72. /w^^Tr ^' ^9'''*CM««»-a' Ins.Co., 11 Grants' Ch. (Out.) 125; Fish v. Cottinett, 44 Paeol Ageebments foe. 47 the receipt of such notice hy the agent, even though he in fact never receives it^ and the fact that the receipt provides that the party is " to be considered insured " for a specified time, as twenty-oue ■days, does not aid the applicant, if his application has been re- jected before the lapse of such period and notice thereof properly sent to the agent. In such case the insurance ceases within a reasonable time after notice of the rejection of the risk is sent, ■even though the period stated in the receipt has not expired. ^uch a receipt is not an absolute contract for insurance for the pieriod named, hut an insurance pending the application, not to ■exceed such period, and if negotiations are sooner terminated by the rejection af the risk, the receipt becomes inoperative.^ Ijiability may exist 'where property is destroyed Mirhen contract is made. Sec. 19. Where the property has heen actually destroyed hy fire, ■when the application is made and the contract entered into, and the contract is ante-dated, or is to take effect at a period earlier than the date of the application, if hoth parties are ignorant of the loss, the contract is valid, and the insurers are liahle therefor? But, if the applicant for insurance knew of the loss, before his application Tvas posted, although not until after it was drawn, a policy, although issued thereon, would be void, because in that case his conduct is fraudulent, and he has been guilty of a fraudulent concealment of a material fact.* In all cases, the important question is : " What was the contract, and when did it commence f^^ If the loss occurred after the contract was made, and after the risk attached, the in surer is liable,^ but if the loss occurred before the risk attached, by the terms of the contract, the contract is void, and the insured is '^ Henry v. ins. Co., ante. 2 Walker v. Provincial Ins. Co., 7 Grant's Ch. (Ont.) 137. ' Mead v. Davidson, 3 Ad. & El. 303; Bunyon on Fire Insurance, 53; Genl. Mut. Ins. Co. V. Buggies, ante. *Fitzherbert v. Mather, 1 T. E. 12. ^ Bunyon on Fire Insurance, 53. 8 In Davenport v. Peoria, etc., Ins. Co., the plaintiff applied to the defendants' agent for insurance. All the terms of the contract were agreed upon, and the agent, if matters werefound as represented, agreed to issue apolicy, to take effect from noon •of that day (March 20th). He examined the risk that day, and gave notice that it was accepted. That night — no policy having been issued — the building was burned. The next day the agent and the plaintiff, both knowing that the building had been ■destroyed, issued a policy in conformity with the contract, and the court held that the policy was valid. Genl. Int. Ins. Co. v. Buggies, 12 Wheat. (U. S.) 408; Per- kins V. Washington Ins. Co., i Cow. (N. Y.) 645; Walker v. Met'n, etc., Ins. Co., 56 Me. 371; Bragdon v. Appleton M. & F. Ins. Co., 42 Me. 259. 48 Fire Insurance. entitled to a return of the premium paid.^ But, if it is evident from the language of the policy that the insurers intended to make themselves liable for the risk, even though a loss had occurred before the contract was made, the policy will be valid, and the loss recoverable. Thus in an Arkansas case,^ on May 1, 1868, the insured took from the insurer an open, or what is sometimes, called a running policy, to continue for one year, insuring goods " lost or not lost ; shipments to be reported and endorsed." It was proven that the insured had not reported all their risks ; that one shipment was insured in another company, not by the procure- ment, however, of the insured, but by the consignors of that ship- ment. April 1, 1869, the insured ordered tobacco from Louisville for Fort Smith. They received the invoice April 11th, and re- ported the shipment on the 12th, to the insurers' agent, who sent the application to the insurers' secretary, who rejected it on the 14th, because he had heard the tobacco had been burned on the 10th. It appeared that the insured was asked by the insurers' agent whether the risk should be endorsed from Louisville or from. Memphis only, and he replied he would be satisfied to have it taken from Memphis, and it was so indorsed upon the policy. She reached Memphis in safety, entered the Arkansas river, struck a snag forty miles below Little Rock, sank, and was burned to the water's edge. It was held that the insurers could make themselves re- sponsible for a loss that had already happened, even though it were total : and that their intention so to do was evidenced by the words " lost or not lost" found in the policy; that under such a policy the contract was not completed until the desire to insure was made, and until made, the contract was inchoate ; that when the desire to insure was made to insurers' acting and accredited agent, and the premium agreed upon and charged to the insured, then the contract became complete. The failure to report all shipments to the insurers did not work a forfeiture of the policy, because there was no agree- ment between the parties that the insured should report them ; and a failure to perform an implied duty does not avoid a contract; and as the contract itself did not fix a penalty for the failure to report them, the law will not arbitarily say the failure ipso facto created a forfeiture. * This is upon the ground that nothing existed to which the risk could attach, and' consequently the contract, without the fault of the parties, hecame inoperative. Franklin v. Long 1 G. & J. (Md.) 40"?; Strickland v. Turner, 1 Exchq. 208. ^ Arkansas Ins. Co. v. Bostick, 27. Ark. 539. Acceptance of Risk. 49 Acceptance of risk binds the company ; what constitutes. Sec 20. When the risk is accepted upon the terms designated in the application, whether the same is made by writing or parol, the contract is complete,^ and neither can recede therefrom, and whether a policy has been executed or not, the risk attaches at the date of the application, or at the time designated therein, and the insurer is liable for any loss that occurred after the time when the risk, by the contract, commenced, even though it occurred before its acceptance thereof; ^ and if the risk is accepted and a policy is issued which, by mistake, does not conform to the contract, either as to the time when the risk attaches or otherwise, a court of equity will compel its correction, and the real contract entered into by the parties will be enforced.^ The person seeking insurance is un- der no obligation to inform the company of a loss transpiring after the application is made, but before its acceptance is signified. Thus, in a New York case,* the plaintifP, on the 28th of March, ^Bently v. The Columbia Ins. Co., 17 N. T. 421. ^Keim v. Home Mat. Ins. Co., 42 Mo. 38; 5 Bennett's F. I. C. 128; American Sorse Ins. Co. v. Patterson, 28 Ind. 17 ; Lightbody v. N. American Ins. Co. , ante; Xenos V. WicTcham, L. R. Q. H. L. 296; Baldwin v. Chateau Ins. Co., 56 Mo. 151; 17 Am. Rep. 671; Whittakery. The Farmers' Union Ins. Co., 29 Barb. (N. Y.) 312; Commercial Mut. Marine Ins. Co. v. Union, etc., Ins. Co., 19 How. (U. S.) 318; Hubbard Y. Hartford Fire Ins. Co., 33 Iowa, 325; Hallockv. Com., etc., Ins. Co., 26 N. J. 268. In New England Ins. Co. v. Robinson, 25 Ind. 536, the plaintiff applied for insurance. An application was made, forwarded to the company, and the risk accepted. It was agreed between the plaintiff and the agent that the policy should be delivered when called for, and that the premiiun should be paid within five days. Before the five days expired, the building was burned. The court held that the contract was complete from the acceptance of the risk. It has been held that where the plaintiff had made oral application for insurance, and the defendant filled out an application and premium note, and sent them on the 15th of January, providing that the policy should take effect January 16th, with a statement that, if signed and returned to them, a policy would be made ; and plaintiff kept them until the 28th, when he signed and handed them to the postmaster, who was his agent for procuring the insurance, to be forwarded, but the postmaster retained them un- til February 1.3, before mailing them, and a fire occurred upon the 81st of January; that there was no complete contract before the fire, as the plaintiff, during all the time that the papers were in the hands of his agent, the postmaster, had the right to recall them. The case proceeds upon the ground that the locus penitentice still ex- isted. Had the papers been deposited by the plaintiff in the mail, there is no ques- tion but that the court would have held that the risk attached, although nothing is said by the court upon that point. Thayer y. Middlesex, etc., Ins. Co., 10 Pick. (Mass.) 326. That such is the rule elsewhere see Hamilton v. Lycoming Ins. Co., 5 Penn. St. 339; Tayloe v. Merchants' etc., Ins. Co., 9 How. (U. S.) 396, and cases cited ante in this note. ^Flinty. Ohio Ins. Co., 8 Ohio, 501. * Whlttaker v. The Farmers' Union Ins. Co., 29 Barb. (N. Y.) 312. In Keim. v. Ins Co., 42 Mo. 38; 5 Bennett's F. I. C. 128, an application for insurance was made and accepted, February 9th, and the policy was made out at once, but the premium was not paid nor the policy taken until March 14th, following. At the time when the assured paid the premium and took the policy the premises insured were burn- ing, as the assured knew, but of which fact the insurer was ignorant. The court held that the insurer was liable, and that, as the contract was complete before the 4 5i) FiBB Insurance. aj^plied to the defendant's agent for insurance, and agreed upon the premium, and took his receipt acknowledging payment of the premium, and stating that the policy was to take effect from noon of that day. The premium was not, however, in fact paid, it being agreed that the plaintiff might send it at his convenience. On the 7th of April, the property was destroyed by fire, and the plaintiff, immediately after the fire, sent the premium to the agent, who, without being informed of the loss, at once forwarded the pre- mium and application to the* defendant company, and the com- pany, without any knowledge of the loss, accepted the risk, and forwarded a policy for the plaintiff, to the agent, but subsequently, upon being informed of the loss, directed him not to deliver it. The court held, however, that the defendant was liable for the loss ; that by the acceptance of the risk, and the premium, and the execution and delivery of the policy to the agent, the contract was complete and perfect, and by relation extended back to March 28th, and covered the loss in question, and that the plaintiff was entitled to a specific performance, by the delivery of the policy to him, and the payment of the amount of the loss, and that the fact that he did not inform the defendant of the loss, under the circum- stances detailed, did not excuse the liability of the defendant,' be- cause he was under no obligation, legal or moral, to inform them of the destruction of the building. If the risk is accepted, and a policy made in accordance with the terms of the application, but is not delivered because the premium has not been paid, and after holding the policy several weeks, without any demand for the premium, and a loss occurs, and after the loss, but without informing the insurer thereof, the assured pays the premium and takes the policy, the company is liable for the loss, as much as though the premium had been paid, and the policy had been de- livered on the day it bore date. Thus, in a Missouri case,i the plaintiff, applied for insurance upon certain property on the 10th of January,1871. The application was accepted, the terms agreed on, and the policy was made out and signed the same day, being in force from noon of that day. The policy, however, was retain- ed by the company until the 27th of March, when the plaintiff paid the premium and took the policy. The property was de- loss, the assured could not be charged with fraud in omitting to inform the assured of the condition of the property at the time he took the policy. ' Baldwin v. Chateau Ins. Co., ante. ACCBPTANCB OF RiSK. 51 stroyed by fire the day before, March 26th, which the plaintiff inew, but of which the defendant was ignorant. The court held that the plaintiff was under no obligation to voluntarily inform the defendant of the loss, and that, by the acceptance of the pre- mium and delivery of the policy, the contract related back to the time when the application was filed and the policy was issued, although the property covered thereby had, in the meantime, been destroyed by fire. Wagnee, J., after a careful review of the case, said : " There can be no doubt but that the policy would have been delivered to the plaintiff and been regarded by the de- fendant as binding from noon on the 10th day of January, 1871, if the house had not been burned on the 26th day of March. And if it had been delivered, it would have been valid from the time it was made to take effect. If it would have been valid if no fire took place, I cannot see how the fact that a fire happened invali- dated it. There could be no justice in allowing the company to -construe it into a contract when it was to its advantage, and to repudiate it when it was disadvantageous. When the defendant accepted the premium and delivered the policy, the agreement to in- sure wus complete and ratified as of the 10th day of January, 1871. The plaintiff had a right to rely on his agreement, and was not hound to voluntarily inform the defendants of the fire." The same 'doctrine has been held in the United States Supreme Court, in a case which is often referred to, and may be said to be a leading case upon the points covered by it.^ In that ease an application was made by the plaintiff company for re-insurance upon a certain risk, upon Saturday, upon certain terms, which were declined, and other terms demanded, and on Monday, these last mention- ed terms were accepted by the plaintiff', and assented to by the president of the defendant company, but Monday being a holiday, a policy was not made, and on that night, before anything more was done, the property was destroyed by fire. On the next day, the plaintiffs tendered their note for the premium and demanded a policy, which the defendants refused to execute or deliver. But the court held tiiat when the parties agreed upon the terms, the con- tract was complete and executed, and that the plaintiffs were en- titled to the indemnity contracted for. The doctrine of these cases 3s expressive of the American law upon this subject, and is be- lieved to be in full accord with the English rule.^ ' Commercial Mut. Marine Ins. Co. v. Union, etc., Ins. Co., ante. ^Mackiev. European Assurance Co., 21 L. T. (N. S.) 102 ; PattisonY. Mills,! 52 FiBE Insurance. 'When notice of acceptance is placed in the mail, the risk attaches. Sec 21. In order to bind the insurers, it is not necessary thafe the acceptance should be known by the assured. It is enough, if the risk has been, in fact, accepted, and notice thereof, or a pohcy in pursuance of the agreement has been mailed, either to the as- sured, or the agent through whom the insurance was sought, even though it was never received ; ^ but the mere making of a policy Dow. & C. 342 ; Lishman v. Northern, etc., Iiifi. Co., L. R. 10 C. P. 179 ; Gled- stanes v. Royal, etc.. Assurance Co., .5 B. & S. 797 ; Laidlaw v. Liverpool iSc Lon- don Ins. Co., 13 Grant's Ch. (Out.) 337. ^ Sallock V. Lis. Co., ante. In Lungstrass v. German Ins. Co., 48 Mo. 201, the company's agent applied for insurance upon iiis own property, and a policy wa& seut him, but not being satisfied witli its terms, he returned it for a reduction of the rate of premium. The reduction was made and the policy returned to him Nov. 6th. On the morning of the 7th the property was burned, and the company claimed that they were not liable because he had not signified his acceptance of the policy, or paid the premium. It appeared that on the 6th of Nov., upon re- ceipt of the policy, he cliarged himself with the premium lu the company's account,, and it being shown that the practice was to return his accounts only once a month, the court held that his acceptance of the policy was sufficiently signified, and the premium paid. In 'lay toe v. Merchants' Ins. Co., 9 How. (U.S.) 390, a party wrote to the defend- ant company accepting their terms of insurance as made known to him in a pre- vious letter. After his letter was posted, and before it was received by the com- pany, the property was destroyed by fire ; and the company refused to issue the policy, on the ground that the contract of insurance was not complete at the time of the loss. The by-laws provided, that 3io insurance should be considered as made or binding, until tlie premium was actually paid. Their agent wrote to in- sured, "Should you desire to effect the insurance, send me your check, payable to- my order, for the amount of the premium, and the business is concluded," and it. ■\ias held that the putting a letter directed to the agent in the post-office, with the claeck inclosed, was a payment witliin the provision of the by-laws. In the same case the by-laws of the company required the assured, as soon as possible after a loss, to give in a particular account thereof under oath. The assured gave in his particular account eleven mouths after the loss, on receipt of which the secretary wrote liim that the company declined to pay the claim as therein made by him and that under the circumstances of the case, they did not waive any grounds of defense whatever, but would avail themselves of all and any that by law they might. It was held that the company, by refusing to issue a policy, and denying the con tract, had waived their right to require the particular account within a reasonable time. In Chase v. Hamilton Mut. Inx. Co., 22 Barb. (N. Y.) 527, the insurer wrote their- agent, through whom application for insurance had been made, that the risk would be taken at two per cent., and if the plaintiff wished the insurance, to send a new application, adding, " If that be sent we will forward policies." The agent showed tlie plaintiff so much of this letter only as related to the rate of premium, and the rent day, November 1, the jjlaintiff paid to the agent the balance on the premium demanded, beyond the amount previously paid on the temporary policy, and received a receipt to that effect. On the night of November 2, the property was destroyed by fire without any fault of the plaintiff. On November 4, the agent, by letter, bearing date November 1, forwarded to the defendant the amount of the plaintiff's premium. The defendants immediately replied, declining to issue the policy, proposing to place the amount received to the credit of the agent. Held, that the contract was fully completed between the parties when the plaintiff ac- cepted the defendant's terms and paid the premium to their agent, that the de- fendant's were bound to issue a policy to the plaintiff and were liable for the loss to the amount Insured, and that as no time was fixed by the company within which the proposition was to be accepted and tlie money sent, the law fixes a reasonable time, and that under the circumstances the time employed was a reasonable time ;, also, that it made no difference, that the money was not sent by the agent until Acceptance by Mail. 63 -which is still retained by the insurers, does not amount to an ac- ceptance. So long as the policy is retained, the locus pemtentice exists, but when the insurer does an act that clearly indicates that all deliberation is over, and the terms of the contract, as well as the risks are accepted, as, by the posting of a notice of his acceptance, or of a policy, the agreement is complete and the risk and liability incident thereto attaches, ^ and cannot be withdrawn, even though after the loss, as it was paid before the loss. In a recent case in Massachusetts (Myers v. London, Liv. and Globe Ins. Co., 121 Mass. 338), the plaintiff contracted with the defendants' agent for insurance upon his dwelling, the amount, rate and duration of risk being agreed upon. The agent was authorized to bind the com- pany "during correspondence only." Tlie plaintiff directed the agent to inform liim when the policy came and he would call and pay for it, and the agent agreed to do so. The policy was made and sent, and the agent notified the plaintiff thereof by letter, and requested him to call for it ; which the plaintiff did several times, but failed to find the agent in. The agent kept the policy until a few days Tjefore the fire and then cancelled it. The court held, that the evidence did not disclose an oral contract for insurance on the day the contract was made, but for ■a policy to be issued and delivered to him on payment of the premium ; citing, Markey v. Miit. Ben. Ins. Co., 118 Mass. 178. ^ Xenos V. Wickham, L. E. 2 H. L. Cas. 324 ; Tayloe v. Merchants' Ins. Co., ante; Hamilton v. Lycoming, etc., Ins. Co., 5 Penn. St. 339 ; MactierY. Frith, 6 Wend. (N. Y.) 104; Hallock v. Ins. Co., post. In Eames v. Homelns. Co., 94. U.S. 621. In that case the plaintiffs owned a flouring mill in Staunton, 111., which had previously been insured by the defendants, the application and insurance having 1)een made through one Beach, a local agent. Beach had no authority to take risks on extra hazardous property, in which class the mill in question belonged ; "but one Ducat, the defendant's general agent, at Chicago, had such authority. Oct. 12th, 1872, the plaintiffs applied to Beach for insurance, and he sent the appli- cation to Ducat with the following letter : " Deau Sir — I inclose application for insurance which you have carried for two years, and was not renewed in Feb., because I charged five and one-half (you were carrying it at five per cent). They now want to insure again. The other large mill in Staunton has lately burned, which is, I suppose, the reason. I have not learned the particulars, but some think the owners burned it." Ducat replied Oct. 14th, saying, that the rate on this risk would not be less than six and one-half per-cent., which plaintiffs probably would not pay. After some further correspondence. Beach inforrtied the plaintiffs that six and one-half was the lowest rate. The same letter inclosed an application in another company for additional insurance at six per cent. This application was filled out and returned to Beach with a letter as follows : ■" Mr. James Beach, Bunkerhill, III.; Staunton, Oct. 2S, 1872. " Deab Sik — I believe I have answered all the questions necessary, and to the Ijest of my knowledge six and one-half per cent, is pretty heavy, but I guess we will have to stand it, as I do not know where we can do better at present. " Tours, etc., EAMES & COOLEY." " On the 28th of October, Beach mailed a letter to Ducat, asking him to send a ' ticket of insurance for the amount applied for on the mill.' On the 29th, the •order for insurance was countermanded by Beach, by telegraph, the mill having been burned in the interval. Ducat was on the point of sending the policy of insurance when the telegram from Beach was received. The question was, whether there was an insurance effected. The court, reversing the decision be- low, decide that there was saying : Supposing this to be the meaning of the cor- respondence, the next question is, whether it had the effect of creating a contract. Eaines had put in an application for insurance. It was made out in the regular form. The property was fully described ; the amount of insurance was named, ^nd the rate of premium at five and one-half per cent, was proposed to be paid, livery thing was satisfactory to the general agent, except the rate of premium. 54 Fire Insurance. notice of such acceptance has never reached the assured. By its ac- ceptance, without qualification or condition, and a posting of a notice No question was made about anything else. Tlie whole subsequent correspon- dence related to that alone. The agent required six and one-half per cent, instead of five and one-half; and finally, as we construe the letter of Eames, he (Eames) agreed to, and accepted this modification. Supposing all the parties to be acting- in good faith, as they were bound to act, had he not a right to suppose that the agreement was concluded, and that the risk was taken by the defendant ? We. do not well see how this conclusion can he avoided. He had not paid the pre- mium, it is true; but it is shown that this was not required until the policy was- made out and delivered. It had not been required of Cooley in 1S70, and yet the policy in that case, when issued, was made to run from the date of the applica- tion, some two weeks prior to its issue, and, of course, covered the risk during^ that antecedent period. If parties could not be made secure until all the formal documents were executed and delivered, especially where the insuring company is situated in a different State, the beneficial effect of this benign contract of insurance would often be defeated and rendered unavailable. As said by Mr. Justice Field in the case of The Insurance Company v. Colt 20 Wall. 567, ' it would be impracticable (for a company) to carry on its business in other cities and States, or at least the business would be attended with great embarrassment and inconvenience, if such preliminary arrangements required for their validity and efiicacy the formalities essential to the executed contract. The law,' he continued, ' distinguishes between the preliminary contract to make insurance or issue a. policy and the executed contract or policy. And we are not aware that in any case, either by usage or the by-law of any company, or by any judicial decision, it has ever been held essential to the validity of these initial contracts that they should be attested by the officers and seal of the company. Any usage or decision to that effect would break up, or greatly impair the business of insurance as transact- ed by agents of insurance companies.' in regard to another question raised in the case the court says : But it is objected, in the next place, that the contract, if one- was made, was not complete and precise in its terms; that it did not state the period of tiine during which the risk was to continue, and did not state what, kind of a policy (of two or three different kinds which the Home Company used), Eames wished to have. It does appear that the application, which was signed on the 12th of October, did not (as is usually done) call for a statement of the period of insurance. It was one of the company's own printed blanks, and the prob- ability is that the reason this item was not inserted was the almost universal practice of taking ordinary insurance against fire for a year. Nothing else seems to have been in the minds of the parties. The former insurance on the property had been for that period. The bill states that Eames applied to Beach for a. contract of insurance and policy on the mill for a year, and this is not denied in the answer ; the application to the other companies, the Phoenix and the Hart- ford, seem to have been for a year. Mr. Beach in his testimony, when asked by the counsel of defendant whether anything had been said as to the length of time the complainants wanted insurance in the Home, promptly answered, ' If I mistake not, the application states ' for one year;" and was only convinced to the contrary after an inspection of the document. The premium is constantly spoken, of by the witnesses and in the letters as so much per cent., absolutely, six and one- half per cent, without adding ' per annum ; " and yet we know that a year's premium was meant. It may be said that this is the usual mode of speaking when rate per annum is intended. This is undoubtedly true when an ordinary policy for a year is the subject of discussion. But when insurance for a fractional part of a year, or any unusual period, is proposed or spoken of, it is not the customary mode of speaking. It is then usual to add the words ' per annum,' in order to avoid, mistake. We think it perfectly manifest from all the evidence taken together, that the parties meant and intended an insurance for a year, and had nothing else in their minds. This is the inference to be drawn from all their conduct, conversations and correspondence ; and we should be sticking in the bark to Ignore it. There is no difficulty as to the time when the risk was to commence. It was the practice of the defendant, as it is of most if not all other companies, to- ante-date the policy to the time of making the application, which, in this case, was on the 12th day of October, 1872. This practice is more beneficial to the companies than to the insured. They are not liable until the contract is com- Acceptance by Mail. 55 thereof, the hargain is closed beyond recall. Thus, in a New Jersey case,^ the insurers made out a policy and mailed it to their agent to be delivered to the plaintiff. Before the policy was received by him, and before the plaintiff knew of the acceptance of the risk, the insurer telegraphed notice of the withdrawal of its acceptance of the risk, and directed the agent to return the policy, because the premises had previously been burned. The plaintiff called upon the agent, tendered the premium, and demanded the policy. The agent accepted the money, but refused to deliver the policy. The court held that the insurer was liable for the- loss. The question was ably discussed by Vkedenburg, J., and the portion of his opin- ion pertinent to this point is given in the subjoined note.^ pleted, and if a loss occurs before its completion they have nothing to pay; and yet they get the benefit of the premium for this period whenever tlie contract is completed. As to the plea that the contract does not specify what kind of a policy was desired, it does not appear that the complainants had any knowledge or notice that the defendant issued different kinds of policies. As Eames justly said, he supposed (as he had a right to suppose) that they would get the same kind of policy which had been issued on the property before. If no preliminary contract would be valid unless it specified minutely the terms to be contained in the policy to be issued, no such contract could ever be made, or would ever be of any use. The very reason for sustaining such contracts is, that the parties may have the benefit of them during that incipient period when the papers are being per- fected and transmitted. It is sufficient if one party proposes to be insured, and the other party agrees to insure, and the subject, the period, the amount and the rate of insurance is ascertained or understood, and the premium paid if demanded. It will be presumed that they contemplate such form of policy, containing such conditions and limitations, as are usual in such cases, or have been used before between the parties. This is the sense and reason of the thing, and any con- trary requirement should be expressly notified to the party to be affected by it." ^Hallock V. The Com. Ins. Co., 26 K J. L. 268; 3 Bannett's P. I. 0. 195. 2 He said: "The case shows that the plaintiff, when he made his application, offered Breck 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. Would it have made the payment more real if the plaintiff had handed Breck the money, and Breck had deposited it with his banker ? The money was, in legal effect, paid to Breck, and by him placed on deposit. It was, in contemplation of law, an actual payment to the company, as much so as if Breck had transmitted the money, as well as the application, to the company. But if not an actual payment, the defendants are estopped from saying that it is not. They must be considered as doing what Breck did, viz., saying to the plaintiff, on the 2d of March, when he tended them the money, we will consider it as paid. N. Y. Central Ins. Co. v. National Protection Ins. Co., 20 Barb. (N. T.) 474; 1 Ben. F. I. C. 90. Secondly. The defendants insist that the application, having been made on the 2d of March, and no action having been taken by the defendants until the 13th, we cannot con- sider the plaintiff as still continuing his offer to the defendants ; that we are bound to consider it as withdrawn. But why so ? There is no pretense of any express withdrawal. The question and the answer can never, in any case, be simultaneous ; the question must always remain for some length of time with the one to whom it is put, and abide the answer. In every negotiation, whether by telegraph, by letter, or by word of mouth, the application and the answer can never be at the same precise instant. The application must wait upon the answer. If the applica- tion is considered to be withdrawn as soon as made, no two minds ever could meet upon any proposition. The aggregatio mentium never could take place. In all cases, the application is construed to stand until the contrary appears ; until it is either withdrawn or answered. Pothier Traite du Contrat du Vente, p. 1, § 2, art. 56 FiKK Insukance. "Whenever the insurer has done an act, amounting to an actual agreement to undertake the risk, liability attaches, and he cannot 3, No. 32; Mactier v. Frith, 6 Wend. (N. Y.) 10.3. But here the plaintiff avers the application to be still standing. The defendants treat it as still before them on the 13th of March, by accepting it, and making out the policy. We must therefore treat it as the parties treat it, as still at noon on the 13th of March a standing and valid pf- fer by the plaintiff to the defendants. Thirdly. The defendants contend that, the policy never was delivered, so as to make it a living contract. But it appears, by the case, that the contract to insure was complete before they mailed the policy to Breck. Their telegraphic dispatch, dated on the 15th of March, says, ' Kisk not taken when burnt; return policy when received. '»i This necessarily implies that the risk was taken, but after the fire. Breck had no authority to insure. After the proposals were accepted by the company, they made out the policies, and sent them to Breck to deliver; so that it appears, by the case, that before they mailed the policy to Breck, they must have received the premium and accepted the risk, and thus com- pleted the contract to insure. If the case had gohe no further, and no policy had ever been made out, it is well settled that the plaintiff could have sued them upon this contract at law or forced from them a policy in equity. PerJdns v. Washington Ins. Co., 4 Cow. 0(50; 1 Ben. F. I. C, 148; Hamilton v. Lycoming Ins. Co., 5 Penn. St. .332; 2 Ben. F. I. C. 542; Angell on Fire Ins. §§ 34, 47; Union Mut. v. Com- mercial Mut.,'ij2i.vf Reporter, March, 1S.'56, p. 610. Under these circumstances, a policy drawn up and signed by the proper officers wants no further delivery. It is a vital policy as soon as signed, becomes instantly the property of the insured, and is held by the insurer for his use. Ang. on Fire Ins. §§ 31, .3.3; Pirn v. Eeid, 6 Man. & Grang. 1 ; 2 Ben. F. I. C. 542; Kohne v. Ins. Co., 1 Wash. C. C. E. 93. But here were further acts of delivery of the policy. It was, on the 13th of March, mailed and sent to Breck, to deliver to the plaintiff. This was sending it to the plaintiff by Breck. Breck and the mail were only the vehicles to carry it to him. It was the same thing as if mailed or sent directly to the plaintiff. The defendants suggest, in answer, that Breck was their agent, and that, by sending it to him, they did not part with the possession of the policy, and that they only gave authority to Breck to de- liver, which they could and did revoke before actual delivery. But when they mailed the policy to Breck to deliver, they did not constitute him their agent to re- ceive or keep it for them, nor to retain it as their agent. He was, in that regard, no agent of theirs; he had nothing further to do for them. By sending him the policy to deliver, they made Breck trustee for the plaintiff; they made it a deposit with Breck to the credit of the plaintiff. It was a delivery to Breck to deliver to the plaintiff, which was a good delivery to the plaintiff. Shep. Touch. 58. This is not a question of the authority or acts of an agent ; but whether the defendants by sending the policy to Breck to deliver, did an overt act intended to signify that the policy should have a present vitality. This certainly was such an act. Without any further interference on their part, it would have resulted in actual delivery to the plaintiff. It was intended to signify to the plaintiff not only that the policy was a present contract, but to effect an actual delivery of it to him. Kentucky Mut. Ins. Co. V. Jenks, .5 Porter R. (Ind.) 96; 5 Penn. St. 339; 9 How. (U. S.) 390. Suppose the defendants had retained the policy, and had merely told Breck to tell the plain- tiff that they held the policy subject to the plaintiff's order, would they not have been deemed as holding the policy for the plaintiff ? The defendants next suggest that the plaintiff was ignorant of their acceptance of the risk, of their making out and mailing the policy to Breck until after they had countermanded its delivery, and that the agrjregatio mentium could not take place until after the acceptance of the proposition by the defendants came to the plaintiff's knowledge, and that before that the defendants had changed their own minds, so that in fact it never did take place, and that consequently there was no legal delivery of this policy. This involves the more general question, does a contract arise when an overt act is done intended to signify the acceptance of a specific proposition, or not until that overt act comes to the knowledge of the proposer ? This question may arise upon every mode of negotiat- ing a contract, whether the parties be in each other's presence or not. First comes the mental resolve to accept the proposition; but the law can only recognize an overt act. Whether that act be a word spoken, a telegraphic sign, or a letter mailed, some interval of time, more or less appreciable, must intervene between the doing of the act and its coming to the knowledge of the party to whom it is addressed. In the meantime, what is the condition of affairs ? is it a contract or no contract ? If the bidder does not see the auctioneer's hammer fall; if the article written for and sent Acceptance by Mail. 57 Tecede therefrom so as to exempt himself from liability for a loss that has occurred pending his deliberation ; ^ and a loss may be 3iever arrives ; if the verbal answer, wlien tlie parties are in each other' s presence, is in a foreign tongue, or by sudden noise or distraction is not lieard; if the telegraphic cir- •cuit is broken; if the mail miscarries ; if the word spoken or the letter sent is overtaken and countermanded by the electric current, is there no contract ? In the progress ■of the negotiation, at what precise point of time does mind meet mind, does the contract spring into life ? Upon this subject, with respect to negotiations conducted by written communications, there has been some variety of decision ; but it appears to me that the weight of authority, as well as reason and necessity, admit of but one solution. The meeting of two minds, the aggregatio mentium necessary to the constitution of •every contract, must take place eo inatanti with the doing of any overt act intended to signify to the other party the acceptance of the proposition, without regard to -when that act comes to the knowledge of the other party ; everything else must be ■question of proof, or of the binding force of the contract by matters subsequent. The overt act may be as various as the form and nature of contracts. It may be by the fall of the hammer, by words spoken, by letter, by telegraph, by remitting the article sent for, by mutual signing or by delivery of the paper, and the delivery may 1)6 an act intended to signify that the instrument shall have a present vitality. "Whatever the form, the act done is the irrevocable evidence of the af/gregatio men- tium : at that instant the bargain is struck. The acceptor can no more overtake and countermand by telegraph his letter mailed, than he can his words of acceptance after theyhave issued from his lips on their way to the hearer. If the two minds do not meet eo instanti with the act signifying acceptance, when can they, in the nat- Tire of things, ever approach each other more closely ? The defendants say, when the act of acceptance comes to the knowledge of the other party. But this knowl- •edge would be a fact without any force, unless we suppose in the proposer a power still of electing not to accept the acceptance. But if we do this, it is apparent that the negotiation is yet precisely in the same stage of development it was in when the tirst proposition was waiting upon the first answer. The notion that there is no -contract until the acceptance comes to the knowledge of the other party, proceeds upon the ground, in the first place, that the proposal has been withdrawn or lost its force, which is against the intent of the parties and the necessities of the case ; and in the second place,upon the ground that the answer is conditional, whereas we sup- pose it to be absolute. We suppose the acceptor to say not simply I agree, but to say I agree if you do, which requires an answer from the proposer ; so that the minds do not meet till he answers. But in the meantime the acceptor may have ■changed his mind, and for the same reason as before, there is no bargain until this last answer comes to the knowledge of the other party ; and so, upon this theory, it must go on ad infinitum without the possibility of the aggregatio mentium ever taking place. There is in fact no difference between the acceptance of a proposition by word of mouth, and a letter stating an acceptance. In the one case it is articu- late sounds carried by the air ; in the other, written signs, carried by the mail or by telegraph. The vital question is, was the intention manifested by any overt act, not l)y what kind of messenger it was sent. The bargain, if ever struck at all, must be ■eo instantia with such overt act. Mailing a letter containing an acceptance, or the (instrument itself intended for the other party, is certainly such an act. Adams v. Ifinsdell, 1 Barn. & Aid. 681 ; Dunlop v. Iliggins, 1 House of Lords Cases, 381 ; Duncan v. Topham, 8 C. B. 22.5 ; Potter v. Saunders, 6 Hare, 1 ; Tayloe v. Mer- ■chants' Ins. Co., 9 How. 390 ; Hamilton v. Lycoming Ins. Co., 5Barr, 339 ; Vasser v. Camp, 14 Barb. .341 ; Mactier v. Frith, 6 Wend. 103 ; Kentucky Mut. Ins. Co. v. Jenks, 5 Porter's R. (Ind.) 96. This last case, in all its essential features, is iden- tical with the one before us. The only English case sustaining the defendants in their view, that I have seen, is that of Cooke v. Oxley, 3 Term R. 653, which, it will 'be perceived by the above references, has been effectually overruled in their courts. In the State of New York, the case of Mactier v. Frith, 1 Paige, 434, was reversed in their court of errors by a very large vote (6 Wend. Ill), and the doctrine sus- tained as contended for by the plaintiff. The only other American case on this side •of the question is that of McCuUoch v. The Eagle Ins. Co., I Pick. 278. This last is against the whole current of authorities both in England and in this country, and appears to me requires for the creation of a contract a fact without significance, or a condition that would render its creation impossible." ' Xenos v. Wickham, ante ; Mead v. Davidson, 3 Ad. & El. 303 ; Parry v. The 58 FiKB Insurance. recovered under a policy, even though hoth parties, at the time of its execution, knew that it had occurred, if the agreement had been, entered into before the loss ; ^ and so for a loss occurring before application was made, if it was not known to either party .^ Upon, an agreement to insure, the assured is entitled to recover the same damages which he would be entitled to if the policy had. been issued ^ ■When policy is conditionally delivered. Sec. 22. Retention of the policy by the assured is evidence of his acceptance thereof, even though it is sent to him with other papers, as a survey, which he is requested to sign and return, which he does not do, but retains both. If, however, the policy is- delivered upon the express condition that the paper sent for his. signature shall be signed and returned to the company, the policy wiU not be biading unless the condition is complied with.* VThen conditions precedent are imposed on assured, contract takes effect,, 'vtrhen. Sec. 23. If the terms are agreed upon, but the assured is required to do some act before it takes effect, it becomes effectual immedi- ately upon his giving notice to the insurer of his compliance with the conditions. Thus, in a Pennsylvania case,^ the plaintiff applied for insurance on an academy, and paid the required proportion of the premium, and executed his note for the residue, and had a. survey made. The secretary of the company wrote the agent to require the plaintiff to substitute earthenware collars instead of sheet iron, and to require him to have the trustees, who held the title, assent to the insurance, and, when these were done, he would send a policy. The plaintiff performed and complied with all these conditions, and the plaintiff requested the defendant's agent to call for the trustees' consent, which he promised to do but neglected, and the building was burned before he got it. The court held that the contract was complete the moment the plaintiff gave notice that he had complied with the conditions, and that the defendants were liable for the loss.® Great Ship Co., 10 Jur. (U. S.) 295 ; Motteaux v. The London Assurance, 1 Atk. 544 ; The Earl of March v. Pigot, 5 Burr. 2802. ^ Mead v. Davidson, ante ; Arkansas Ins. Co. v. Bostick, 27 Ark. 539. 2 The Earl of March v. Pigot, ante. 3 Humphrey v. Hartford F. Ins. Co. 15. Blatchf. (U. S. 0. C.) 35. * Le Boy v. Park Ins. Co., 39 N. T. 56. s Hamilton v. Lycoming Ins. Co., 5 Penn. St. 339. 6 See also, E. Carver Co. v. Manufacturers' Ins. Co., 6 Gray (Mass.) 214. Substitution of Policies. 59 When company substitutes policies in other companies obtained before, but not delivered until after loss, liability for loss remains. Sec. 24. When an agent of an insurer sends an application to him for insurance, and the insurer to whom application is made, and whose binding receipt the applicant holds, sends policies in another company or in other companies therefor, in place of its own policy, it is not thereby discharged from liability to the as- sured, for a loss occurring after such policies are made, but before their delivery to him, even though he, after the loss, relying upon it that they afforded indemnity to the amount insured therein, accepts such policies and surrenders the binding receipt issued to him by the company, to whom application was made, and in which insurance was expected to be obtained.^ In such a case, the ' In Dayton Inn. Co., v. Kelly, 24 Ohio St. Zi^; 19 Am. Rep. 612, it appeared that "J. R. Young, the secretary of the defendant below (an incorporated insurance company), was autliorized by the company to negotiate contracts for insurance, to sign and issue certificates lilce the one sued upon, to appoint agents to solicit risks, and to receive applications for policies, and to authorize such agents to deliver to applicants for policies the above-named certificates, and to collect premiums for in- surance. Charles F. Gtmckel was appointed such agent by the secretary, and was supplied with certificates didy signed by the secretary, with authority to counter- sign, fill blanks, and to deliver the same to applicants upon the receipt of premiums. Gunckel was also agent for several other insurance companies, among which were the ^tna, the Home of New York, and the Hamilton. About the 30th of Novem- ber, 1867, Gunckel, being such agent, solicited a risk from the plaintiff, and agreed with him to postpone the payment of the premium for ninety days from the date of insurance; and at tlie same time jjrepared an application for a policy, whicii con- tained the usual interrogations, respecting the proposed risk. The ninth interroga- tory was as follows : ' Insurance — what amount is now insured on the property ? In what offices (state particularly), and on whose account?' To this interrogatory there was no answer given. The fact was, however, that tlie plaintiff had previ- ously obtained a policy from the Enterprise Insurance Company, for ■■? 2,000, on tlie same property. This application was signed by the plaintiff, and delivered to Gunc- kel with the understanding, that upon call by the plaintiff for insurance, Gunckel should address and forward the application to such company as lie might select. On the ^ih. of December following, the plaintiff, by letter to Gunckel. requested insur- ance to the amount of S -5,000. Same day, upon receipt of plaintiff's letter, Gunckel remitted to plaintiff a certificate signed by Secretary Young, a copy of wliich is set out in the petition, having first, however, erased the words, ' or should the risk be not accepted, and the above sum of money be refunded to applicant, then this re- ceipt is void, and of no effect;' and at same time forwarded the plaintiff's ap- plication to the home office of tlie defendant, with information that a certificate for Insurance had been issued to the plaintiff. The erasure by Gunckel was without authority from defendant. The plaintiff, however, received the certificate in good faith, and without any knowledge of the circumstances of the erasure. Upon tlie receipt of the plaintiff's application at the home office of the defendant, the officers in charge procured from the German Insurance Company a policy in favor of tlie plaintiff for $2,000, from the Cooper Ins. Company a like policy for $2,000, and from the Central Company one for $ 1,000; and forwarded the same to Gunckel to be delivered to the plaintiff in lieu of their own policy for .$.5,000. Each of these policies contained a condition, that ' if the assured shall have or shall liereaf ter make any other insurance on the property hereby insured, without the consent of this company written hereon,' then this policy shall be void. At the time the German, Cooper and Central Companies delivered the policies to the defendant, they respect- ively charged the defendant with the amoimt of premium thereon, and the defend- ant charged Gunckel with the amount of premium on the plaintiff's risk. The printed policies of the defendant, referred to in the instrument upon which the suit 60 FiBE Insurance. assured may maintain an action against such company for his loss. But it seems that in such case when a policy is obtained without the -was brought, contained the following conditions : ' Provided, further, that in case the assured shall have already any other insurance against loss by fire, on the prop- erty hereby insured, not notified to this company, and mentioned in or indorsed upon this policy, or if the said assured, or his assigns, shall hereafter effect any in- surance on the same property, and shall not, with all reasonable diligence, and be- fore any loss by fire occurs, give notice thereof to this company, and have same indorsed on this policy, or otherwise acknowledged by them in writing, this policy shall cease and be of no effect.' And -also a further condition, that ' no insurance shall be considered as binding until the actual payment of the premium.' On the' 1.3th day of the same month, the plaintiff made application, by letter, to Gunckel for further insurance, on the same description of property, to the amount of $10,- OOO; and at same time informed him that he (plaintiff) had obtained other in- surance on same property, from the agency of Landis & Son, to the amount of $13,000, including $7,000 applied for on that day. The amount of insurance thus notified to Gunckel included also the policy for §2,000, from the Enterprise Com- pany, which had been obtained before the execution of the instrument sued on. On the next day, December 14, Gunckel indorsed on the policies, then in his hands, from the German, Cooper and Central Companies, the amount of insurance in other companies, which was thus notified to him. Neither the German, the Cooper, nor the Central Company assented to or was notified of any insurance on the property eifected by plaintiff after the date of their respective policies. On the 18th day of same month, the property insured was destroyed by fire; and on the next day, Gunckel, having full knowledge of the loss, delivered the German, Cooper, and Central policies to the plaintiff, who, in consideration thereof, and in the belief that they were valid and binding policies upon the companies by whom they had been issued, surrendered the instrument sued on to Gunckel to be canceled, and at the same time executed to Gunckel his note for the amount of the insurance premium as. per agreement. This note was afterward paid, and the payment accounted for by Gunckel. The loss was notified to the companies interested, including the German, Cooper and Central, and proof thereof duly made. The German, Cooper and Central Companies repudiated the plaintiff's claim on the ground that their policies were avoided by reason of subsequent insurance, without notice to them and with- out their consent. Proof of loss was afterward, and about three months after the fire, made as against the defendant. McIlvaixe. J., said: 1. The court instructed the jury, among other things, as follows: ' In regard to the issues made by the first and seventh defenses, if it was proved that the contract upon which suit was brought was signed by J. R. Young, as secretary of the defendant, and if Charles F. Gimckel was agent of the defendant, the contract would have the effect of binding the com- pany, though not signed by the president of the company.' The defenses referred to were based on the provisions of defendant's charter, the ninth section of which provides as follows (49 Ohio L. 191) : ' That all policies or contracts of insurance, that may be made or entered into by said company, may be made either under or without the seal thereof, and shall be subscribed by the president, or by such other officer as may be designated for that purpose by the board of directors, and attested by the secretary; and being so subscribed and attested, shall be obligatory upon said company according to the tenor, intent and mean- ing of this act, and of such policies or contracts.' This charge assumed, as was averred in the answer and not denied in the reply, that the contract sued on was not subscribed by the president, and that the secretary had not been designated hy the board of directors as an officer for the purpose of subscribing ' policies or contracts of insurance,' as required by the ninth section. It must be admitted that the charter gave to the company all the powers that it possessed. It undoubt- edly gave the power to make contracts of insurance, and the ninth section pre- scribed a form for the preservation of the evidence of its contracts, which is made obligatory on the company. If this form constitutes the only mode by which the company can obligate itself, of course any other mode would no more create a binding contract of insurance than if the corporation had never existed. The question therefore arises, is the form thus -prescribed the only one in which the defendant can enter into a binding contract of insurance ? It will be observed that the ninth section does not, in totidem verbis, confer upon the company the power to make contracts of insurance. If there were no express grant of such Substitution of Policies. 61 hnowledge of the assured, he may ratify the act of the person pro- curing it, even after a loss, and by such ratification, by relation, it power to be found elsewhere in the charter, I admit that it would be implied from the provisions of this section; and in that case, the form therein prescribed would be exclusive. But if the grant of power to contract be found elsewhere in the charter, then our inquiry will be confined to the question, whether the form prescribed in the ninth section was intended as a limitation upon the power to contract, or merely as prescribing the mamier of executing its policies. Insm-- ance against &e was the sole object and purpose for which the defendant was incor- porated. And the first section of its charter declares that it shall be capable ' gen- erally to do and perform all things relative to the object of the association.' This ' grant is certainly broad enough to confer the power to make contracts relative to in- surance — power to negotiate and agree upon all the terms and conditions of the risk. Indeed, the very terms of the ninth section seem to imply that negotiations have ended in a complete contract before the execution to the formal instrument is re- quired. Having found in the first section of the charter a grant of power to con- tract for insurance, we do not feel authorized to so construe the ninth section as to render null and of no effect all contracts made within the scope of the power there conferred, unless and imtil the president or other designated officer has subscribed the ' policy or contract of insurance.' On the other hand, we feel justified in hold- ing that the terms, ' policies or contracts of insurance,' as here used, were intended to embrace the final instruments — such as are technically called policies of insurance, and do not include intermediary contracts of insurance, or contracts for policies. 2. The court further charged : ' That if the jury find that Gunckel was the agent of the defendant and that he made the alteration in the receipt or contract before it was delivered to Kelly, and that he did not do so by Kelly's procurement or assent or knowledge, then the alteration does not affect the liability of the defendant, but would be liable upon what remained of the contract.' We find no error in this in- struction. The testimony shows that the secretary of the company was authorized to negotiate contracts for insurance, and also to appoint agents to solicit applica- tions, etc. It also sliQWS that the secretary had supplied Grunckel, as agent of the company, with these receipts or certificates, duly signed by himself, with authority to deliver them to applicants. We think tlie company, therefore, and not the ap- plicant, should bear the consequences of Gunckel' s erasure, although he was acting in violation of his duty to the company in making it. The company held Gunckel out to the world clothed with the apparent authority to bind it, by the delivery of such contracts ; and that, too, with an erasure of part, such as was made in this instance. The plaintiff was justified in believing he was authorized to do so, for he had no means of knowing but that the paper was in the precise form in which it was when issued by the secretary. The appearance of authority extended as well to the document erased as to the document entire. 3. The court instructed the jury in re- lation to the condition in the contract concerning other insurance, as follows : ' That even if the jury should find that Kelly did not notify Gimckel of the insurance in the Enterprise Company of November 27th, 1867, on or before the 5th day of Decem- ber, A.D. 1867, yet if he wrote to Gunckel on the ViVci of December, informing him of all the insurance, and Gunckel was the agent of the defendant, that such notice, if received before the loss, would be a good compliance upon the part of Kelly, with his obhgation to give notice to the company of all other insurance, and that it would be sufficient as to the Enterprise insurance, and sufficient as to the $ 7,000 applied for on that day to Landis & Son, although such $ 7,000 was not issued tmtil the 14th of December. That it was not necessary that any indorsement of either prior or subsequent insurance should be made upon the contract sued upon or recited in the same.' If, under the contract, the plaintiff was required to give notice oi prior in- surance, we doubt whether this instruction, in so far as it relates to that subject, could be sustained. The contract was for insurance according to the ' tenor and conditions of the printed policies ' of the defendant. The conditions, in relation to other insurance contained in the printed policy, were as follows: ' Provided, further, that in case the assured shall have already any other insurance against loss by fire on the property hereby insured, not notified to this company, and mentioned in or indorsed upon this policy, or if the said assured, or his assigns, shall hereafter effect any insurance on the same property, and shall not, with all reasonable diligence, and before any loss by fire occurs, give notice thereof to this company, and have same indorsed on this policy, or otherwise acknowledged by them in writing, this 62 Fire Insukance. becomes an operative contract of insurance from its date.^ In an English case,^ the plaintiff applied to an agent of the defendant, policy shall cease and be of no effect.' A fair and reasonable construction of this contract would require notice of prior insurance to be given at the time of making application for insurance. The object of notice is to enable the insurer to act prudently and intelligently in relation to the risk ; yet, notwithstanding the reference to the condition in the printed policy, it was competent for the defend- ant to waive the condition, and we think it was waived, in so far as it related to the notice of prior insurance. Tlie risk was taken upon an application which formed part of the contract. The ifiterrogatory in the application for insurance, in relation to prior insurance, was not answered. The acceptance of the risk upon such an application is a waiver of any notice which a truthful answer to the interrogatory would have disclosed. 21 Ohio St. 176 ; 6 Gray, 85. As to notice of Us subsequent insurance, the charge of the court was right. Notice to Gunckel was notice to the defendant. We are not prepared to say that the notice to Gunckel would have been sufficient, if he had been the agent of the defendant merely for the purpose of soliciting applications and collecting premiums. Confessedly his au- thority in relation to this risk was much more extensive. He was, in fact, intrusted with the German, Cooper, Central policies, for the purpose of delivering them, in lieu of the defendant's own policy, and lifting the instrument sued on. Had he "been intrusted with a policy of the defendant, for delivery, in performance of the contract, there can be no doubt that notice to htm and indorsement by him of sub- sequent insurance thereon would have bound the company. He, in fact, indorsed the subsequent insurance upon the policies in his possession, and, in our opinion, lie thereby assented, as the agent of the defendant, to all the subsequent insurance of which he had notide. We also think the court below was right in charging the jury ' that it was not necessary that any indorsement of either prior or subsequent insurance should be made upon the contract sued upon, or recited in the same.' The parties contemplated and contracted for a ' regular policy,' but the instrument sued on is not such policy. We understand, as did the court below, that the mean- ing of the parties was, that prior, as well as subsequent, insurance should be men- tioned in or indorsed upon the regular policy, when or after it should be issued. Such recitals or indorsements would be a full compliance with the contract in this respect. No such policy having been issued, there was no failure to comply with this condition. The court also instructed the jury: ' That, if the company charged the amount of the premium to Gunckel, and Gunckel received the note of Kelly for the same, which was subsequently paid, that was a good and sufficient compliance with the contract upon Kelly's part, and the contract is binding, although said note was not given until after the fire.' The facts assumed in this charge, in connection with the fact admitted in the defendant's answer, viz., that Gxmckel was the agent of the company, ' to solicit applications and to collect premiums, when insurance was effected,' amount to a waiver of tlie condition in their ' printed policies; ' ' that no insurance, whether original or continued, shall be considered as binding until the actual payment of the premium.' It is very doubtful whether such condition in the policy contracted for, attaches to a contract for intermediary insurance (10 Boston. (N. Y.) 83; but whether it does or not, the charging of the premium to such agent, and the agent's agreement to give time for its payment, and the subse- quent payment to the company, constitxites a waiver of prepayment." 1 In Excelsior Ins. Co. v. Royal Ins. Co., 55 N.T. 543, Mrs C. was the owner of a mortgage interest in a certain building in the city of Eochester. Her husband as her agent applied to one McC, the agent of plaintiffs, for insurance on her mortgage interest. MoC. issued two policies, for each plaintiff, for $8,500 each. When McC. made his daily reports to the home offices, the plaintiffs each directed him to cancel the policies. This McC. neglected to do, but applied to defendants' agents for re-insurance. Defendants' agents as they claim, and as plaintiffs deny, refused to re-insure, but they did issue a new policy to Mrs. C. for the amount of the other two. Mrs. C. did not authorize McC. to get the insurance with defendants. She held the plaintiffs' policy at that time. Shortly after this, the building was burned, and Mrs C. then paid defendants' agents the premiums for their insurance, and they accepted it, as they claim, under protest and as plaintiffs claim voluntarily. The defendants' policy was not delivered to Mrs. C. until after the fire; it was 2 Mackie v. European Assurance Co., 21 L. T. (N. S.) 102. When Compaut is not agreed on. 63 "wlio was authorized to acceptor reject risks for insurance, supposing that he was also agent for another company in which he had formerly been insured, but the agent sent him a receipt for the premium in the defendant company. The plaintiff thereupon w^rote the agent that he did not want to change, if the old office was willing to take the insurance, as he knew nothing about the defendant company, and should require to be satisfied of its respectability and standing, before he consented to the change. Before anything more was done, and within five days thereafter, the premises were burned, and the plaintiff having brought an action upon the policy to recover the loss, the court held that it amounted to an accept- ance of the policy, and made it a completed contract from the day of its date. "When company is not agreed on. Sec. 25. The fact that the company or companies in which the lisk is to be placed are not agreed upon, but is left for the agent himself to determine, does not affect the question, if the agent in fact selects the companies, and enters the risk in their hooks. Thus leld by McC, Mrs. C. assigned her interest in said policy to plaintiffs, and tliey brought this action to recover of defendants, first, on ground that defendant is a le-insurer, and second, as assignees of Mrs. C. There was a verdict for plaintiffs in court below for full amount of the policies. The court held that defendants ■cannot be held to be re-iusurers, their policy does not purport on its face to be a ■contract of re-insurance. It is made in Mrs. C.'s name. The defendant was not informed that a re-insurance had been applied for. The application sent to the home oflSce was for an ordinary policy. If defendant was chargeable with the knowledge of its agent not communicated to it, it cannot be void from the evidence that defendants' agent understood that the policy issued was for a re-insurance. That although defendants' policy, had it been issued to take up those of plaintiffs, might be void, because plaintiffs' policies were not canceled. Defendant waived «uch right, by receiving the premiums from Mrs. C. after the fire, and when its agents knew plaintiffs' policies were still in existence. That plaintiffs are entitled to recover as assignees of Mrs. C. That although McC. was not the agent of Mrs. C, and had no authority from her to procure the insurance from defendant, she •afterwards ratified his acts, paid the premium, and thus rendered the policy valid ab initio. That such ratification was sufficient, although made after the fire. That there being no request to submit the question, whether the premium was paid to ■defendants' agent under protest, to the jury, the finding of the court is conclusive that it was not so paid. That if the plaintiffs had purchased defendants' policy -of Mrs. C., unconnected with their liability upon their own policies, it would be doubtful whether such purchase would have been valid. But, in this case, the purchase was undoubtedly valid. Defendants' policy contained a clause that, in ■case of other insurance on the same property, defendants should only be liable to pay its ratable proportion, according to the terms of its policy. Held that under this clause defendant's policy, the plaintiffs policies being in existence at the time ■of the fire, plaintiff could only recover, as assignees of Mrs. C, one half of defen- ■dants' policy. In Mutenberger v. Beacon 9 Penn. St. 198, it was held that one for whose bene- fit insurance had been effected, without his authority, might even after a loss, adopt the act of such person, and by relation, such adoption extended back to the issuing of the policy, and rendered it an operative security. 64 FiEB Insurance. in a New York case,^ the plaintiff called upon the defendant's agent in January, 1866, to insure $26,000, upon a quantity of cotton, and paid the premium thereon. No company was designated in which the risk was to be placed, and the agent was also agent for several other companies. No policy was made out, but the agent entered 16,100 of the risk in the book of the defendant, reported the risk to them and forwarded the premium. In February, 1866, the property was damaged by fire, and after the loss, the agent made out and delivered a policy in the defendant company to the plain- tiff, and in an action upon the policy to recover the loss, the court, upon these facts, directed a verdict for the plaintiff, which was sustained by the Court of Appeals.^ 1 Ellis V. Albany City Fire Ins. Co., 50 N. Y. 402. ^ Geovek, J., in delivering the opinion of the court, upon tliis question, said r " The inquiry in this caso is whetlier an agreement to issue a fire policy upon the cotton, for the loss of which this action was brought, was made by the defendant. It was proved tliat C. F. McCoy, a resident of Augusta, Georgia, in 18t)5 was en- gaged in the insurance business as agent for several insurance companies, incorpo- rated by different States; that in November of that year the defendant appointed him its agent, giving him a power of attorney, the material part of which in this case was as follows : ' Be it known, that C. F. McCoy, of Augusta, State of Geor- gia, is herby duly appointed and constituted an agent of the Albany City Fire In- surance Company, at Augusta, during the pleasure of said company. As agent, he is authorized and empowered to receive pi-oposals for insurance against loss or damage by fire, and to make insurance by policies of the said Albany City Fire Insurance Company, to be countersigned by the said C. F. McCoy, and to renew the same, to assent to assignments and transfers.' That at the same time defend- ant delivered to McCoy a quantity of blank policies of insurance, signed by its. president and secretary. The question in this case is whether this authorized McCoy to make a contract binding upon the defendant for the issue of policy of insurance. In determining this question the prevailing usage in transacting such business must be regarded ; as it is an elementary principle that the delegation, of an authority to transact any business includes an authority to transact it in the usual way, and to do the acts usual in its accomplishment. It must also be kept in mind that he was clothed with full authority to make all necessary sur- veys to determine tlie risk, its duration and the rate of premium, without any reference to a consultation with the company or any of its officers; in short, to- negotiate and conclude all the terms of the contract, and to consummate it by- filling up and countersigning the policy. Tliis necessarily includes power to make a pri'liminary contract for the issuing of a policy; as it is manifest tliat no policv could ever be issued in the absence of such a contract. Tlie question is whether this preliminary contract is binding upon the company. In other words, whether, when made, and the premium therefor paid by the assured, the company is bound, before the policy is actually filled up, countersigned and delivered. It is clear that if binding upon the company at all for the shortest period of time, it will so- continue until, by some act of the assured or in some other wav, it is discharged therefrom: mere lapse of time, short of the running of the statute of limitations, will not have this effect. The usage of making agreements for insurance and paying the premiums, providing for the issuing of policies thereafter, to be dated at and m force from the time of making the agreement, is so general that judicial notice must be taken of it. It would, upon principle, follow that an unrestricted authority to negotiate a contract of insurance by issuing a policy, included authority to make a valid preliminary contract for such issue. In Post v. jEtna Insurance Co..43 Barb. 361, it was shown that the agent was intrusted with blank policies and certificates of renewal, executed by the officers of the company, which provided that they should not be operative until countersigned^ When Rate is not agreed on. 65 When presumptions come in aid of the insured. Sec. 26. When the insurer has previously insured the same pro- perty, or other property of the same kind, in the same locality, there hy the agent. The agent was shown to have transacted business for some time for the defendant. It was held that the possession and use of these papers by the agent showed that he was authorized to make a preliminary agreement for the renewal of a policy by issuing a certificate, although a parol agreement, re- newing the same, would be unauthorized. This is a direct authority for the power of the agent in the present case to make a like agreement for the issuing of a policy. The possession of blank policies and certificates of renewal by an agent, providing that they shall be effective only when coimtersigned by such agent, im- ports nothing more than what is expressed in the power of attorney in the present case ; that is, an authority to bind the company by filling up, countersigning and delivering the policy or certificate ; and so it was regarded by the court, as the validity of the contract was placed upon the ground that it was necessary that such agreement should precede the issuing of the paper, and that the company was responsible for the failure of the agent to perform what he had undertaken to do by such agreement. In Sanborn v. Fireman's Insurance Company, 16 Gray, 448, this question was considered. The court remarked : ' The objection that the agent had only power to issue policies, and not otherwise to make contracts binding on the defendant, comes within the same rule of construction. His power of attorney authorized him to effect insurance, and, for this purpose, to survey risks, fix the rate of premium and issue policies of insurance, signed by the president, etc. We are of opinion that this gave him authority to make the preliminary contract as well as to issue the policy. He was not a special agent employed merely to receive and transmit proposals to his principal, but had power to do whatever the company could do in effecting insurance ; and it appeared by the evidence of the defendant that he was furnished with policies signed in blank, to be filled up and issued at his discretion. It will be seen that the court declared the authority to make the pre- liminary contract from the full power given to negotiate the contract, and fill up and issue the policy in his discretion, and not from a construction giving the agent power to bind the company by parol contracts of insurance. In this view, the case sustains the position contended for by the plaintiff in the present case. It is not claimed that McCoy could bind the defendant by a parol contract of insurance. That Is not the question ; but it is whether, having agreed upon the terms of an insurance and to issue a policy therefor, the company is liable for his failure to perform such contract. My conclusion is that it is. It may be said that this con- struction would enable McCoy to perpetrate a fraud upon the company by making preliminary contracts when its design was only to become bound by writing. This, to a certain extent, may be true ; but it furnishes no reason for depriving third persons of the benefit of contracts entered into with him as its agent, who relied thereon for indemnity from a loss from the peril embraced in the contract, by a construction of the papers more strict and rigid than is fairly required by their im- port. It is an elementary rule that the principal must bear a loss sustained by the misconduct of his agent, acting within the scope of his authority, rather than a third person who has fairly dealt with him as such. Assuming that McCoy was authorized to bind the defendant by a contract to issue a policy, the defendant in- sists that no such contract was in fact made. The undisputed evidence showed that, in the fall of 1865, McCoy was the agent of several insurance companies ; that the plaintiff had about 112 bales of cotton at Howard's landing, upon the Chattahooche river ; that he applied to McCoy for insurance upon this cotton while there, and for further insurance while on its transit from that place to Appa- lachicola, and, also, for insurance upon the same after its arrival at the latter place until placed on shipboard for Liverpool ; that the amotmt to be insured was agreed upon, and the premium determined by McCoy, who agreed to insure the same as requested ; that the plaintiff left it to McCoy to determine in what ccn:- panies he would place the insurance, and the amount in each respectively ; tliat McCoy, among other companies, determined to place $6,100 of the amount to );e insured in the defendant's company, and entered the contract to that effect in the register kept by him, received the premium thereon, and credited the amount 1 o the defendant ; and, before any loss accrued, reported the risk taken, and paid the premhnn to the defendant. This was a contract by McCoy to insure the aljove 6 66 FiBE iNSTJRAlfCB. being no change in the nature of the risk notified to the insurer, a mere order for insurance, and an agreement to insure, without any of the terms being spoken of or discussed, would be good, as a contract to insure the same property, for the same sum, for the same time, and at the same rate, , the presumption being, from the fact that the insurer promised to insure without making any change in his rates or conditions, and that the insured signified no change, that the contract was to be the same as the previous. If any changes are made by the insurer, but the property is of the same class, and in the same locality, although the amount of insurance and the term are different, and no rate is named, the presumption is that the same rate is to continue, and the contract will be regarded as complete.^ May be complete contract ■when rate is not agreed upon. Sec. 27. The fact that no rate of premium is agreed upon, does not necessarily defeat the contract, if customary rates for the same class of property exist, and if the contract is complete except as to the premium, and there is an understanding that the insurance was effected, and the contract is otherwise complete, the premium will be presumed to be at the customary rates, and an acceptance by an agent of a certain sum as the premium, or the fixing of a certain sum as the premium, will render the contract complete. This doctrine was well illustrated in a Maine case,^ in which the plain- tiff entered into a contract to insure $3,600 on a building owned amount in the defendant's company ; and as he could only effect this by issuing a policy, a contract (as was held in Post v. The jEtna Company, supra) to issue such policy. This contract being valid against the defendant, it follows that all exceptions taken to rulings' of the judge, as to the competency of evidence given for the piu'pose of showing a subsequent ratification, are unavailable.' " 1 In Audubon v. Excelsior Ins. Co., 27 N. T. 216, the plaintiffs were in the habit of sending plates of their work to a bindery on Spruce street, New York, to be bound, and of procuring insurance upon them for the brief period they remained at the bindery. Some two months prior to the loss, they sent sets of their work to the bindery, and procured a policy of §1,000 thereon for one month. Afterwards they sent five additional sets of their work to the bindery, and sent to the defendant for insurance upon them for one month. The secretary was informed what the plaintiffs required, and of all matters sufficient to embrace the contract, except as to the rate of premium. Reference was made to the former policy on other sets, and the secretary said he would send the policy Monday. This occurred on Satur- day afternoon. A loss having occurred on Sunday, before a policy was issued, the defeidants denied their liability ; but the court held that the contract was com- pletft, and that the risk attached Saturday afternoon, and consequently that the defe \dants were responsible for the loss. The court held that the fact that the defendant had insured the same description of property, at the same place, just prior to this occasion, the fair inference was, that the same rate of premium would continue, and the fact that nothing was said about the premium, under these circum- stances, did not leave the contract incomplete. ^ Walker v. Metropolitan Ins. Co., 56 Me. 371. Premium Acknowledged. 67 ~bj him, upon a builder's risk, and requested him to continue the insurance when the builder's risk expired, which the agent agreed to do, and entered the risk in his blotter. After the builder's risk expired, the risk was continued as a permanent yearly risk, commencing July 1st, 1866. No specific premium was agreed upon, but the plaintiff had a claim against the company, and the agent was directed to take the amount from such claim, to which the agent assented, and in settling the claim, after the loss sued .for, he retained a certain sum as premium upon the policy. No policy, however, had, in fact, been made, but the practice was shown to be to make them subsequent to the taking of the risk, and to regard them as attaching at the time of their entry in the blotter. The defendant refused to recognize the act of the agent, and directed him to pay the amount retained as premium, and in- sisted that, as no premium had been fixed, and no policy made at the time of the loss, no valid contract existed. But the court held that, if the plaintiff and the defendant's agent understood "that an insurance was, in fact, effected, the pre-payment of the 3)remium was unnecessary, as the company might waive that, and that, if no premium was fixed, it must be presumed that it was to he at the customary rates, and the fixing of a sum by the agent, as "the premium, even after a loss, and assented to by the plaintiff, would, the contract being otherwise complete, render the contract ■complete and operative. Acknowledgment of receipt of premium in policy. Pre-payment of pre- mium not always essential. May be waived, even after policy is made. Sec. 28. In all cases where, by the terms of the contract itself, prepayment of the premium is a condition precedent, unless such condition is waived, full performance must be shown, or the risk •does not attach,^ and a part payment thereof, unless credit is given ,for the balance, will not render the contract obligatory .^ The question as to whether a waiver exists in a given case, is one of 1 Sanfordv. The Trust F. Ins. Co., 11 Paigne Ch. (N. Y.) .547; Berr/eaen v. The -Builders' Ins. Co., 38 Cal. 541. A policy of insurance whioli is conditioned that the company will not be liable for any loss occurring when the premium note is "Wholly or in part past due and unpaid, is, under such circumstances, suspended, in the absence of a waiver of the condition of the policy by the company. A waiver Tvill not be Inferred from an acceptance, by the company, of a part of the amount of the premium-note after maturity, nor from an offer of an extension of time of pay- ment not accepted by the insured, nor from a statement by the secretary of the company that the company was liable under the policy. Garlick v. Mississippi Valley Ins. Co., 44 Iowa, 553. " Barnes V. Piedmont, etc., F. Ins. Co., 74 N. C. 22. 68 FiEB Insurance. fact, to be determined by tbe jury in view of all tbe facts and circumstances. A waiver may be implied from the acts of the agent, and if he has so dealt with the assured in reference thereto^ as fairly to induce a belief, on his part, that the condition is waived, and the premium has not been called for, after a loss, the company cannot insist that the risk never attached because the premium was unpaid.^ If the premium, as is usually the case with large risks, is changed in general account by the agent, or by the broker with the knowledge of the company, it cannot set up the nonpayment of the premium to defeat 'its liability. It has been held, that when the insurer, by his conduct or course of dealing, has fairly induced a belief in the mind of the assured that a for- feiture or condition will not be insisted upon, as, where it prints upon its policy, " every policy non-forfeiting," or where it has habitually waived forfeitures under similar circumstances with the assured, and others, to his knowledge, it is estopped thereby from insisting upon the same.^ But, so far as evidence of the practice of the agent, to give credit to others is concerned, it is hardly believed that evidence thereof of itself, can establish a waiver, and that it is inadmissible to establish a waiver, unless connected with other proof to establish it If it is also shown, or offered to he shown, that the agent has previously given credit for premiums to the plaintiff ihen eyidiQJiCQ of his practice in that respect in reference to others, may be shown, and the circumstance that the pohcy is in his possession,^ in con- nection with such evidence, tends to establish a credit for the pre- mium.^ So it has been held that the mere fact that the policy is sent to the assured, by the agent, even though the condition there- in as to pre-payment is express, is of itself evidence that a short 1 Hallock V. Com. Ins. Co., ante; First Baptist Churchy. Brooklyn Ins. Co., ante; Boehen v. WilUamsburgh F. Ins. Co., 35 N. J. 131. J' Home Life Ins. Co. v. Pierce, 75 lU. 426; Helme v. Philadelphia Life Ins. Co., b7 I'enn. St. 107; Contra, see Wood v. Poughkeepsie Ins. Co., 32 N. Y. 619. /r!^.?'*^"*°'^*" -^"*- ^"^ '^^ ^^^^rson, 77 111. 382; Madison Ins. Co. v. Fellows, 1 Dis. )flo A ' ^^'^ ^"^^ Central Ins. Co. v. National Pro. Ins. Co., 20 Barb (N. T.) tn 'tT?™®"""*^ ^- ^^<^^ford, 14 Mass 121; Troy Fire Ins. Co., v. Carpenter, 4 Wis. 7?a' ,?oi^\7: F"**"* -^"*- ^^-f^ -^"'■- ^o-' ^ ^- Y. 283; Illinois Central Ins. Co. v. iVoir,Sl m.35i; Teutonialns. Co. v. Mueller, 77 id. 22; Promdent Ins. Co.y. Fernell, 49 id. 180; Marshy. N. W. Ins. Co., 3 Biss. (U. S.) 3.51; Michael y. Mut. Ins. Co., 10 La. An. 737; Barnumv. Childs, 1 Sandf. (jST. Y.) 58; Goitv. National Protection Ins. Co., 2.5 Barb. (N. Y.) 189. / See opinion of Davis J., in Wood v. Poughkeepsie Ins. Co., 32 N. T. 627; see also Sheldon v. Atlantic F. Ins. Co., 26 N. Y. 460. Pbbmium Acknowledged. 69 credit is given,^ unless the agent indicates a contrary intention. It is held in numerous cases that, where the policy contains a con- ■dition requiring pre-payment of the premium as a condition pre- cedent, and also a receipt for the premium, that a delivery of the policy to the assured estops the company from setting up the forfeit- ure for nonpayment of the premium, because the receipt is absolute ■evidence of payment.^ In the case last referred to, Beaslby, C. J., in passing upon this -question, says : " This policy, executed by the president and secretary ■of the company, contains a formal acknowledgmentof the payment of the premium in question, and in my opinion, this should prevent the defendants from averring or showing non-payment for the purpose of denying that the contract ever had any legal existence. What does ihis receipt, in connection with its delivery, import, if it does not mean that the payment of the premium is conclusively admitted to the extent that such payment is necessary to give validity to the corir tract? Unless this be the meaning, it serves no legal office, for it ■does not mean that the money has been actually received. It is "true that there is an express declaration that the policy is to have no effect until the premium shall have been paid ; but in this same instrument is an equally express declaration, that the act upon which the contract is to become efficacious has been done. Such an acknowledgment appears to be analogous and equivalent to the acknowledgment of the receipt of a valuable consideration in a '^Boehenv. Williamsburgh Ins. Co., ante. In Miller v. Life Ins. Co. ,. 12 Wall. {IT. S.) 285, the application provided that the policy shall not be binding until the premium shall have been received by the company or some authorized agent In the lifetime of the person whose life is insured. The premium was to be part cash and part notes. Insured told the agent to call on his partner for the cash, and to send the policy to him. The notes were sent to the insured, who executed and returned them to the agent. In the letter inclosing them, the coftipany's agent wrote: " The cash payment we will get of Scott when the time arrives." The policy recited the consideration, but upon the margin, noted that agents were not authorized to waive, alter or change any of the provisions of the policy. The receipt which accompanied the policy contained a notice: " Agents must not deliver policies till the premium is received, as no policy is in force till paid for. The policy was delivered, together with the receipt, but Scott never paid the cash part of the premium. The agent notified the insured that Scott refused to pay the premium, and the insured prom- ised the agent to get the money and send it along in a few days. The Insured be- came sick. The agent wrote to him, inclosing the two premium notes, and request- ed a return of the policy. The insured died before this letter reached him. It was held that the agents had power to waive the payment of the premium, and to deliver the policy without exacting the cash premium; and that delivering the policy with- out requiring payment of premium, raised a presumption that credit was intended; and phere a credit is intended, the policy is valid, though the premium be never j>aid. ^ Provident Ins. Co. v. Farrell, 49 HI. 180; Baschv. Humbold, etc., Ins. Co., 35 T^. .T. 429; 5 Bennett's F. I. C. 421. 70 FiEE Insurance. conveyance operative by force of the statute of uses, being always considered as conclusive for tbe purpose of giving a legal force to the transaction. This policy purports to have an effect immediately on delivery, founded on a paid up consideration. It does not seem, competent for the promisor to prove that the acknowledgment is not true, and that the contract never had any existence. I think that when the assured received this policy, he had a right to presume, either that the agent had settled the premium with the company, or that they, hy their receipt, intended to relinquish the clause requiring pre-payment. The usual legal rule is, that a receipt is only prima facie evidence of payment, and may be explained ; lut this ruler does not apply where the question involved is not only as to the fact of payment, hut as to the existence of rights springing out of the con- tract. With a view of defeating such right, the party giving the re- ceipt cannot contradict it. An achnowledgment of an act done, corb- tained in a written contract, and which is requisite to put it in force, is as conclusive against the party making it as any other part of the contract, and cannot be contradicted or waived by parol." ^ Indeed, this rule is so strict that it has been held that an action to recover a portion of the unearned premium might be maintained by the policy holder, even when the premium was paid by a promis- sory note, and the note had not been paid, ^ and that an action ia favor of the company against the assured, unless an obligation in writing exists against him, cannot be maintained therefor ^ A delivery of the policy, with such a receipt, is conclusive upon the insurer, and the fact of payment cannot he denied by the insurer in an action to enforce the policy.* The possession of the policy is. of itself conclusive evidence of payment.^ It is also held that this, rule holds good in the case of renewal receipts.^ ■ ^5Keiit'sOom.Sded. 260; Hodgson Y. Marine Ins. Co., 5 Cr. (U. S.) 100; Prince of Wales Life Assurance Co. v. Harding, El. Bl. & El. 183 ; Consolidated Fire Ing. Co. V. Cashaw, 41 Md. 59; Anderson v. Thornton, 8 Exchq. 425; Dalzell v. Muir, 1 Camp. 532. ' Hemmingway v. Bradford, 14 Mass. 121 ; Dalzell v. Muir 1 Camp. 532. "Airy v. Bland, Park. 27; see also. Marshall on Ins. 334; Park, on Ins. 26. ^Madison Ins. Co. v. Fellows ante; Prince of Wales Life Assn. t. Harding, EL Bl. & El. 183; Consolidated F. Ins. Co. v. Cashaw, ante; Michael v. Mu. Ins. Co.y ante. ^Troy F. Ins. Co. v. Carpenter, 4 Wis. 20; Dalzell v. Muir, 1 Camp. .532; De Ganimede v. Pigon, 4 Taunt. 246; see also cases in previous note; see, holding a contrary doctrine, Ins. Co. of Penn. v. Smith, 3 Whart. (Penn). 520; Sheldon v, Atlantic F. Ins. Co., 26 N. T. 400. ^Prince of Wales Life Assn. v. Harding, ante. Premium Acknowledged. 71 There is no conflict of authority as to the power of a stock insurance company to waive the condition of a policy, as to pre- payment of premium, and such waiver may be made by an agent of the company, having either apparent or actual authority to do so, and may be shown by any act or circumstance that tends to show an intention or purpose to dispense with it. The cases upon this point are numerous.^ ^Bersche v. Globe Mut. Ins. Co., 31. Mo. 546; Ins. Co. v. StocJcblower, 26. Penn. St. 199; Heaton v. Manhattan Fire Ins. Co., 7 K. I. 502; Keenan v. Dubuque Mut. Fire Ins. Co., 13. Iowa. 375; Mitchell v. Lycoming Ins. Co., 51. Penn. St. 402; Bathburn-v. City Fire Ins. Co. 31 Conn. 194; Tuttle v. Robinson 83. K H. 104; Hallock V. Commercial Union Ins. Co., 26. N. J.; ante; Buckley v. Garrett, 48 Penn. St. 204; Bragdon v. Appleton Mut. Ins. Co., 42. Me. 259; Perkins v. Washington Ins. Co., ante; Lungstraussv. German Ins. Co., 48. Mo. 201; Boutony. AmericanMut. Lifelns. Co., 25. Conn. 542; Fourdray v. Dart. 26 Conn. 376. Chase V. Hamilton Ins. Co., 22 Barb. (N. Y.) 527. In MowryY. Home Life Ins. Co., 9 E. I. 346, the defendants executed a receipt for the premium, on a policy, and delivered it to their agent, who delivered it to the assured, and took his note for the amount the premium. In an action upon the policy, the defendants claimed that it had of been forfeited by non-payment of the premium. The coxut, however, held, that in the absence of notice to, or knowledge by the assured, that the agent was not au- thorized to give credit for the premium, the taking of the note operated as a pay- ment. But, where the agent accepts in payment of a premium due the company in money, articles of personal property, without special authority from tlie company, it is held a fraud and not binding upon the company, Hoffman v. Hancock Mut. Life Ins. Co., 92 U. S. 161; but an agreement on the part of the company, made by the president, to charge the premiums to the assured as they become due, is a valid and binding agreement. Missouri Life Ins. Co. v. Dunklee 16 Kan. 168; and the agent has the right to pay the premium to the company, and take the notes of the assured, payable to himself therefor. Home Ins. Co. v. Curtis. 32 Mich. 402. In a recent case before the Court of Appeals in New York, Marcus v. St. Louis Ins. Co., not yet reported, reversing the case as reported in 7. Hun (N. Y.) 5, it was held that where a life insurance policy contained a provision forfeiting the policy for the non-payment of premiums when due, a general agent, who represented the company, issuing the policy, before a premium became due, had authority to extend the time of payment, and to waive tjfie f orfeittxre, and that another clause in the policy that " agents are not authorized to make, alter, or discharge contracts," did not apply to such general agents. Reaffirming the doctrine of Sheldon v. Atlantic Fire Ins. Co., 26 N. Y. 460 ; Wood v. Poughkeepsie Ins. Co., 32 id. 619. The doctrine of this case conflicts with that of Mentz v. Lancaster Fire Ins. Co., 79 Penn. St. 475, in which it was held that a general agent has no power to waive any conditions in a policy. The premium must be paid as provided in the policy, unless payment according to its terms is waived, and the burden of establishing a waiver is upon the insured. Thus, in Bradley v. Potomac Ins. Co., 32 Md. 108, the Potomac Fire Insurance Company issued its policy of insurance to B., stipulating therein tliat the company would pay all loss to the property insured, resulting from fire, and not exceeding the amount specified, during one year from the date of the policy. There were further provisions in tlie policy, expressly providing that the company should not be held liable under the policy, imtil the premium in full was actually paid, and that, if the premium was not paid within fifteen days from the date of the policy, it should be null and void. A loss by fire occurred to the prop- erty covered by the insurance, after the delivery of the policy, but before the pre- mium was paid, and before the expiration of the "fifteen days." The insured, •while the fifteen days were still unexpired, tendered the amount of the premium and claimed indemnity for the loss. The court held that actual payment of the premium, not only within the " fifteen days," but before loss, was necessary to render the company liable under the policy, and that the holder, not having ful- filled the conditions, could not recover for the loss. In Massachusetts, it is held that where, by the by-laws of a mutual insurance company, the policy is not to be 72 Fire Insurance. Such waiver may be shown by parol ;^ and a delivery of the policy, without requiring pre-payment, is prima facie evidence of such waiver ; ^ but this may be overcome by proof that no waiver was intended, or understood by the assured, as, that the policy was merely delivered for examination, with a distinct notice that, if satisfactory, the premium was to be paid at once.^ But if the policy is sent for examination, with a statement, " Should you decline the policy, please return it by return mail ; if you retain it, please send me the amoun^ of premium," it has been held that a credit was given, and pre-payment waived.* The delivery of a policy, before the premium is paid, does not necessarily make the policy operative, and if there is no credit given for the premium, and the policy specially provides that the policy shall not attach until the premium is paid, and that unless paid within a certain time, the policy shall be null and void, the insured will not be liable for a loss occurring within the number of days from the date of the policy specified therein, even though within that time, hut after the loss, the premium is tendered to the insurer. In such a case there is nothing to which the policy can attach, and the party has, at his peril, neglected to make the policy operative, by complying with the terms of the policy as to the payment of the premium.^ But a delivery of the policy without exacting the pre- binding until the premium is paid, that a policy made, but not delivered, will not be operative, even though the treasurer of the company agrees that if anything happens, he would see the premium paid, or that he would take it upon himself to keep the policy good, Buffum v. Fayette, Mut. Ins. Co., 3 Allen (Mass.) 360; but this was placed upon the grounds that the treasurer had no authority to waive the condition. If the waiver had been made by a proper officer, it would doubtless have been held good, Priest f. Citizen^s, etc., Ins. Co., 3 Allen (Mass.) 603; and such waiver may be either express or by implication, Underhill v. Agawam Ins. Co., 6 Cush. (Mass.) 440; but it is held that, if the matter affected by the waiver is of the substance of the contract, the officers of a mutual company have no power to waiver them. Haley. Mechanics' Ins. Co., 6 Gray (Mass.) 169; Bremer v. Chelsea Ins, Co., 14 id. 203. 1 Pino V. Merchants' Ins. Co., 19 La. An. 214. 2 Davis, J., in Woody. Poughkeepsie Ins. Co., .32 N. Y. 619. ^ Wood V. Poughkeepsie Ins. Co., ante; Goit v. National, etc., Ins. Co., 25 Barb. (N. Y.) 189; Boehen v. Williamsburgh F. Ins. Co., ante. * Sheldon v. Atlantic Ins. Co., ante. 5 In Bradley v. Potomac F. Ins. Co., 32 Md. 108, by a policy dated the 11th of November, 1867, and executed by the company and delivered to the insured on that day, it was declared that the company, in consideration of $ 160, to be actually paid to it by the insured, within fifteen days from the date of the policy, did insure B. against loss or damage by fire to the amount of $4,000, on his property therein described ; and in the clause that followed the description of the property, it was set forth that the company promised and agreed to made good unto the insured, his executors, etc., all such immediate loss or damage, not exceeding, etc., as should happen by fire to the property described, during one year, to wit: from the 11th of Payment of Premium. 73 payment of the premium, is prima facie evidence of a waiver thereof, and imposes the burden upon the insurer of showing that, in fact, no credit was given or intended, and that the condition was not waived,^ and where a credit is given for the premium, at "the time of making the contract, or when the policy is delivered, it is equally obligatory as though the premium was paid. ^ If no mode of payment is prescribed in the contract, of course it is incumbent upon the assured to offer to pay in such money as is lecognized as legal tender, although an offer to pay in current bank bills would be good, if not objected to upon that ground. But, if the assTired is seeking to enforce perforriiance of a contract, pru- dence would suggest a tender of money that is recognized as a legal INovember, 1867 (at 12 o'clock at noon), imtil the 11th day of November, 1868 (at 12 o'clock at noon), the said loss or damage to be estimated, etc. By a condition in the policy it was provided that the company should not be held liable under the policy, or under any renewal thereof, until the premium in full therefor was actually ])aid; and by a further condition it was mutually agreed that, if the premium on the policy was not paid within fifteen days from its date, the policy should be null and "void; and it was further agreed that the policy was made and accepted in reference to the terms and conditions therein set forth. A portion of the property insured "was totally destroyed by fire, and the balance damaged by fire and water, within fifteen days of the execution and delivery of the policy. Proper preliminary proof of the loss was furnished to the company. After the fire, and within fifteen •days from the date of the policy, the premium was tendered to the company by the insured, but not accepted. An action was brought to recover on the policy. Held, that the actual payment of the premium within fifteen days from the date ■of the policy- was a condition precedent to the attaching of the risk, and as the property was destroyed before the tender of payment within the time limited, there "was nothing upon which the risk could attach, and the company, therefore, was not liable for the loss. ^Opinion of Davis, J., in Wood v. Poughkeepsie Ins. Co., 32 N. Y. 619; Boehen T. Williamshurgh Ins. Co. 35 N. T. 131; Bodine v. Excelsior Ins. Co., 51 id. 117; 10 Am. Eep. 566; Sheldon v. Atlantic, etc., Ins. Co., 26 id. 460; Goit v. The Nat. Protection Ins. Co., 25, Barb (N. T.) 189; Trustees, etc., v. Brooklyn, etc., Ins. Co., 19 N. Y. 305. 2 Thus in Church v. Lafa>yette F. Ins. Co. 66 K Y. 222, 13 Alb. Law Jour. 446, an action was brought upon a policy upon a house. It appeared that plaintiff had dealt with the defendant company for many years, and was in the habit of getting policies without paying for them at the time; that on September 6th, he applied to the secretary of the company for insurance for the coming year, and asked a reduc- tion of rates which was refused, that the plaintiff then said, "Very well, 1 must have It insured." The next day defendant made out the policy to plaintiff, insuring him :from September 6. On September 9, plaintiff asked the secretary if he had taken the building, and he replied that he had at the old price. On the 16th of October plaintiff applied at the company's office to a clerk in charge, for insurance upon another building, and stated to the clerk that he -would pay for both together, to ■which the clerk replied, "Very well." Subsequently the house was burned; and, thereafter, plaintiff tendered the premiums upon both policies; but that for the policy upon the burned house was refused, the secretary stating that the company -was not liable because the house was unoccupied when burned. The other pre- mium for the other policy from its original date was received by the company a few days afterwards. It was held that it waS for the jury to determine whether or not a waiver of payment was made when the policy upon the burned house was taken out, and a nonsuit was error. Bowman v. Agricultural Ins. Co., 59 N. Y. 521. Washoe Tool Co. v. Hibernian Ins., Co., 66. N. Y. 613. 74 FiEE Insurance. tender. But, where the company or agent accept payment in a different mode, they are bound thereby, and are estopped from after- wards setting up a failure to pay " in money," in avoidance of liabihty. A check, bill of exchange, draft, or note even, accepted in payment, if good, and paid upon presentation, is an operative and sufficient payment.^ But it has been held, that the receipt, by an agent of articles of personal property, in payment of a pre- mium, without special authority from the company, is a fraud upon it, by which it is not bound,*and that the assured can claim no- benefit from such a payment. He is bound to ascertain whether the agent has authority to receive payment in that way.^ But it has been held, that where an agent accepts the note of the assured, payable to himself even, the insurer is bound thereby, as the as- sured is not bound to know that such an act is in excess of his au- thority, and unless he knows, or has notice to that effect, the note operates as a payment.^ So it has been held, that an agreement by the president of an insurance, to charge the premiums to the assured, upon the company's book as they matured, is valid and binding upon the company ; * and generally, it may be said that a payment of premiums made to an officer or duly authorized agent of an insurance company, in any of the ordinary modes adopted in business, will be binding upon the company in the absence of notice or knowledge on the part of the assured, that such officer or agent is not authorized to accept payment in such way.^ But in order to establish a prepayment of the premium by a waiver from the act of an agent, it must in some way appear either from the apparent authority of the agent or otherwise that he was authorized to waive prepayment, and it is doubtful whether mere authority to take an application and collect and transmit premiums amounts to authority to waive payment otherwise than according to the terms of the policy.® 1 Tayloe v. Merchants' Ins. Co., ante ; Mowry v. Home Life Ins. Co., 9K. I. 345 ^Hoffman v. Hancock Mut. Life Ins. Co., 92 V. S. 161. ^Marcus v. St. Louis Co.(N. T. Ct. of Appeals, not yet reported). See also, Mowry v. Home Life Ins. Co., 9 E. I. 346; Home Ins. Co. v. Curtis, 32 Mich. 402- * Missouri Life Ins. Co. v. Dunkler, 16 Kansas, 168. ^See note 7, ante, page 75. ^In Crltchetty. Am. Ins. Co., 53. Iowa, 404, 36. Am. Rep. 230, where a policy contained a condition rendering it void if default was made in payment of a premium note of thirty days after due, it was held, that an agent of the insurance company authorized only to receive applications for insurance and collect and transmit premi- ums had no authority to extend the time of payment of a premium note so as to avoid a forfeiture by reason of a failure to pay such premium note within thirty days Payment of Pkemium. 75 Usage to collect premium 11711611 policy is delivered. Effect of. Sec. 29. In an action upon an agreement to insure, it is compe* tent for the plaintiff to prove a usage that, when there has been a verbal agreement for insurance, and the terms agreed upon, the contract is deemed valid, and the premium not due until the policy is delivered.^ But in such a case, m order to make the con- tract operative, it would be the duty of the assured to be ready to receive the policy and pay the premium within a reasonable time.^ When the insurer does any act that indicates that a credit is after maturity. An agent employed to collect a claim does BOt thereby have au- thority to hind his principal even to grant an extension of time. Hutchings v. Mun- ger, 41 N. T. 155; Kirk v. Hiatt 2. Ind. 322; Coming v. Strong, 1 id. 329. Where an agent is intrusted with a policy for the purpose of delivering it, and does deliver it, though in violation of a provision of the policy as to prepayment, it has been held that the assured has a right to assume that prepayment has been waived. Young v. HartfordF. Ins. Co., 45 Iowa, 377; BowmanY. Agricultural hw. Co., 59 N. Y. 521; Mississippi Valley Ins Co. v. if ey land, 9 Bush. (N. Y.) 430; Sheldon v. Connecticut Ins. Co., 25 Coim. 9. But the waiver rests upon something done by the agent which he was employed to do and not upon what was said by him. A mere agreement to waive prepayment will not put a policy in force where it is not delivered. It is the delivery of the policy which constitutes the ground of waiver. In Halloclc v. Com- mercial Ins. Co., 26 N. J. 268, a recovery was allowed, although the premium had not been paid, nor the policy delivered. But the agreement 5for the insurance had been made and the premium tendered, which the agent declined to receive because the policy was not made out. ia. Trustees of Baptist Church v. Brooklyn Ins. Co., 19 N. Y. 305, there was a parol contract for a renewal, but no payment of the re- newal premium. It was held that the plaintiff was entitled to recover, but in that case the contract was made by the officers of the company and not by an agent. In Viele V. Germania Ins. Co., 26 Iowa, 9, the rislt was increased by the act of the as- sured c6ntrary to the provisions of tlie policy. It appeared, however, that the agent assented to the use of the premises, by reason of which the risk was increased. Such assent was held to be a waiver of the forfeiture. In Bonton v. American Mut. Life Ins. Co., 25 Conn. 542, the premium was actually paid to the agent, though after the day it fell due. It was held that though the agent had power to make the contract of insurance, and had power to receive the premium when due, he had no. power, without an express authorization, to bind the company by receiving it after it was due. Substantially the same doctrine was held by implication in Ins. Co. v. Norton, 96 U. S. 334. In that case a recovery was allowed where the agent had ex- tended the time of payment of premium but the right of recovery was made to turn upon the ground that the jury was justified in inferring from the practice of the company an authorization of the agent to extend the time of payment. There was no pretense that the agent, by virtue of his power to make the contract of insurance and collect premiums, could extend the time of payment. There is a class of cases where a receipt of premium by an agent, paid when due, has been held to be a. waiver of a forfeiture incurred by a violation of a condition of the policy. Walsh V. .Mtna Life Ins. Co., .30 Iowa, 133. But where an agent, who is authorized to re- ceive premiums, receives a premium paid when due, he is acting within the scope of his general authority. The assured has a right to suppose that the payment is valid ; that it becomes a payment to the company, and that the company by receiving it, if it receives it with knowledge of the forfeiture, waives the forfeiture. "We have been unable to discover any rule in the law of insurance which would justify us in hold- ing that an agent can bind the company by his consent to a postponement of a pay- ment of a renewal premium, and keep a policy in force contrary to its provisions, unless he is expressly authorized to do so. Adams, J., in Critchett v. American Ins. Co. 53 Iowa, 404; 36 Am. Rep. 230. ^Baxter v. Massasoit Ins. Co., 13 Allen (Mass.) 320. "HoAB, J., in T. Baxter v. Massasoit Ins. Co., ante. 76 FiKE Insurance. given, knowing that the insured desires it, it is a waiver of any lorfeiture that might otherwise arise from payment according to the letter of the policy. Thus, where the policy provided that, Tvhen a premium note was taken for a cash premium, any default in its payment should operate to suspend the company's liahUity until it should be paid ; the assured gave such a note and, imme- diately after it was due, having another policy which he desired canceled, and the unearned premium thereon applied to this note, and not knowing how much would be due the company, he proposed by letter, to pay, asking for a statement of the amount, whereupon the company at once applied upon the note the amount in their hands, and directed him, by letter, to remit the balance, which he did by first mail ; but a loss occurred before the remittance was mailed, and it was held that the forfeiture was waived.^ The power of an agent to waive any provision of a policy, v^hether it be a condition precedent or subsequent, is to be ascer- tained from his apparent authority, and not necessarily from the authority actually possessed by him. If the principal clothes him with apparent, although not with real authority, to act for him in such respects, he is bound thereby. The assured is not, at his peril bound to ascertain what the actual authority of the agent is, but has a right to rely upon his apparent power, and if the company permitted the agent to act in such a manner as to induce the as- sured to believe that he had authority to bind it, touching the particular matter in controversy, the company is thereby estopped from setting up want of authority im the agent.^ If an agent ac- cepts the responsibility of a broker to whom the assured has paid the premiums, and the company makes no objection, it cannot afterwards cancel the policy without repaying the unearned pre- mium to the assured.^ 1 Sims V. state Ins, Co., 47 Mo. 311. In Carson v. German Ins,, Co., 62. Iowa 433 the defendant mailed a policy of insurance to the plaintiff, and with it a letter stat- ing that its agent A. would call in a few days and settle for the policy. When A. called, plaintiff was not at home, and A. asked plaintiff's son to tell him to forward the premium to the company and it would be all right. It was held, that plaintiff had a reasonable time after notification by his son within which to forward the premium, and that for a loss occurring within that time the company was liable. Three days was not an unreasonable time. 2 An insurance broker has no authority to waive pre-payment. Thus A., desir- ing insurance, applied to B., an insurance broker, who applied to C, a broker, who applied to D., another broker, who applied to the agent of a company, who agreed to take the risk. The agent delivered the policy to D. without demanding payment of the premium. Through C. and B., A. received the policy, and paid the premium to B., who paid it to C, who kept it. The policy contained a clause providing that 3 Bennett v. Maryland Ins. Co., 14 Blatchf. (U. S. C. C.) 422. Payment or Peemiijm. 77 Payment of premium not essential ; unless required in case of contracts to insure. Sec. 30. It is not essential, unless expressly required by the agent, that the premium should be paid at the time when the con- tract is entered into, in order to constitute a valid contract to insure. It is enough if the premium is paid when the policy is made, or even if not paid at all, if the agent has given a credit therefor, ^ or has agreed to turn it on a debt due from him to the person insured.^ Thus in the case last cited, the agent lived in the house insured, agreed to apply it on the rent, and it was held a sufficient payment, the company being indebted to him in nearly the amount. The rule is, that in the case of a mere oral contract of insurance, supported by a sufficient consideration, wliich is to take effect forthwith, although it may be entered into contempora- neously with an agreement by the insurers to deliver, and the as- sured to accept subsequently, as a substitute therefor, a written policy by the former in the form usually adopted by them, becomes binding and remains in force until the delivery or tender of such policy. Until then, the condition usually inserted in such policies, requiring pre-payment of the premium to make them binding, un- less expressly adopted by the parties in such oral contract, forms no part of the contract of insurance between them. A mere demand of the premium, without insisting upon it or tendering a valid policy, does not terminate the oral insurance ; and the insured may recover thereon for a loss, although after it occurred, and while the insurers were ignorant of it, he paid them the premium, and received from them a written policy which was not binding on them, by reason of not being countersigned by one of their officers as was required in the body of it.^ it should not become operative until actual cash payment of the premium into the office of the company. It was held that the agent had no power to waive this con- dition; that he did not attempt to waive it; that B. and C. must be deemed A.'s agents, and not the agents of the company; and that A. could not recover under the policy for a loss. Pottsville Mut. Ins. Co. v. Minnequa Springs Improvement Co., 106 Pa. St 137. 1 Audubon v. Excelsior Ins. Co., ante ; Hallock v. Comm'l Union Ins. Co., ante ; Post V. ^tna Ins. Co., 43 Barb. (N. Y.) 351; Whittaker v. Farmers' Ins. Co., 29 id. 312. 2 Woody V. Old Dominion Ins. Co., 31 Gratt. (Va.) 362. 3 Kelly V. Commonwealth Ins. Co., 10 Bos. (N. Y.) 82. In Davenport v. Peoria etc., Ins. Co., IT Iowa, 276, the court held, that under an oral contract to insm-e it is not necessary, unless specially provided otherwise that the premium should be paid. Where an application for insurance is made and accepted, and the policy is made out in duplicate, and the name of the assured, as such, put down on the books of the insurance company, the contract is complete; and unless the company have 78 FiEE Insueance. The premium is not payable until the policy issues, then the as- sured must accept the same and pay the premivm.^ In nearly all the cases where actions have been brought upon such contracts, it ■will be seen that the premiums were not paid until after the loss, when the premium was tendered and a policy demanded ;2 and un- der such circumstances, specific performance has often been de- creed in courts of equity;^ and actions for a breach of the contract sustained in courts of law> The fact that the policies contain a condition that the risk shall not attach until the premium is paid, does not affect the question, because the assured cannot be pre- sumed to know the conditions of a paper he has never seen, and, unless expressly adopted in the oral contract, they form no part of it, and the premium is not due until a valid policy is executed and tendered to the assured. In a leading case upon this question,^ a defective policy was executed and delivered to the plaintiff after a loss had occurred, when the premium was paid. The plain- tiff, admitting that the policy was invalid, brought an action upon the oral agreement to insure, and joined therewith a count upon the defective policy. The defendants denied their liability for the loss, either under the oral contract or the policy — under the oral contract, because the premium was not paid until after the loss, when the policy required it to be paid before the risk attached. The action was upheld, and a recovery permitted under the oral contract, and as the doctrine of the case is important, I give the opinion of Robeetson, J., entire, in the subjoined note.* required payment of tlie premium, or given notice that they will not be bovind until the premium is paid, there is a waiver of such payment. Proof of such a waiver is no violation of the rule prohibiting parol evidence to vary or contradict a written contract. Pino v. Merchants' etc. Ins Co., 19 La. An. 214. 1 Dbnio, J., in Audubon V. Excelsior Ins. Co., 27 N. Y. 216. 4. Bennett's F. I. C. 696; Davenport v. Peoria, etc., Ins. Co., ante ; Hamilton v. Lycoming, etc., Ins. Co., 5 Penn. St. 339; Kohne v. Ins. Co. of N. America, 1 Wash. (U. S. C. C.) 93; Mlis v. Albany F. Ins. Co., 50 N. Y. 402; Sanborn v. Fireman's Ins. Co., 16 Gray (Mass.) 443; N. E. Ins. Co. v. Bobinson, 25 Ind. 536; Baldwin v. Chateau Ins. Co., ante ; Loring v. Proctor, 26 Me. 18; Hallock v. Commercial Ins. Co., ante. 2 See cases cited in the last note. ' Ellis V. Albany F. Ins Co., ante ; Palm v. Medina Ins. Co., 20 Ohio, 529; Andrews v. Ins. Co., 3 Mas. (U. S.) 6; Tayloe v. Merchants Ins. Co. ante. * Kelly V. Com. Ins. Co., 10 Bos. (N. Y.) 82 ; Shearman v. Niagara Fire Ins. Co., 46 N. Y. 530; Audubon v. Excelsior Ins. Co., ante ; Pratt v. N. Y. Cent, Ins. Co., 641 Barb. (N. Y.) 589. 6 Kelly V. Commonwealth Ins. Co., 10 Bos. (N. Y.) 82; 3 Bennett's F. I. C. 641. ^ He said: "Under the evidence and charge to the jury in this case, the only embarrassment grows out of that part of the complaint which states a cause of Payment of Peemium. 79 In the case of mutual insurance companies, whose charter pro- Tides that the premium shall be paid before the risk attaches, as action arising out of the execution of the policy, of which a copy is annexed. The testimony of Kelly, one of the plaintiffs, hy itself, shows clearly the making •of an independent oral contract to insure, irrespective of an agreement to deliver a policy. The question of the reliability of such testimony, and the making of such contract, were fairly left to the jury, as matters of fact. The only questions to be considered in regard to such contract are those raised by the requests to ■charge, to wit : Whether, as the parties contemplated the making of a policy in a certain form, the same conditions were grafted on such contract as would be ■contained in such form, and whether the tender of a policy in such form and ■-demand of the premium, and the refusal of the latter, would not terminate the oral contract. I apprehend no such construction can be given to tlie original con- tract : otherwise if the policy had failed to be returned from Philadelphia before the beginning of the risk the plaintiffs would have been without insurance alto- gether. It certainly became binding the moment it was made, and the utmost ■effect that can be given to the additional promise to execute a policy in a certain form is that, upon the tender of that policy, and a demand of the premium, the oral contract should cease. But, in this case, no such policy was ever prepared; the only one prepared was one that declared it to be only obligatory when ratified hy the agent for the defendants. Unless the defendants waived that condition when tendering it, if they ever made such tender, they could not escape from the ■continuing obligation of the oral contract. In regard to that branch of the case, the charge of the court as well as its refusal to charge, is unimpeachable. So, too, the refusal to charge that Campbell was not the agent of the defendants, in regard to any material fact, is warranted by the facts. The only important point of his agency was his receipt of the policy. There was evidence that Hewson, the acknowledged agent of the defendants, employed Campbell to deliver the policy, and receive the premium. His delivery of it was, therefore, theirs, as he did not make it until he received the premium. There was no pretense that the delivery to Campbell was as the agent of the plaintiffs; indeed, the defendants contended to the contrary. In regard to the premium, it was actually paid before the policy was delivered, and its pre-payment formed no part of the oral contract to insure. It was not necessary, therefore, to establish either its waiver, or any authority to waive it. What the parties intended in regard thereto is wholly immaterial, if such intent was not conveyed in the language by which the con- tract was formed. The payment of the premium, after the fire, did not affect the agreement between the parties: by the oral contract credit was given to the plaintiffs for it, at least until a proper policy should be tendered, and such premium demanded. The conflicting testimony of the plaintiffs, Kelly and Camp- t)eirs clerk (Crary) left it uncertain whether the premium was ever demanded, and the actual payment corresponded in time with Kelly's last promise to pay it; Campbell, at all events, in demanding the premium, for which he was the agent of the defendants, never dealt with the plaintiffs as though desirous of ending the oral contract, since he sent to them several times for it. I do not see how, if the defendants chose to carry out their agreement to execute a policy, by receiving the premium, its times of payment, whether before or after the fire, could make any difference. The only point remaining in the requests to instruct, except that as to the interview between one of the plaintiffs and a temporary representative of Campbell, is the refusal of the court to instruct the jury that the policy in ques- tion was inoperative, because it was not countersigned by the agent of the defend- ants. The complaint clearly contains two causes of action, although, perhaps, not distinctly enumerated as such. The statement of the second cause, growing out ■of the written policy, would necessarily have been insuiiicient to maintain a legal action, without the allegation of waiver of the countersigning of such policy by the agent for the defendants. In the absence of that, it might have been sus- tained as an action to compel the countersigning, and then to recover on such •countersigned policy, which are causes of action that may be joined. Bunten v. Orient Ins. Company. 8 Bosw. 448. But the summons is merely for a money de- mand on contract, and there is no demand for relief, except damages, The com- plaint concedes the insufficiency of the policy, unless properly delivered and the signature of the agent waived; while the answer virtually admits its efficiency if. 80 FiEB Insurance. also in cases where the assured is notiiied that such pre-payment is a condition precedent to a binding contract, the premium must be both those contingencies occurred. The request, therefore, to charge absolutely that ' the policy was ineffective and inoperative, for the reason that it vvas not countersigned by the agent,' was too broad and general, without the qualification, unless such signature by such agent was waived. A change in the form requested would have been, in substance, that nothing could atone for tlae absence of the signature. The defendants had a right to ask that the jury might be instructed, that unless the plaintiffs proved the waiver, they could not recover, because that was the issue ; but not merely and absolutely that a policy in the same form, unsigned by the agent, was not binding, because no such issue was involved. Notwithstanding the change in the form of pleading, juries are confined in their findings to the issues actually made by them. Indeed, the court, by charging that the plaintiffs were entitled to recover, ' if the policy was delivered to them, nothing remaining to be done, the defendants being competent to waive any provir- sion in their policy that it should not take effect unless certain things were done,' or, ' if it was handed to them as indeed to be an effectual agreement binding on the defendant,' virtually conceded the effect of the conditions as to countersign- ing and pre-payment of premium, and every other provision to render it inoper- ative, contained in it. It virtually said the converse; that if anything remained to be done, required by the policy to be done to malce it binding, or if it was not intended to be an effectual agreement binding on the defendants, it was not so. Not much stress was laid, in the argument, upon this, and no great reliance was prob- ably placed upon it at the trial. The only remaining point as to which an instruc- tion was requested was, the conversation between one of the plaintiffs and Brewster, a temporary representative of Campbell; this was to the effect that what was said or done by the former to the latter was not a tender of the premium to the defend- ants. In the view I have taken of this case, it was not necessary for the plain- tiffs to tender any premium ; it was not alleged in the complaint, and the plain- tiffs' case did not depend upon it. As to the exception taken to the admission of the conversation, it was properly overruled. The evidence shows that Campbell, being employed as a sub-agent by Hewson, to deliver the policy and receive the premium, and interested to earn liis commissions as a bi-oker, sent to Kelly to notify him the policy was ready ; the latter went to the office of the former to pro- cure a change in the policy, and found Campbell unwell in an adjoining office, who employed a friend (Brewster) to receive Kelly's communication ; he did so, wrote a memorandum of it and put it in the policy, where it was seen by Campbell. It was sent by him to Hewson, but went to Kelly by mistake. Kelly had a right to show that he had not refused, but only delayed, with the defendants' assent, to pay the premium; that he went to Campbell's office to give his reason for such delay, and that such reason was communicated to Campbell. When tliey delivered him the policy and returned the memorandum, which return, he had reason to believe, was virtually a denial of his request, lie promised to pay the original premium, and paid it at the time. The taking down of such conversation by Brewster, and the making of such memorandum and Inclosing it to Campbell, were features in the dealings between the parties, to show that there never had been any intention to abandon the contract of insurance with the plaintiffs. The defendants, at that time, could have sued himfor the premium and recovered ; there was no reason why they should not be equally held for the insurance unless, upon a tender of the policy and a peremptory demand by them for the premium, the plaintiffs had refused to pay it.. The evidence was admitted in the first place, subject to be stricken out, if not connected with the defendants. The court instructed the jury that it was immaterial. No application was made to strike it out, but simply a request to pass upon its effect, while the defendants themselves introduced Brewster and Campbell to testify as to such conversation. Under sucli circumstances the ex- ceptions should not prevail. * * From all the circumstances it appears that the jury had a right to find that a valid oral contract to insure was made, determina- ble on the execution and delivery of a written contract ; that such delivery and the vigorous demand of the premium, so as to terminate the oral contract, was delayed until after the fire; that the premium was then paid, and an imperfect policy delivered, intended to have been made perfect by the defendants, on payment of the premium. It is clear that for such premium the defendants intend- ed to have taken the risk; they had a right to stop the credit for the premium and Payment of Peemittm. 81 paid wlien the application is made, unless waived, or liability will not be created either upon an agreement to insure or a contract of insurance. ^ The fact that the by-laws and regulations of the com- pany require that the premium shall be prepaid, does not affect this species of contract, but only relates to executed contracts of in- surance. And if they did relate to executory contracts, they would not apply, unless the assured was shown to have had notice of the fact, nor even then, if the agent or the company, without receiving the premium, accepted the risk and executed a policy. In such case, the insurer would be regarded as having waived performance of this condition, and, upon payment of, or an offer to pay, the premium within a reasonable time after the acceptance of the risk, or after a policy was made, the contract would be obligatory. ^ But if the assured has notice that " no contract for insurance is to be regarded as binding, until the premium is paid," he must pay the premium, or receive credit therefore, or the contract is not bind- ing, even though a policy is made but not delivered. ^ The com- pany or an agent may waive this condition, and if the agreement is entered into without anything being said as to the payment of the premium,* or if the agent waives the condition and gives the oral contract py presenting a perfect policy and demanding the former. They did not exercise the right, and when a loss has occurred they seek to evade it." The verdict for the plaintiff was upheld. See also, opinion of Denio, J., in Audubon v. Excelsior Ins. Co., ante, in which he says, " It is true that in this case the consideration was not paid, but the owners of the property were ready to pay it when the policy should be delivered. In the meantime it was a debt against the owners for which credit was given until the delivery of the policy." See also, to same effect, Pratt V. N. Y. Central Ins. Co., ante. Also a much stronger case than either of the others, Societe De Bienfasence, etc., v. Morris, 24 La. An. 347. 1 Baxter v. Massasoit Ins. Co., 13 Allen (Mass.), 326; Flint v. Ohio Ins. Co., 8 Ohio, 50; Buffum\. Fayette Ins. Co., 3 Allen (Mass.) 360. ^ Hallock V. Comm'l Union Ins. Co., ante Excelsior Fire Lis Co., v. Uoyal Ins. Co., ante; Gallaghan v. Atlantic Ins. Co., 1 Edwards' Ch. (K Y.) 64; Keim v. Some Ins. Co., 42 Mo. 38. 3 Flint v. Ohio Ins. Co., 8 Ohio, 501. * In Post V. ^tna Ins. Co., 43 Barh. (K. T.) 351, the plaintiff had an interview with defendant's agent February 27th, who then inquired whether plaintiff desired to have this and another insurance on the same property, in another company, re- newed when they should expire, both being to expire at the same time, to which plaintiff replied that he required them to be renewed for sixty days. In the after- noon of March 24, the agent was asked by plaintiff whether he had renewed these policies._ The agent inquired when they expired, and the plaintiff told him they had expired that day, and the agent stated he would go right over and do it. This conversation occurred, not in the agent's place of business, but in a neighboring store. Kothing was said about the premium, but the evidence disclosed the fact that this agent had previously renewed several insurances for the plaintiff in the same way. The agent was a hanker, and plaintiff kept his bank account with him, and he had on former occasions debited plaintiff in account with the necessary amount of premium, without any check for it. It was held, the evidence was sufficient to establish a contract to renew the insurance for sixty days, notwith- 6 82 . FiEE Insukance. credit, the contract is obligatory. Thus, in a New York case,i the plaintiff, on March 28th, applied to the defendant's agent for in- surance. The risk was accepted by him, and he delivered a receipt to the plaintiff for the premium, although it was not in fact paid, and agreed that the policy should take effect from noon of that day. As to the premium, the agent agreed that the plaintiff might send it to him wlaen convenient. The property was destroyed April 7th. Insured sent the premium to the agent immediately after the fire, said nothing about the Idss, and the agent, not having heard of it, sent the premium and application to defendants, who, with- out any notice of the loss, made and sent a policy to the agent to be delivered to the plaintiff ; but subsequently, on hearing of the ■ loss, directed him not to deliver it. It was held that the defendant could not be permitted to say that the policy would have been valid from March 28th, if no fire had occurred, and also to insist that it was not valid, because of the fire April lih ; that the plain- tiff was under no legal or moral obligation to inform the defendant of the fire before or at the time the premium was paid ; that he was entitled to have his application acted upon after the fire in precisely the same manner as if no fire had occurred. ^ If an agent has power to bind the company until the application is accepted or rejected by it, the assured is not bound to call for the policy, nor to pay the premium unless required, but may hold the company for any loss sustained, even though the agent never in- standing all policies and renewal certificates, supplied by the company to the agent, declared they should not be valid till countersigned by the agent. Keim v. Home Mut. Ins. Co., 42 Mo. 38. 1 Whittaker v. Merchants' Union Ins. Co., ante. 2 In Excelsior Ins. Co. v. Royal Ins. Co., 55 N. T. 343, the plaintiffs' agent, having executed their policy, insuring certain buildings, machinery and fixtures was ordered by them to cancel it. Whereupon he instructed his clerk to make application to defendants' agents to reinsure the risk. They made a policy in the name of the owner covering the risk described in plaintiffs' policy, and deliv- ered it to the clerk of plaintiffs' agent, who made an unsuccessful effort to find the owner, and to deliver it. The premises were consumed two days after defend- ants' policy was issued. The day after the fire occurred defendants' agents received the premium. The owner made proof of loss and sent them to the plaintiffs, claiming that the policy made by the defendant was without authority from her, and that the plaintiffs' agent in procuring it had no authority so to do. The court held that this was not a contract to re-insure, but one of original insurance, and unon which the plaintiffs, as assignee of the owner, were entitled to recover. In N. Y. Central Ins. Co. v. Nat. Protection Ins. Co., 20 Barb. (N. Y.) 468, the a^ent of the insurer was told that the money was in the bank ready for him, and ' he said "let it lie, and when I want it I will draw for it." Held, a waiver. Walker Y. Metropolitan Ins. Co., ante; Boehen v. Williamsburgh City Fire Ins Co., 3-i N. Y. 84; Sheldon v. Atlantic, etc., Ins. Co., 26 N". T. 460; Lycoming Ins. Co. V. bfhellerberrjer, 44 Penn. St. 259; Blanchard v. Waite. 26 Me. 18- S C. 28 Me. 51. ' Payment of Premium. 83 formed the company of the application, until he is notified of the ac- ceptance or rejection of his application, unless the loss occurs after the lapse of the period during which the policy was to run. ^ But if ' In Fish V. Cottinett, 44 N. T. 538, the defendant company, of which Cottinett was president (The Liverpool, London and Globe), by letter dated February 12, 1862. appointed Harry Wilbur of Batavia, its agent, with power to receive pro- •posals for insurance against loss and damage by fire, in Batavia and vicinity ; to fix rates of premium, to receive money, subject to such instructions as might from time to time be given to him. Written instructions were also sent as follows : " Tour appointment as agent, gives you the power of binding the company during the pleasure of its general agent or board of directors, to an amount not exceeding $ 10,000 upon alternate buildings or their contents. Tou are hereby instructed to avoid all specially hazardous risks and decline them ; should any be offered you, irom parties of the highest character, you will forward the application, with your comments thereon, and many bind the company during the correspondence.* * On accepting a risk, you will fill up the application, and, when desired, issvie jour certificate of insurance, which should be returned upon receipt of policy.* * All remittances are to be made on the first day of each month." The company did not intrust Wilbur with blank policies, to be filled up and signed by him. Upon lis application to the company to do so, its general agent wrote to him, on the 12th day of November, 1863 : " We send by early mail policies, as per application. I am "fully satisfied that you can do quite as large a business by having policies issued here as if written by you. The delay of one day is trifling, when the insured are as fully protected when you take the risk as if the policy was delivered." Under his appointment, Wilbur opened an agency and transacted business for the company, from February, 1862, until after January, 1864, at Batavia. In 1864, further in- structions were sent the agent, containing the following directions, among others : " Remittance must be made up and forwarded to Albany on the first of each month, including every item to that date, * * whether the premium be collected or not, * * Eisks may be taken for the following amounts, viz. : On hazardous and non-hazardous, $20,000; extra hazardous, 810,000; specially hazardous, S->,000 ; to be increased only by special permission." In June, 1863, the plaintiff, being the owner of the brewery buildings and property mentioned in the complaint, ;sOld and conveyed them to one Boyle and one Smith, who gave to him their mort- gage thereon, to secure the payment of .$8,000 being part of the purchase money thereof. The brewery buildings, in the business of insurance, are stated as specially hazardous. On or about the 20th day of October, 1864, the plaintiff applied to Wilbur, as agent, to insure him upon the brewery buildings, as mortgagee, against loss and damage by fire, to the amount of $5,000. And it was then verbally agreed, between the plaintiff and Wilbur, who assumed to act in behalf and in the name of the company, that the company, from that time forth, and for the space of one year therefrom, would insure the plaintiff, upon the brewery buildings, against loss and damage by fire, in the sum of $ 5,000, and would deliver to the plaintiff its policy of insurance 'accordingly ; and that the plaintiff would, when requested (its then payment being waived), pay to the company two and a half per cent, upon that sum, as the premium for insurance. On the 24th day of October, 1864, the plaintiff became the owner, in fee, of the brewery buildings and property. On that day he called upon Wilbur, and informed him of the fact that he had become the owner of the property, and that if the policy had not been made out, he wished it made to him as owner, instead of mortgagee. Wilbur told him that it should be so made over. The plaintiff, after this, frequently called upon Wilbur, to get the policy, and Wilbur, upon each and every of said occasions, told the plaintiff that the policy had not yet come, but that it would come ; that he need not give himself any trouble about it ; and that he was just as much insured as if he had the policy. The plaintiff acted in good faith, and relied upon the agreements and upon the statements of Wilbur. On the 24th day of January, 1865, the buildings were de- stroyed by fire, and the plaintiff thereby sustained loss to an amount exceeding $5,000. No policy of insurance upon the buildings was ever delivered by the com- pany to the plaintiff ; nor was the premium ever demanded or paid. Wilbur never commimicated to the company the application of the plaintiff for insurance, nor the agreement made with him. Immediately after the loss by. fire, the plaintiff made and delivered to the company proper proofs of the loss. Upon these facts, it wis "held that the plaintiff was entitled to recover. 84 FlEE IsrSUEANCE. he is notified that the policy is made, and is called upon to complete the contract, a neglect to pay the premium is an abandon- ment of the contract and all rights under it.^ Agent to -whom policy is sent, bound to deliver. Sec. 13. When an application for insurance is sent through an agent of the insurer's and the risk is accepted, and a policy is sent to him for delivery to the assured, the contract is complete, as of the date of the application, and the agent is bound to deliver it» unless he has discovered that the insured has been guilty of sueh fraud in the procurement of the company's acceptance of the risk, as would operate as a full defense to the insurer in an action upon the policy, in which case, of course, no contract exists. The fact that a loss has occurred, or any circumstance transpiring after the contract is made, will not excuse a non-delivery of the policy, or destroy the right of the insurer to enforce its delivery, ^ and a delivery thereof to the agent of the company, or sending it to him by maily is a delivery to the assured, and its delivery by the agent to the assured is a good delivery, even though he has previously been di- rected by his principal not to deliver it. ^ So it seems that a policy bearing date on the day that the premium is paid, takes effect by relation from that day, although not delivered until several days afterwards, and where the premium has been previously paid, although the assured had been informed of the insurer's intention of revoking the agenfs authority, a delivery of the policy by such agent is binding 1 Sandford v. The Trust F. Ins. Co., 11 Paige Ch. (N". Y.) 547. 2 Fried v. Royal Ins. Co., 50 K Y. 243 ; Cooper v. Pacific Ins. Co., 1 Nev. 116 ; Kentucky Mut. Ins. Co. v. Jenks, 5 Ind. 96 ; Kohne v. Ins. Co. of N. America, 1 Wash. C. C. (U. S.) 93 : Mactier v. Frith, 6 Wend. (N. Y.) 103 ; Tayloe v. Mer- chants' Ins. Co., ante. The doctrine of the text was ivell illustrated in Sallock T. Com. Union Ins. Co., 26 N. J. 268 ; also, 27 N. J. 645. In that case the defend- ants' agent was authorized to accept proposals and premiums for iilsurance, but not to make contracts therefor. The proposals were received by him, forwarded to the company, and policies, if issued thereon, returned to him for delivery. The plain- tiff applied to the agent for insurance, March 12th, and an application was made, under which, if accepted, the insurance was to commence at noon of that day. The amotuit of premium was fixed, and the plaintiff offered to pay it, but the agent told him that he could keep it, and he would call for it. The plaintiff was a. banker, with whom the agent kept an account. The application was not acted upon until March 13th, when a policy was made and sent to the agent for delivery. Ten hours prior to the making of the policy the property was destroyed by fire, and the defendants telegraphed the agent not to deliver the policy. The plaintiff ten- dered the premiiun, which the agent accepted, but refused to deliver the policy. The court held that the contract was complete when the risk was accepted, and that even though the assured was not aware of the acceptance, and that the defendants; after a loss, could not recede from the contract, and the agent was boimd to de- liver the policy. 8 Hallock V. Ins. Co., 26 N. J. 268. Agent bound to delitek Policy. 85 wpon the company even after his authority is revoked. ^ The doctrine of the case last cited does not go the extreme length stated in the text, but it is evident that the doctrine stated in the text is correct, because, as previously stated, the policy, immediately upon being executed, becomes the property of the assured, hence any person who ■withholds it from him is a wrong-doer, and liable in trover for its conversion. ^ The simple test is, whether the aggregatio mentium exists. If so, and nothing remains to be done but to deliver the policy ; the con- tract is complete, as well before as after the policy is made. The ' policy is merely evidence of the contract, and, before its execution, delivery and acceptance, the contract may be proved by parol, and if a contract in fact is established, the insurer is liable for a loss under it happening after the time when the risk attached.^ As soon as the policy is executed and all conditions precedent are performed, it instantly becomes the property of the assured.* But the burden is upon the assured to establish his right to the policy, by showing performance or offer of performance of all con- ditions precedent, within a reasonable time. The insurer, in such cases, is regarded as holding the policy in 1 Lightbody v. N. American Ins. Co., 23 Wend. (N. Y. ) 18. ^ Hallock V. Ins. Co., ante ; Ellis v. Albany Ins. Co., ante. ' Whittaker v. Farmers' Ins. Co., 29 Barb. (N. Y.) 312 ; Pinly v. Beacon Ins. Co., 7 Grant's Ch. (Ont.)130; Keiyn v. Home, etc. Ins. Co., ante; Hallock v. Commercial Ins. Co. , 26 N. J. 268 ; 27 id. 645 ; Arkansas Ins. Co., v. Bostick, 27 Ark. /)39. In Kentucky, etc., Ins. Co., v. Jenks, 5 lud. 96, the application was made by tlie husband for a policy upon liis life, payable to his wife. The application was made Sept. 27, 1850, and the company's approval thereof was duly entered on their books ; and October 2d, 1850, a policy was issued and forwarded to their agent. It was agreed that the premium should be credited against the assured's bill against the company for advertising. The assured was taken sick Sept. 29th, 1850, and died Oct. 4th, 1850, and the agent returned the policy to the company. The court held that the contract was complete, and that the defendants were liable thereon. The ground upon which the ruling is predicated is, that the proposal is a continu- ing offer up to the time of its acceptance or rejection, and that, when accepted, and nothing remains to be done as a condition precedent by the assured, the risk attaches and the insurer by its own act cannot relieve itself from liability. Walker V. Met'n Ins. Co., 56 Me. 571 ,' Marland v. Boyal Ins. Co., 73 Penn. St. 393 ; Ham- ilton V. Lycoming Ins. Co., ante ; Keim v. Home Mut. F. & M. Ins. Co., ante; Hubbard v. Hartford Ins. Co., 33 Iowa. 325 ; Palm v. Medina Ins. Co., 20 Ohio 529 ; Cooper v. Pacific Mut. Ins. Co., 7 Nev. 116 ; Baldwin v. Chateau Ins. Co., 56 Mo. 151 ,■ Audubon v. Excelsior Ins. Co., 27 N. Y. 216 ; Fried v. Boyal Ins. Co., 50 N. Y. 243 ; Tayloe v. Merchants' Ins. Co., ante ; Ins. Co., v. Colt, ante ; Ins. Co, V. Wright, 1 Wall. U. S. 456; Hartshorne v. Union etc., Ins. Co., 36 N. Y., 172 ; Pattison v. Mills, 1 Dow. & C. 342 ; Lishman v. Northern, etc.. Ins Co., L. K. 8 C. P.' 216 : American Horse Ins. Co., v. Patterson, 28 Ind. 17; Blanch- ard V. Waite, 28 Me. 51 ; Hyde v. Ins. Co. 10 La. 543; Willets v. Sun Mut. Ins. Co., 45 N. Y. 45 ; Warren v. Ocean Ins. Co., 16 Me. 439. * Grovek, J., in Ellis v. Albany F. Ins. Co., ante ; Hallock v. Ins. Co., ante. 86 FiBE Insurance. trust for the assured, and is bound to deliver it upon demand, and failing to do so, is liable in trover therefor.^ The policy is not binding, when not delivered to assured, as to matters in which it varies from the actual contract. Sec. 32. When a valid contract for insurance is made, the policy- is not binding upon the assured, if it varies from the real contract entered into, unless he, with knowledge of its provisions, has accepted- it. If the policy is made and retained by the insurer, or its agent, .until after a loss, the assured never having seen it, the real contract will prevail and the policy is not evidence, even, of the contract en- tered into ; and this is so, even though the policy has expired, and has been renewed by a receipt which expressly refers to the policy for the terms of insurance. Thus, in an English case, ^ the plain- tiffs entered into a valid contract, with the agent of the defendants, for insurance upon a vessel, and took from him an agreement for a policy. The agreement contained no exception suspending the policy while the vessel should be at sea. The agent sent the order to the defendants, who made a policy, and sent it to the agent. The policy contained a provision exempting the insurer from liability while the vessel was at sea. The policy was not called for by the plaintiff, nor was it ever seen by him, but was retained by the agent. When the policy expired, it was renewed, the re- ceipt referring to the policy for the terms of the contract, but the renewal receipt, like the policy, was retained by the agent. A loss having occurred while the vessel was at sea, the defendants denied their liability, under the policy, for the loss, insisting that the policy, and not the agreement, expressed the contract. But the court held that, under the circumstances, the plaintiffs had a right to rely upon it that the policy would be made in conformity with the agreement, and that the memorandum delivered by the agent, and not the policy, must be regarded as the contract. Insurer bound to make policy conform to agreement. Warranties not agreed upon, cannot be enforced. Sec. 33. When a valid agreement to insure is made, and the terms are agreed upon, the insurer cannot insert additional terms not then 1 Hamilton v. Lycoming Ins. Co., 5 Penn. St. 337 ; 2 Bennett's F. I. C. 542 ; Sragdon v. Appleton, etc., F. Ins. Co., 42 Me. 259; Hallock v. Ins. Co., ante; Davenport v. Peoria, etc., Ins. Co., ante; Goodall v. N. E. Mut. F. Co., 25 N. H. 169. * Pattison v. Mills, 2 Bli. (N. S.) 519. Policy must conform; to Contract. 87 entered into. Thus, in a late English case,' the plaintiff entered into an agreement with the defendants on the 11th of March, to insure his vessel. On the !^6th of March she was lost, and on the 17th, with- out saying anything about her loss, he demanded a policy in pursuance of the agreement. Then, for the first time, the de- fendants required to be informed of the amount insured upon her hull, and inserted in the policy, " warranted not insured for more than £2,700 after March 20th." In fact there was a policy for £500, outstanding, which expired that day, and there was an agreement that unless notice was given in ten days, of an intention to discontinue, it should be considered as renewed and in force for another term. No notice having been given, the defendant insisted that the warranty was broken. The court held that the warrant was utterly inoperative, as it was no part of the contract entered intOf and that the insurers were bound by the contract as made March 11th. The court also held that, even though the policy as made, was operative, there was no breach of warranty, for after a total loss on the 16th of March, before the £500 policy expired, there was not, and could not be any renewal thereof under the agreement. In another English case, ^ the insurer's agent made an insurance upon a vessel and took from the agent an agreement for a policy. There was no exception in it suspending the policy while the vessel should be at sea. The agent transmitted the order for the policy to his principals, who sent a policy to him, which contained a clause exempting insurer from claim while the vessel should be at sea. It was not demanded by, nor was it delivered or shown to the insured, who renewed the policy through the same agent at the end of the year. The memorandum of renewal referred to the specific policy then in the agent's office in Glasgow. It was neither demanded by, delivered nor shown to the insured ; and soon after she was destroyed by fire at sea. It was held the memorandum delivered to the insured was the contract between the parties ; that the policy was not the contract, because it did not conform to the original agreement, and because the insured was never informed as to the exemption, and therefore never adopted the policy ; also that the renewal had ref- erence to the original agreement, and the insurers were hound to execute it conformably to the stipulation of the original agreement. ^ Lishman v. Northern Maritime Ins. Co., L. R 8-; C. P. 216. ' Pattison v. Mills, ante. 88 FiKE Insukance. Insurers will be compelled to execute, contract, although they were mis- taken as to the value of the property. Sec. 34. Where a yalid contract to insure is* made by parol, the insurer cannot, after a loss, refuse to execute the policy because, in fact, the property covered by the contract cost less than the amount they had agreed to insure, unless positive fraud, such as would avoid the policy if made, can be shown on the part of the as- sured, in reference to his representations as to value. Thus, in a Canada case,^ the plaintiff contracted with the defendants to issue a policy to him upon a building for a certain sum. The policy was not made out at the time, nor was it made when the loss occurred, but a valid contract to insure existed. The defend- ants, in an action brought to compel a specific performance of the contract, defended upon the ground that the real value of the property was much less than they had been led to believe. But the court held that this constituted no defense. An omission of a mere formality or variation from form prescribed in the charter or articles of association, does not render policy void. Sec. 35. As to all matters not entering into the essence of the contract, but which merely relate to the forms to be observed, when there is no essential departure from the terms of the charter or the articles of association, the officers may waive strict perform- ance, and a contract, essentially, although not strictly conforming to the charter requirements, will be upheld. Thus, in an English case,^ the registered deed of settlement provided that the common seal should " not be affixed to any policies, except by order of three directors, signed by them, and countersigned by the mana- gers." Another section provided that " every policy shall be given under the hand of not less than three of the directors, and sealed with the common seal." A policy was issued, executed and sealed, signed by three directors, one of whom was the manager ; no previous order had been given, signed by three directors, as required, and upon this ground, the company insisted that the policy was inoperative and void. But the court held that the mere omission of a formality, or an immaterial variation from the forms prescribed by the deed, would not vitiate a policy. So, too, it has been held that, where a policy contains a provision that it shall ' Laidlaw v. Liverpool & London Ins. Co. 13 Grant's Ch. 337. 2 Prince of Wales Life Assn. v. Harding, El. B. C. & El. 183 ; Kelly v. Com. Jns. Co., 10 Bos. (N. Y.J 82. , y y v/« Policy not void, when. 89 not be valid unless countersigned hy the agent ; a policy delivered by the agent, -without being countersigned by him, is nevertheless u valid and operative contract.^ The rule may be said to be that in ull cases where there has been a substantial, although not a literal ■compliance with directions as to form, or the method of execution, the contract is valid, unless the omission shows that certain matters, esserv- tial to the making of the contract itself, were omitted to be done. In the cases previously referred to, the provisions were obvi- ously intended as a method of obtaining the judgment of the ■directors, in the one case, as to the propriety of entering into the contract, and this was obtained by their execution of the contract. In the other case, the purpose is to obtain the judgment of the agent, as to whether anything has occurred between the receipt ■of the application and the making of the policy, rendering it in- expedient to enter into the contract, and this is secured by his ■delivery of the contract, iatending it as a valid contract of in- surance.^ If the circumstances attending the delivery of the policy are .«uch as show that it was the intention of the parties to treat a policy not countersigned, as an executed agreement, and to dis- pense with that condition, the policy will be operative, as, where the agent receives the premium and delivers the policy, omitting to countersign it through mistake,^ but the burden is upon the ■assured to show that the condition was waived, and mere posses- •sion of the policy is not enough to establish the fact,* but if they were delivered as completed instruments as if the premium had been paid, the company is thereby estopped from setting up such ■omission in avoidance of the policy,^ unless the act of incorpora- tion itself provides that the policy shall not be valid, unless ■countersigned, and in that case, if the premium has been paid, the ■company will be compelled to issue a valid policy, and in all cases, where such a defect exists it would seem to be the better course to proceed for a specific performance of the contract.^ 1 Myers v. Keystone etc., Ins. Co. : 27 Penn. St. 268 ; Norton v. Phoenix, etc., Ins. Co., 36 Conn. 503 ; Hibemialns. Co. v. O'Connor, 29 Mich. 241. ^ Hibemia Ins. Co. v. 0' Connor, ante. Contra, see Kelly v. Com. Ins. Co. , ante. ' Myers v. Keystone, etc., Ins. Co., 27 Penn St. 268 ; Norton\. Phoenix, etc., Ins. Co., 36 Conn. 503. * Prall V. Mut. Protection, etc., Ins. Co., 5 Daly (N. Y. C. P.) 298 ; Badger v. .American Popular, etc., Ins. Co., 103 Mass. 244. 5 Hibemia Ins. Co., v. O'Connor, 29 Mich. 241. « Perry v. Newcastle Fire Ins. Co., 8 U. C. (Q. B.) 363. In Lynn v. Burgcyyne, 90 FiKE Insurance. But, in any event, if a valid and binding contract was entered into, no defect in the execution of the policy would shield the company from ultimate liability. The remedy of the party would be to seek its reformation so as to represent a valid and operative instrument, and the very fact that a policy was issued, however defective, affords ample proof of the intention of the insurer to issue a valid policy, as it will not be presumed that it intended to- issue an invalid or inoperative policy, but the reverse.^ 13 B. Mon. (Ky.) 400, it was held that if it is stipulated in the policy that " it shall not be valid until countersigned by A.," a policy which is not thus countersigned is not valid. But, in such a case, if it is shown that A. delivered the policy, in- tending it as an operative instrument, it is clear that the ultimate liability of the company cannot thus be defeated. 1 See Chapter on Befobmatiok of Foljcleb, post. The Policy. ^^ Seo. 36. Skc. 37. Sec. 38. Sec. 39. Sec. 40. Sec. 41. Sec. 42. Sec. 43. Sec. 44. Sec. 45. Sec. 46. Sec. 47. Sec. 48. Sec. 49. Sec. 50. Sec. 51. Sec. 52. Sec. 53. Sec. 54. Sec. 55. Sec. 56. Sec. 57. Sec. 58. Sec. 59. Sec. 50. Sec. 61. Sec. 62. Sec. 63. Sec. 64. Sec. 65. Skc. 66. Sec. 67. Sec. 68. Sec. 69. Sec. 70. Sec. 71. Sec. 72. Sec. 73 Sec. 74. CHAPTER II. THE POLICY. Kinds of. Wager policies. Interest or no interest. Interest policies. Open policies, blanitet and floating. Valued policies. Wliat are not valued policies. Conclusive, altliougli overvalued. "Wlien portion of property is not at risk. Valuation fixed by company. Shifting risks. Places witliin description, and property covered by. Permission to remove goods, effect of. Misdescription, effect of. Location of goods; wlien witliin description. Wlien change of locality does not defeat policy. Property not belonging to the class insured. Concealed property. Property not in use. What policy covers by implication. Grain, what is. Intention of parties must be gathered from the policy. Constructiou of policies. Conditions in policies. Ambiguous conditions. Words of condition must be set forth in proper place. Most favorable construction for assured. Written stipulations ; effect of upon printed. Repugnant stipulations. Giant Powder. Practice of other insurers. Breach of conditions; effect of. Alteration by indorsement. Policy construed according to its terms. When policy takes effect. Policy suspended, may re-attach. When policy is exhausted. Detached — meaning of. Machinery — what is, question for court. 92 The Risk and its Incidents. "In trust," how construed. From — until. Imm ed iate —forthwith. Contiguous. Contained in. Deliver in. Survey. Hazardous — extra hazardous — specially hazardous. Occupied — vacant. Keeping — storing. Policy covers entire building. Open policy on merchandise. Construction of pro raiaclause in re-insurance. Effect of mistatenient of title. When forfeiture is waived. Company estopped from setting up breach of conditions, when. Vacant premises. " Vacant or unoccupied." — " Vacant and unoccupied. Dwellings — warranties in presenti. Permission to violate condition. Unlawful use of buildings. Contingent interests. By what law governed. Duty of assured to save property. Assignment of policy. Eelative rights of mortgagor and mortgagee. Mistakes in policies. Conditions as to notice, etc., must be complied with. Loss must be consequence of ignition. Explosion — loss by. Destruction I of building.to. arrest fire. Loss by tlieft — proximate cause. Total loss — what is. Negligence of assured. Return premium. When assignment of policy creates new contract. Indorsement passes title in proceeds of policy. Policy not countersigned by agent. Right to cancel — when cancellation takes effect. Right to cancel when property is in imraediaie peril. When policy expires. Forfeiture may be waived. Mortgagor's right to proceeds of policy assigned to mortgagee. Promise to pay loss when not liable therefor. Policy payable to mortgagee as interest may appear. Misstatement as to incumbrances. Proceeds of policy after death of assured. Materials of wh^ch building is composed, not insured. Loss must be from cause not excepted against. Distance from other buildings. Adjoining premises. Application must be true. Changes subsequent to insurance must be noticed, when. Prohibited uses. Insured bound by acts of his agent. Fraud of insurers ; effect upon policy. Assured may surrender policy for cancellation. Effect of partial settlement of loss. Right of insurer to recover back money paid for loss. Property described without words limiting location of risk. Policies in blank, or to whom it may concern. Policy in name of agent. Joint owners. Rebuilding, effect of notice of. Renewals. Void policy not vitalized by consent to transfer. Sec. 75. Sec. 76. Sec. 77. Sec. 78. Sec. 79. Sec. 80. Sec. 81. Sec. 82. Sec. 83. Sec. 84. Sec. 85. Sec 86. Sec. 87. Sec. 88. Sec. 89. Sec. 90. Sec. 91. Sec. 92. Sec. 93. Sec. 94. Sec. 95. Sec. 96. Sec. 97. Sec. 98. Sec. 99. Sec. 100. Sec. 101. Sec. 102. Sec. 103. Sec. 104. Sec. 105. Sec. 106. Sec. 107. Sec. 108. Sec. 109. Sec. 110. Sec. 111. Sec. 112. Sec. 113. Sec. 114. Sec. 115. Sec. 116. Sec. 117. Sec. 118. Sec. 119. Sec. 120. Sec. 121. Sec. 122. Sec. 123. Sec. 124. Sec. 125. Sec. 126. Sec. 127. Sec. 128. Sec- 129. Sec. 130. Sec. 131. Sec. 132. Sec. 133. Sec. 134. Sec. 135. Sec. 1.36. Sec. 137. Sec. 138. Sec. 139. Sec. 140. The Policy. 93 Sec. 141. Where statute limits powers of company — rule. Sec. 142. Cancellation without authority. Sec. 143. Equitable lien upon insurance money. Sec. 144. Conditions of policy must be strictly performed. Sec. 145. Sending premiums by mail. Sec. 146, Policy against fire on vessel — general average. Sec. 147. Policy-holder in dissolved — insolvent corporation — Eight of. Sec. 148. Money due in hands of Insurance Department not attachable Sec 149. Infancy of insured no defence. Kinds of. Sec. 36. As lias been seen, a contract of insurance to insure, as well as the renewal of a policy about to expire, or that has already expired, may be by parol,^ and is equally as valid and binding as though it was in writing, unless by statute, it is required to be in writing, or executed in a particular manner. But, generally, con- tracts of this nature are evidenced by a writing, called a policy, executed by the proper officers of the company from which it issues. The person whose interest is insured under the policy, is the assured or insured, and the person or company taking the risk, is the insurer. Policies are either wager or interest, open or valued. ■Wager Policies. Sec. 37. Wager policies are those covering a risk, interest or no interest, and which do not, in any measure, depend upon the pecu- niary interest of the assured for their validity, but which are oper- ative in the hands of a person who is a stranger to the title, or to any proprietary interest in the subject-matter insured. At common law, these policies, as. applied to marine risks, have been recognized as valid, although a contrary doctrine has been held ;2 but the 1 In Ludwig v. Jersey City Ins. Co., 48 N. T. 379, the plaintiff's policy being about to expire, he applied to the defendants' agent to renew it. The policy insured his stock of goods at 29 Centre street, upon the first floor. Before the renewal was made they were removed to an upper floor, at the same number, and the plaintiff so informed the agent, and the agent also knew the fact from personal observation, as he called to see the plaintiff after his removal, and before the contract for renewal was made. Tlie renewal receipt professed to renew the prior policy, but in the memorandum of location simply said, ■' Premises 39 Centre street, city of New York," omitting the words of the policy " contained in the first story." A loss having occurred, the defendants insisted that they were not liable because the goods were not, at the time of the loss, in the place where they were described to be, in the policy. But the court held that, as the defendants knew of the change of location before the contract was made, the presumption was that they intended to make a valid insurance, and to change the terms of the policy so as to cover the goods where they knew them to be when the contract was make, and where they knew the assured desired to have the policy cover them, and that the change, in this respect, might be shown by parol. See also, Trustees, etc., v. Brooklyn Ins. Fire. Co., ante. " In Godart v. Garnett, 2 Vernon, 269, heard in 1692, a bill was filed to compel the surrender of a policy, upon the ground that the assured had no interest in the 94 The Risk and its Incidents. •weiglit of authority is to tlie effect that, at common law, such pol- icies are valid as applied to marine risks} But this doctrine has never been applied to fire insurance, and it is not believed that even though the stat. 19 George 2, c. 37, had not virtually put an end to such contracts, before questions of fire insurance had been much considered by the courts, that the doctrine would have been held applicable to them. The extreme jealousy with which such con- tracts were regarded, by both the courts and the people, and the dangerous tendencies which t&ey were believed to involve, would undoubtedly have prevented the courts from applying the doctrine to this class of contracts.^ In any event, there is no warrant from the common law for wager policies of fire insurance. Partaking strongly of the nature of gambling contracts, they are generally discouraged, and are inoperative in those States where gambling contracts are prohibited by statute f but unless specially prohib- ited, it must, in order to fall within the provisions of a statute against gaming, amount to a mere wager or bet,* and is always a question of legal construction. Interest or no Interest. Sec. 38. The words, "interest or no interest," used in a policy, do not necessarily convert it into a wager policy ; the true test is whether, at the time the policy issued, and at the time of the loss, the subject-matter of the risk. The assured had loaned £300 upon bottomry upon the ship, and insured her for £450. The court directed the policy to be delivered up for cancellation, remarking, " The law is settled, that If a man has no interest and insures, the insurance is void, although it be expressed in the policy, interested or not interested ; and the reason the law goes upon is, that insurances are made for the encouragement of trade, and not that persons unconcerned in trade, not interested in the ship, should profit by them." See the report of this case in Marshall on Insurance, 99. 1 HarmanY. VanHutton, 2 Vernon, 717 ; De Paiba v. Ludlow, 1 Com. Kep. 361; Good V. Elliott, 3 T. R. 693; Assinedo v. Cambridge, 10 Mod. 77 ; Dean v. Dicker, 2 Star. 1250 ; Goss v. Wither, Burr. 695. Crawford v. Hunter, 8 T. R. 23; St. John V. American Mut. Life Assurance Co., 2 Duer (N. Y.) 419 ; Miller v. Eagle etc.. Ins Co., 2 E. D. S. (N. Y. C. P.) 268 Jubel v. Church, 2 John. Cas. (N.T.) 333; Abbott V. Sebor, 3 id. 39 ; Buchanan v. Ocean Ins. Co., 6 Cow. (N. T.) 318 ; Clen- dining v. Church. 3 Caines (N.T.) 141. ^ In Pennsylvania this species of contract has been held void as being opposed to public policy, even as to marine risks. Pritchet v. Ins. Co. ofN. America, 3 Yeates Hartford In.1. Co. v. Farrish, 73 III. 166; Bryce v. Lorrillard Ins. Co., 55 N. T. 240. 116 The Risk and its Incidents. building, the words describing the location are generally treated as the statement of a fact relating to the risk,' and as amounting to a stipulation that they sliall remain there.^ But in a case recently decided in the Supreme Court of Iowa this is made to depend upon the nature and uses of the property.^ Thus, in that case, a policy was issued upon a phaeton, " " contained in a frame barn." It was burned while in a carriagemaker's shop for repairs. The court held that it was a loss within the policy, holding that from the very nature of the property and the uses to which it was devoted, location was not of the essence of the risk, and, taken in connection with the nature and uses of the property insured, amounted only to a warranty that the phaeton would he contained in the ham and would remain there except when absent for temporary purposes. " In the case at bar," said Adams, J., " there is nothing to indicate that it was the intention to insure the con- tents of the barn as such, ^ach policy must be construed according to the intention of the parties as manifested by all its terms. We are of the opinion, therefore, that while the words, ' contained in a barn,' describing it, are words relating to the risk and constitute a warranty that the carriage would continue to be contained in the barn, they mean only that the barn described was their place of deposit when not absent therefrom for temporary purposes incident to the ordinary uses and enjoyment of the property." In a former edition of this work, I took occasion to criticise the doctrine of this case somewhat sharply, upon the ground that the words " contained in " used in the policy describing the risk, were words of limitation rather than description, and override the usages of the risk. But upon a more careful examination of the principles applicable in the construction of this class of contracts, I am satisfied that my criticism of the doctrine of the case is un- warranted, and that the usages and ordinary incidents of a risk should override any implied limitations either as to the place, or con- duct of the risk, and that the doctrine of the Iowa case * is well sustained by principle,'' and by late authorities, and that the words 1 Wall V. East River Ins. Co., 1 2J. Y. .STO. " RoufjhtonY. Mnnuf. F. Iiix. Co., 8 Met. (Mass.) 234: Boynton v. Clinton, etc,, Ins. Co., 16 Barb. (N. Y.) 2.54. " McCluer v. The Girard F. & M. Ins. Co, 48 Iowa, 349. * McCluer v Girard F. & M. Ins. Co., ante, has also charges of North Western Ins. Co., (Wis 1885) 25 K. W. Rep. 419. ' Younger v Royal, Ins) Co., 1 Burr, 341. Place of Risk. 117 *' contained in " are to be treated as describing the usual place of lisk, when the thing insured is not temporarily absent therefrom for some purpose, " incident to the ordinary uses and enjoyment of the property " insured. A permanent removal of the property from the place insured, would withdraw it from the protection of the policy.^ Thus, in the case last cited, the plaintiff procured from the defendant a policy of insurance against fire for the term of five years, upon certain articles of household furniture described in the policy as " all contained in house etc., — McMillen St., Provi- dence, R. I." The property was subsequently, without the knowl- edge or consent of the insurer, removed to a house upon another street, to which the plaintiff had removed her residence. Upon the first hearing of the case ^ the court heard that the defendant was liable for the loss. But upon a rehearing of the case the court overruled its fprmer decision and held that the defendant was not liable, because the removal was permanent rather than temporary. The court said : " There seems to be no doubt that if this question "were to be decided on authority, it must be taken as a general Tule, that all the material statements of the policy of insurance, including statements as to the place in which the insured property is situate, are warranties, and that such warranties must be true and must continue to be true during the whole life of the policy as the condition of any recovery thereunder.* The plaintiff however contends that this case comes within an ■exception to the general rule. The argument is that inasmuch as the insured property is household and personal effects, and inas- much as it is matter of common knowledge that certain persons do at times change their place of abode, carrying with them such of their effects as are of the kind here insured, therefore it is to be presumed that the defendant issued the policy in suit with the knowledge and expectation that the plaintiff might make such re- moval during the term of the insurance, and with the implied agreement that she might make such removal without vitiating the policy. There is indeed to be deduced from the cases an excep- tion to the general rule as above stated ; but we do not think that 1 Lyons v. Washington Ins. Co., E. I. Sup. Ct., 1883; 44 Am. Eep. Sin overruling a, previous decision in the same case reported in 13 E. I. 347. 2 Lyons v. Washington Ins. Co., 13 E. I. 347. ' Eddy Street Iron Foundry v Hampden Ins. Co., 1 Cliff 300 ; Shertzer v Mu. F. Ins. Co., 46 Md. 506 ; Wall v Fast River Mu. Ins. Co., 13 N. Y. (U. S. C. 0.) 370 ; ^Hartford F. Ins. Co., v Farrish, 73 111. 166. 118 The Risk aitd its Incidents. either in reason or on authority it goes to the extent claimed hj the plaintiff. Briefly stated the rule seems to be that the tempo- rary removal of property, whether occasional or habitual, in pursu- ance of a use, which is a certain necessary consequence arising from the character of the property, without any change in the ordi- nary place of keeping, will be no defense to an action on the policy. The reason of Lord Mansfield, although in a case of marine in- surance, applies exactly to this question. ^ In a Kentucky case ^ " bugles " were insured as " contained in " a certain livery stable. While at a carriage factory for repairs, they were destroyed by fire, and it was held that as the absence of th& buggies from the place where they were usually kept, for repairs,, was an incident of their use, the company was liable. The court said " An examination of the various authorities referred to by the counsel leads us to the conclusion that the, words " con- tained in " must he construed with reference to the nature of the "property to which they are applied. In insurance of personal property which is generally kept in one place and whose use does not require it to be moved, such as a stock of merchandise in a store^ or carriages in a wareroom for sale, the location is an essential ele- ment of the risk, and is generally a continuing warranty, but in insurance on property whose ordinary use requires it to be moved from place to place, the presumption is that they are in use, and that the policy is issued in reference to such use, In the first class of cases the words describing the situation are regarded as a warranty not only that the property is situated as described, but that it will so continue. In the latter case the words defining the situation are words of description, and a warranty only so far that the property will continue to be in the place of deposit except when absent for temporary purposes incident to its ordinary use and enjoyment.^ In an Iowa case* this principle was acted upon. In that case the policy covered tools, pumps,etc., so describing them as being " in the one story frame building situated on the north side of the public square, and west of Fourth St., Fort Dodge, Iowa." It was held that the removal of the property to another building some thirty- 1 Pelly V. Uoyal Exchange Assurance Co., 1 Burr. 341 ; Holbrook v. St. Paul F. & M. Ins. Co., 25 Minn. 229. " London etc., F. Ins. Co., t Graves 12 Ins L. J. 308. ^ Everett v. Continental Ins. Co., 21 Minn. 76. * Harris v. Canadian Ins. Co., 58 Iowa, 236. Place or Risk. 119 feet distant, answering the same general description as to structure and location, rendered the policy void, although the premium for the whole term had been paid. The removal in this case was per- manent. In another Iowa case ^ this question was presented in a novel form. The policy covered " household furniture, use- ful and ornamental, including sewing-machines, provisions, and family wearing apparel, all contained in a certain dwelling-house." The insured claimed damage for an injury by fire to an overcoat, dress-coat, vest and shirt, most of the family wearing apparel, while they were being worn by him in the usual and ordinary way, at a place other than the premises insured. The court held that the defendant wasliable for the loss. Beck C, J., said, " The character of the property insured must be considered in determin- ing the true construction of the policy. The household furniture is used only in the dwelling. It is proper to infer that the parties to the contract intended the risk should attach to it only when in the building specified. But wearing apparel, when used, must of necessity be worn sometimes away from the dwelling. We must infer that the parties to the contract intended the apparel to be used, and hence intended it to be used sometimes away from the dwelling. Of course the use of the apparel away from the dwel- ling must be of an ordinary use, and the dwelling must be the place of deposit for the apparel when not in use. The policy, therefore, does not contemplate that the insured may take a jour- ney or sleep away from his dwelling ; thus, when the apparel is not worn, keeping it in a place of deposit other than his own dwelling. It wUl be observed that the language of the policy does not convey the idea that the apparel is to be kept in the dwelling. There can be no inference of a prohibition of ordinary use else- where. Counsel for defendant advance the thought that the words " household furniture," used in the policy, are intended to cover the other articles of property, family wearing apparel and provi- sions; that is, family wearing apparel is included in the general term, " household furniture." They argue, that as the household furniture was covered by the policy only while in the dwelling, its component, wearing apparel, is subject to the same rule. The fault with the argument is that it does violence to the language and structure of the contract. "Wearing apparel cannot be con- 1 ZonguevUle\. Western Assurance Co., 51 Iowa 553 ; 33 Am. Eep. 146. 120 The Risk and its Incidents. sidered as a part of the household furniture ; the words are never so understood. The language of the policy is of common use, and must be understood in its common acceptation. In a Minnesota case ^ the insurance was on mules, " all con- tained " in a certain barn. The court said : " The claim that the policy covered the mules only while in the barn — that is, that the words in the policy, ' all contained in the two-story frame barn (30 X 100 ft.), situate (detached) in section 19, town 140, range 43, in Becker county, Minnesota,', limited the risk to the property while actually in the barn, or were a warranty that it should re- main in the barn, — is determined by a former decision in this court '^ in which it was held that a clause with respect to the property insured (a threshing machine), ' stored in a barn on sec- tion 36, town 23, range 28, owned and insured by L. L. Chaffin,' was mere matter of description, operating to identify the property, and not a promissory stipulation on the part of the insured, nor a condition of insurance on the part of the insurer, that the location mentioned must remain unchanged, or, if changed, that while changed the insurance should cease or be suspended. Here the description is in some respects more full than in this case, but it is still within the principle acted on in that case, only matter of description or identification. Policies of insurance, unless the lan- guage excludes the presumption, must be presumed to be made with reference to the character of the property insured, and to the owner's use of it in the ordinary manner, and for the purposes for which such property is ordinarily held and used. Where the lan- guage is not too explicit to admit of it, the policy so far as regards the question whether it covers the property when removed from the place where it is described as being at the date of the policy, is to be interpreted upon this presumption. So, language which, 1 Holbrook v. St. Paul F. & M. Ins. Co., 24 Minn. 229. 2 Everett Y. Continental Ins. Co., 21 Minn. 76. In Peterson v. Mississippi Val- ley Ins. Co., 24 Iowa, 494, the policy insured, with other property, "seven horses, * * * situated section 22," etc. The policy contained the usual stipulation that if the risk should be increased by any means, without the assent of the insurer, the policy should become void. The assured, a farmer, while hauling his grain to mar- ket with two of the horses, put up for the night at a hotel, distant from section 22. during the night the hotel bam in which the horses were stabled was destroyed by fire, and one of the insured horses was burned to death. It was held that the risk was not limited to the use of the horses on section 22, but extended to the usual and ordinary use of them elsewhere, and the company was liable for the loss of the horse. Mills v. Farmers' Ins. Co., 37 Iowa, 400, was a policy insuring "live-stock on premises situated sections 7, 76. 27," A horse owned by the insured, and usually kept on the designated premises, was killed by lightning at a place six miles distant from such premises, when the owner was driving him to the mill. It was held that the insurer was liable. Place of Risk. 121 occurring in a policy upon property from its character and in its ordinary use kept permanently and continuously in one place — as a stock of merchandise, or machinery in a building, or household furniture, or things stored — might, perhaps, be held to limit the lisk to the property while in the place contained as described by the policy, could not, without defeating the manifest intention of the parties, receive the same interpretation when occurring in a j)olicy upon entirely different property, the real and beneficial en- joyment of which forbids its being kept at all times in one place, such as horses, carriages, farming machinery, etc. The presump- tion we have referred to bears not only on the clause describing the location of the property, but also the condition in reference to an increase of, risk. The condition of this policy seems more ap- ;f)licable to insurance on buildings than movable property. The Islank used was evidently such as the company usually employed in insuring buildings rather than movable property. But although apparently more applicable to a building than to this kind of property, it must be given effect, if possible, in this policy. As the insurer insures the property while used by the owner in the ordinary way, and for the ordinary purposes for which the prop- erty is kept, he assumes all the risk from fire incident to such use and not merely that incident to the property during a part of the time, or while it may be kept in a particular place. In this case, the mules were used in cultivating a particular farm. The policy ■covered them while so used, and if the risk might be at times greater in such use than while they might be stabled in the barn, that greater risk is assumed by the company. The condition against increase of risk refers to an increase beyond that which the company assumes — to wit, that ordinarily incident to the use of the mules in the cultivation of the farm. Whether the risk was increased beyond that is not stated by the court below in its iindings." The language of the policy must first be regarded, and if it defi- nitely fixes the location of the risk, the policy does not attach if the property is destroyed outside the locality designated. As -when the property is described as being " upon premises occupied by the assured," the policy relates to premises occupied by the assured at the issuance of the 'policy^ and not to any premises which may subsequently be occupied by the assured during the life of the policy. The rule is, that the language of the policy is first to 1 Providence etc., JR. li. Co. v. Yonkers F. Ins. Co., 10 K. 122 The Risk akd its Incidents. be looked to, and if, by the well settled rule of construction, the intention of the parties is not clear, then extrinsic evidence may be resorted to ; ^ but if the language is plain and unambiguous, it must control, and extrinsic evidence is not admissible to control its construction.^ Fermission to remove goods, effect of. Sec. 48. The fact that permission to remove goods has been given, will not relieve the company from liability for a loss occur- ring, even though the goods are not removed. Permission to remove, does not obligate the assured to remove them, but leaves it optional with him to do so.^ Where, however, such permission has been, given and the removal has been effected to such an extent that property enough has been removed to exceed the value of the in- surance, the policy will not cover a loss at the original location^ because the parties will not be presumed to have contemplated but one risk.* The property may be removed from the premises to avoid the peril insured against, when the danger is such that a man of ordinary prudence would not permit them to remain, and the insurer is answerable, under the policy, for the damages sus- tained thereby.^ Particularly is this the case when the policy provides that the assured shall labor for their protection.® A re- moval made without permission, except as previously stated, avoids the policy.'^ JVIisdescription, effect of. Sec. 49. In order to render the policy invalid, upon the ground 1 Savage v. Howard Ins. Co., 44 How. Pr. (N. T.) 4. 2 Hough V. People's Ins. Co., 32 Md. 398. ' In Kunzee v. American Ex. Ins. Co., 41 N. T. 412, the plaintiff, the holder of a. policy of fire insurance, upon his goods in a certain store, being desirous of remov- ing the goods to another store, and of having the policy cover the goods when so removed, applies to the defendant, the insurance company, by whom the policy was- issued, " to have it transferred to cover the goods in the new building," stating that the goods were to be moved that day, and the company accordingly, by their secre- tary, indorsed on the policy and signed a memorandum, that it was " transferred U> cover similar property " in the new building. It was held, a fire having the next day destroyed the goods before their removal, that the defendants were still liable for the loss. * McClure v. Lancashire Ins. Co., 9 Ir. Jurist (N. S.) 63. 6 Haltzman v. Franklin Fire Ins. Co., 4 Cr. (U. S. C. C.) 205: Case v. Harford Fire Im. Co., 13 111. 676. " Tallman v. Home, etc., Ins. Co., 16 La. An. 426; Peoria M. & F. Ins. Co. v. Wilson, 5 Minn. 53. ' Simonton v. Liv., Lon. & Globe Ins. Co. 51 Ga. 76; Croghan v. Underwriter^ Agency, 53. id. 109. The Policy. 12S of misdescription, it must be so radically defective, that of and hy itself it cannot be applied to the subject-matter to which the as- sured intended that it should apply. If, by any reasonable con- struction, or the aid of such proof of extraneous matter, as is per- mitted by the rules of evidence, it can be applied to the subject- matter actually intended, it will be so applied. The maxim, " cer- ium est quod, eertum reddi potest" comes in aid of the assured, whenever there is enough in the policy itself, to enable the courts to apply it. Therefore, where the description is simply defective^ and not totallg wrong, the policy is not inoperative ; but if it is to- tally defective, and there is not enough in the description, so that it can be certainly applied, the policy is inoperative.^ A mere er- roneous description, does not prevent the policy from attaching, if there is enough to point with reasonable certainty, to the subject- matter intended to be covered. The maxim, falsa demonstratio non nocet, applies in such cases, as well as to other written instru- ments, and the description, so far as it is false, is rejected, and ap- plies to no subject at all, and, so far as it is true, is applied to carry out and effectuate the real purpose and intention of the par- ties.i This must be understood, however, as only applying to 1 Bryce v. Lorrillard Ins. Co., 55 N. Y. 240; Ironsides v. Pacific Fire Ins. Co.^ L. R. 6 Q. B. 674; Everett v. Lis .Co., ante. 2 In Heath v. Franklin Ins. Co., 1 Cush. (Mass.) 257, the policy covered a build- ing "on the corner of Charles street and Western avenue. A cabinet-maker's shop is in the building." In point of fact, there was no cabinet-shop there, and the in- surers insisted that their policy did not cover the building destroyed, although it was on the comer of the streets named. In passing upon this question, Dbwey, J., said : "In the policy itself and on the face of it, there is nothing to create any ambiguity, as to the description of the building. But, upon proof of the circum- stances, and the actual state of things in reference to the two buildings, the ambigu- ity arises. The plaintiff, however, insists that upon the proper reading of the de- scription in the policy, It may well be taken to apply to the western building ; and this would very clearly be so if the words, ' situated at the corner of Charles street and the Western avenue,' are to be taken as referring to the ' adjoining building,' and not to the building insured. But this, we think, cannot be maintained. The case does not seem to be one in which any grammatical rule, referring the words 'situate,' etc., to be the next antecedent, can properly be applied. Such a rule is not one of general application, especially to cases like the present, where the words are used in a continuous description of various distinct and independent circum- stances, applicable to the building insured, and which, from their very nature, are distinct and independent descriptions. The object of each and all these different descriptions is to set forth fully all the essential circumstances relating to the prop- erty insured. Among these circumstances the most prominent is the location of the building to be insured. We might well expect, as a part of the description contained in the policy, a statement of the location of the particular building which was the subject of it ; and it is much more natural and probable that the location of the building to be insured should be given, tlian the location of a building not insured, and which was only introduced incidentally to disclose the manner of the connection of the building insured with an adjacent building. We cannot doubt that a proper reading of the policy requires that the words ' situate at the corner of Charles street and the Western avenue' should be applied to the building insured, rather than to the 124 The Risk and its Incidents. cases when, after reje'cting the false description, there is enough left of that which is true, to describe the property, intended to be covered, with reasonable certainty.^ The application of this rule is well illustrated in a New York case,^ in which the testator de- vised to his wife, during her life, " the farm which I now occupy," and it was claimed that he intended to devise the whole of his real estate, which included a farm of about 90 acres, at that time in the adjoining building. Having settled this point, we are then to look at the whole de- scription, and see whether it can, upon any sound principle, apply to the western building. And in reference to this inquiry it will be seen that the recital in the pol- icy, as we have just held, varies from the description which would embrace the western house, in the most material particular, namely, the house Insured is de- scribed as situate at the comer of Charles street and the Western avenue ; but thatis the location of the eastern house, and not the western. That part of the description, therefore, being inappropriate, the application of the policy to the western house must be shown by other parts of the same description. We do not doubt the propriety of rejecting a particular description, which is clearly false, in order to give effect to other descriptive words, when such words are sufficient to deiine the object intended to be described. In such a case, the false description may be rejected as surplusage. But the difficulty here is, that we are called upon to re- ject that particular part of the description which is the most leading. Again, if we reject this description, we have no other elements of description sufficient to em- brace any particular house as within the policy. Striking out the words, ' situate at the comer of Charles street and the Western avenue,' we have no locality and no particular house insured. The matter stands thus as to the western house. Reject- ing this particular in the description as false, and giving full force and effect to all the other parts of it, the description is then so substantially defective that it cannot be held to apply to the particular house which the plaintiff insists was insured. This view of the case precludes the plaintiff from recovering damages for any loss which lie may have sustained in the destruction of the western house by fire. It was sug- gested, that the policy might be construed to embrace the whole block, that is to say, the two buildings, and thus avoid the difficulty in the variance of the descrip- tion as to situation. But we think that this cannot have been the true intention of the policy, the description clearly referring to one building, and that a building 'connected by doors with the adjoining building.' The next inquiry is, whether this policy must totally fail for uncertainty in the description, or whether it may be lield to attach to the eastern building, which, it was in evidence, had sustained some small damage by fire. The fact that the parties intended to cause a policy to be made as to one of these two buildings will hardly be doubted ; and, having decided that the western house was not covered by the policy, it might seem to result as a matter of course that the policy attached to the eastern house. But such is not necessarily the consequence, as the description may be equally uncertain as to both. In such case, the policy must wholly fail. But the fact that the policy was intended for the one house or the other may have some influence ; and if there be not only a preponderance of evidence resulting from the description and the actual state of things, in favor of one building rather than the other, but sufficient evidence after rejecting the false description to identify the ]inrticidnr building, we may well conclude that such building is covered by the policy, and was designed to be so by the parties. In looking at the policy, we find all the leading descriptions, and par- ticularly that of location, to be directly applicable. The only description that is in- applicable and which appears by the evidence not to be true, is the recital, ' a cab- inet-maker's shop is in the building.' » * * The rules of law fully authorize the rejection of any false description, if what remains be sufficient to clearly designate the object intended to be described. « * * We are of the opinion that the re- cital, ' a cabinet-maker's shop is in the building' may be rejected as erroneous, and that the policy will then attach to the eastern building." IPATTESON, J., in Hubbard v. Hubbard, 15 Q. B. 241. ^Jackson V. Sill, 11 John. N. Y.) 201. The Policy. 125 occupancy of a tenant, and that he gave such instruction to the attorney who drew the will ; and the plaintiff offered to show these facts, but the court held that the evidence was inadmissible, because there was no latent ambiguity, but a mistake merely, which could not be corrected by evidence outside the instrument itself. In the English case,i last referred to, the testator devised to the defendant, "all those two cottages or tenements, the one occupied by my son, John Hubbard, the other occupied by my grand-daughter." The building- which the defendant claimed passed to him under the will, was divided into four parts or tenements, having no communication with each other; one tene- ment, in which was occupied by John Hubbard, and another by the testator's grand-daughter, one by the defendant, and the other by another tenant. The defendant claimed that the tes- tator intended to devise to him the wliole building, and offered to show that such was the intention of tlie testator, but the court rejected the evidence. " Can the legal maxim," said Wightman, J., " that a false demonstration does not prejudice, apply to this case ? I think not. The maxim applies only to eases in which the false demonstration is superadded to that which was sufficiently cer- tain lefore. In the present case, if the demonstration said to be false, were rejected, the terms of the devise would be : ' I do hereby give to my son, David Hubbard, two cottages, etc.,' leav- ing it uncertain, which or where. Thus it will be seen, that in all cases where, after rejecting all the description that is false, if there is not enough left that is true, to point, with reasonable certainty, to the premises intended to be covered by the policy, the policy is inoperative, and the error cannot be corrected by parol evidence, either in an action upon the policy, or to reform it.^ 1 Hubbard v. Hubbard, ante. ^Bryce v. Lorrillard Ins. Co. ante. In lonides v. Pacific Fire Ins. Co., ante, the plaintiff's clerk applied for Insurance upon hides on board the Socrates. Five ships were named in the register, one name immediately following the other, and the first Socrates and the other Socrate. The manager asked the clerk which ship he meant and he replied " the Socrates." The hides were really shipped on the Socrate, and were lost, and it was held that they were not covered by the policy. In American Central Ins. Co. v. McLanathan, 11 Kansas, 533, the plaintiff took out a policy for $ 2,000 on his two-story frame dwelling, occupied by him, situate on southwest comer of Second and Vine streets, Leavenworth, Kansas, and $ 300 on frame barn in rear of same. The agent of insurer knew the premises for which insured sought insurance; that they were situated on the southwest corner of Elm and Second streets, and that neither party intended to cover property on the corner of Vine and Second streets. Held, not a case of an entire misdescription, for insured did not occupy the build- ings on the corner of Second and Vine streets, and therefore it was unnecessary to have tlie instrument reformed, because, if either from the face of tlie instrument or 126 The Risk and its Incidknts. Iiocation of goods. 'When -within description. Sec. 50. Goods insured as being in a certain building, are cov- ered, although at the time of the loss they are in a part of the building not occupied by the assured when the policy was made. Thus, a policy was issued upon " goods contained in a third story of building 18 and 19 Harvard Place, Boston. To be void, if said property shall be moved without necessity." Prior to the loss, the goods were removed into other rooms in the same story of the building, where they were destroyed by fire. It was held they were covered by the policy.^ But where goods are insured as being " in the store part of the building," if removed to another part of the building, they cease to be covered.^ In a Massachu- setts case ^ a policy covered A.'s goods, in his chambers of the " stone, brick, and iron building. No. 117 Franklin Street," were insured. The entrance No. 117 led to chambers over Nos. 119, 123, 121, Franklin Street, and Nos. 63 and 67 Federal Street, all these being in one building. A. also hired chambers in an adjoin- ing building. He connected these chambers with the others. It was held that the goods insured were those in the first-named building, and that the goods in the adjoining building were not covered by the policy. "When change of locality does not defeat policy. Sec. 51. Where a policy covers goods in a certain building, or upon the floor of a certain building, or at a certain number of a certain street, it covers them anywhere in the building, or upon the floor, or at the number designated, although they are not kept in the same part of the building, or in the same room or rooms upon the floor, in which they were kept when the policy issued, from extrinsic facts, the true and the false description could be made to a^i«tr^ that which was false must be rejected (citing 1 Greenl. Ev. sec. 301), Held, also, no re- pugnance appeared on the face of the instrument. Ap^yiag' it to the subject in- sured, the true and the false description appeared, and that which was false must be rejected. 1 West V. Old Colony Ins. Co., 9 Allen (Mass.) 316. ^Boynton \. Clinton, etc., Ins. Co., 16 Barb. (N. T.) 254. The Baltimore Fire In- surance Co. issued a policy of insurance to a railway company, insuring " two Mur- phy & Allison passenger cars, contained in car house No. 1, and engine J. H. Nichol- son, contained in engine house No, 2." One of the cars and the engine, described in the policy, having been subsequently damaged by fire while making a regular trid on the line oit the railway, in an action on the policy, held that the words " contained in " were designed to restrict the risk to the property, while actually inside of the car and engine-houses, specified in the policy; and that the railway company could not recover for the loss. The Annapolis, etc., E. M. Co. v. Baltimore Fire Ins. Co. 112. ^ Sampson v. Security Ins. Co., 133 Mass. 40. The Policy. 127 and that, even though the policy provides that it shall be void if the goods are removed to any other place without necessity.^ But -where the policy specifically designates the locality of the property, it is not covered by the policy, if moved away from such locality ; as if insured as being in a certain building, if moved into another .adjoining,^ or if upon a certain floor if moved to another.^ But if the property still remains where it comes within the general appli- cation of the terms employed, it is covered by the policy, although not where it was when the policy issued.* Thus, in a recent case in Massachusetts,^ it was held that a policy upon goods described as being in a certain building, covered the goods in any part of the building, although at the time when the policy issued the goods were all in one store in the building, and a plan referred to in the policy show that the building was divided into several stores. But in this case it was evident that the plan was referred to, not to lo- cate the place in the building where the goods were kept, but merely to show the relative situation of the building itself. If the purpose had been to designate the precise location of the goods in- sured, the rule would have been otherwise. A policy upon property described only " as property in " a cer- tain building, will not cover property specified in the policy as not insurable, unless by special agreement ; ^ but a policy issued to a railroad company upon " any property upon which they may be liable, in freight, buildings or yards " of the corporation, covers merchandise belonging to other parties for which, the corporation is ■liable as common carriers, even though other common carriers are, by contract, liable to indemnify the corporation against all loss upon the property.^ ^Property not belonging to the class insured. Sec. 52. In an English case,^ the plaintiff insured his " stock 1 West V. Old Colony Ins. Co., 9 Allen (Mass.) 316. =! In Moadingerv. Mechanics' F. Ins. Co., 2 Hall (N. Y.) 496; 1 Bennett's F. I. C. 285, the plaintiff had a policy upon his stock in trade as a baker in a " frame dwell- ing-house and bake-house front and rear." He had a quantity of flour stored for use in his bakery in a shed leading from the bake-house to the dwelling. It was held that this was not covered by the policy. ^Storer v. Elliott Ins. Co., 45 Me. 175. * West V. Old Colony Ins. Co., ante. ^Falr V. Manhattan Ins. Co., 112 Mass. 320. « Com. V. Hide & Leather Ins. Co., 112 Mass. 136. ' Com. V. Hide & Leather Insurance Co., ante. » Watchorn v Langford, 3 Camp. 422; 1 Bennett's P. I. C. 91. 128 The Risk and its Incidents. in trade, household furniture, linen, wearing apparel and plate.'* He was not a linen draper, but followed the business of a coach, plater and cow keeper. A fire occurred during the life of the policy, and a large quantity of linen drapery goods which he had just previously to the fire, but after the policy was made, pur- chased " on speculation," were burned. He claimed to recover under the policy, for the loss of these linen goods, but the court held that they were not covered by the policy. " I am clearly of the opinion," said Lord Ellenborough, " that the word linen, in the policy, does not include articles of this description. Here we may apply noscitur a sociis. The preceding words are "house- hold furniture," and the latter "wearing apparel." The linen- mugt he household linen or apparel. Concealed property not covered, when purpose is unla^vful. Sec. 53. So, a policy upon " stock, wearing apparel and house- hold furniture in a grocery store and dwelling-house " does not cover linen, sheets and shirts, smuggled into the country for clan- destine sale, nor a watch.^ In this case, the facts were, that the plaintiff procured a policy upon property described in the policy as stated, supra. The company sent their surveyor to look at the property intended to be covered. The stock was very small; there was but little furniture, and that was of a cheap kind ; the wearing apparel that was shown, was of the poorest kind. No Irish linen, or sheets, or shirts, were shown to the surveyor, or spoken of. The store was a grocery in which it was usual to keep liquors, wooden ware, slops, and gross articles of most varieties. Among other things, compensation was claimed for about 350 yards of Irish linen, a watch, nineteen pairs of fine linen sheets, thirty-eight fine linen shirts, and a quantity of diaper, which had been smuggled into the country from Ireland. These articles had never been used, though once washed because soiled in the passage. They were stored away in the garret, and were not used in the house or kept in the store for sale. The judge charged the jury that " such articles of linen sheets and shirts as were actually laid in with a view to the use of the family, if exhibited at the prelimi- nary inspection, were within the policy ; so were such as had been laid in for sale or traffic in the usual way in the store ; but such as were concealed, and intended for secret sale, or for other use, 1 Clary v. Protection Ins. Co. 1 Ohio, 227; 1 Bennett's F. I. C. 432 The Policy. 129 were not embraced within the policy," also that " the watch is of the description of articles usually denominated memorandum arti- cles, and is not included in the policy," and this ruling was sus- tained upon appeal.^ Property of same class, although not in use, covered by policy, vrhen. Sec. 54. The fact that property insured, is not, at the time of the loss, in actual use, does not defeat the policy as to that, if it is intended for the uses contemplated hy the policy. Thus, it has been held that furniture stowed away in the garret, because there was no room for it in other parts of the house, although not used in the garret, but which was intended for use as needed, is covered by a policy covering household furniture,^ and the same rule would hold in reference to merchandise or other property. The test is, not whether the property is in actual use for the purposes contemplated, at the time of the loss, but whether it was bona fide intended hy the assured to he so used as necessity required, and was really a part of the class described in the policy, in view of the nature of the property insured, and the uses for which it was intended. ■What policy covers by implication. Stock in trade, etc. Sec. 55. " All goods placed or to be placed in the building for seven years," covers all goods placed there before the date of the policy, as well as those afterwards placed there.* So a policy on a mechanic's " stock in trade " covers all the fixtures, tools, etc., \ised by him, in prosecuting his business.* So it covers all articles incident to, or necessarily used in the prosecution of the business,^ and such a policy is not confined to the identical articles on hand when the policy issued, but articles of the same class on hand at the time of the loss.^ A policy may also be extended to cover goods not strictly within the premises named, if a usage is shown to exist in regard to contiguous places as within the description. Thus, on " stock of ship timber in a ship-yard," held to embrace and cover timber lyiag on the sidewalks near the yard, a usage be- ^Burgess v. Alliance Ins. Co., 10 AUen (Mass.) 221. 2 Clarke v, Fireman's Ins. Co. 18 La. 431. ^New York Qas-Light Co. v. Mechanics' Fire Ins. Co. 2 Hall (N. T. S. C.) 108. * Moadinger v. Mechanics' Fire Ins. Co., 2 Hall (N. T.) 490, ^Spratleyy. Hartford Ins. Co., IDil. U. S. (C. C.)392; Phoenix Mre Ins. Co. v. Favorite, 49 111. 259; Lichenstein v. Baltic F. Ins. Co., 45 id. 301; Croslry v. Franklin Ins. Co., 5 Gray (Mass.) 540; Seavey v. Central, etc., Ins. Co., Ill Mass. 640; Moadinger v. Mechanics' Ins. Co. 2 Hall (N. T.) 490. ^ Crombie v. Portsmouth F. Ins. Co. , 26 N. H. 389. 9 130 The Risk and its Incidents. ing shown to regard the street as a part of the yard.^ A policy on a " steam saw-mill " covers not merely the building but also all the fixtures and machinery therein.^ Patterns used in casting, which from their size and shape admit of being applied and man- aged by the hands of one man, were held, to be " tools " within the meaning of a policy insuring " fixed and movable machinery, engine, lathes, and tools " of a manufacturer of machinery ; and not to be included in a provision excepting from the operation of the policy "jewels, plate, watches, ornaments, medals, patterns, printed music," etc.^ A policy can only be construed to cover property naturally em- braced under the term used, or such property as usage has made incident to it as an addition to the ordinary meaning of the term. Thus, a policy on a " ship on the stocks " does not embrace timber lying in the vicinity in the yard, although prepared for and intended to be used in the constructicin of the ship, nor, unless attached to the keel.* A policy upon an unfinished house does not cover timber to be put into it, lying in another adjoining building,^ nor, under the doctrine established in the preceding case, would such timber have been covered by the policy if it had been piled in the un- finished building, and in nowise annexed to it. Until connected with the building, such timber remains materials, and is, in no sense, any part of the building.^ Where a policy covered 1 Webb V. Natimal Fire Ins. Co., 2 Sandf. (N. T.) 447. ^Biglerv. N. Y. Central Ins. Co., 20 Barb. (N. T.) 635. 2 Lovewell v. Westchester Fire Ins. Co., 124 Mass. 418. *Hood V. Manhattan Ins. Co., 11 N. T. 532; * Ellmaker v. Franklin Ins. Co. , 5 Penn. St. 183. "Tji Hood Y. Manhattan Ins. Co., ante, Johnson, J., said: "The inquiry is, at what point in the process of building the vessel, will such timbers cease to be ma- terials for the barque, and become a part of the barque ? The answer, I think, is, When they have entered into the structure which, when completed, will be a barque. This construction accords with the ordinary use of language upon such subjects. If a man had entered this ship-yard and asked to be shown the barque building for Howes, Godfrey & Co., he would have been shown the structure upon the keel, irrespective of how far the work had progressed, as being the barque; and it would have occurred to no one to point out materials not annexed to the keel, although com' iletely prepared for that use, as being the barque. It is true that, in a techni- cal sense, neither the keel, with the incomplete structure thereon, nor any of the materials intended for the vessel, is a barque; but in the ordinary use of language, the fonner would be so spoken of, and the others, though the work on them was all done, would not. It is in this ordinary sense that the language of parties is to be in- terpreted. I do not think it necessary to place any reliance upon the words ' on the stocks near said ship,' nor upon the expression of a 'privilege to build another vessel along side ; ' for though these words perhaps confirm the view which I have The Poltot. 131 «n brick pottery building, " certain amounts on machinery stock etc., and finally $50, on office furniture including safe contained in taken, indicating as they do an estimate of tlie amount of risk with reference to the precise locality to be occupied by the subject insured, yet the broader ground is more satisfactory, that the language used, in its ordinary acceptation, embraces the struc- ture which, when completed, will be the barque, and does not embrace materials ■which are not become a part of the structure, by being fixed to or in it. The deci- sion below is objectionable in another aspect. If it be upheld, it follows that tim- Ijer so far completed becomes thereupon part of the vessel, and consequently loses its character of ' materials,' and could not be insiu'ed under that name. It frequently happens that one man owns the keel and employs another, the ship-builder, to fur- nish materials and finish the ship. Such materials, though completely finished, re- main the property of the builder until they actually become a part of the structui-e •of the ship. Johnson v. Hunt, 11 Wend (K. Y.) 135; Merritt v. Johnson, 7 John. (N. T.) 473; Andrews v. Ditrant, 11. N. Y. 35. In such a case, upon a loss by fire, the ship-owner could not recover upon a policy on the ' ship building,' for lack of interest ; nor the shipbuilder upon a policy on ' materials,' because the property has lost the character of ' materals,' and become a part of the ship building.' This con- sequence must .follow, unless courts are at liberty to hold property to be properly described as 'materials' and not as 'parts of a ship,' or as 'parts of a ship' and not as ' materials,' according as one or the other description is necessary to give indem- nity to the assured. The construction given accords with the law regulating the change of property when the owner and builder are different persons ; that the com- mon use of language is in harmony with it, and that the test of liability is simple and easy of application, recommend as fit to be adopted. The case of Mason v. Franklin Fire Ins Co., 12 G. & J. (Md.) 468, presents substantially the same ques- tion, and was decided in the same way by the Court of Appeals in Maryland. Ell- maker V. Franklin Ins. Co., 5 Barr, 183, is analogous, and was decided on the same principle in Pennsylvania. The plaintiff should have been nonsuited, and the judg- ment must be reversed anda newtrial ordered; costs to abide the event." Parkbk, J. , said : ' ' Although it is said that pohcies of insurance are to be construed liberally for the insured (1 Story's R 360; 2 Sumner's R. 380; 5 Cranch (U. S.) 385, yet, where the words are not ambiguous, and the expression of the intent of the parties is full, I know of no reason why they should be excepted from the general rules of law applicable to the construction of all contracts. In deciding, therefore, whether the property in question is covered by the insurance, the language of the transfer is to be construed in its usual and popular sense, thei'e being nothing to take it out of that general rule. The question to be decided is not, whether the property iu ques- tion is covered by the first or the second policy. If it is excluded from the first, it does not necessarily follow that it is included in the second. But the question is whether it is within the first policy, on which this action is brought; that is to say, whether the 462 sticks of timber burned were a part of the barque then building for Howes, Godfrey & Co. The sticks were cut and ready to be framed, but they had not been framed. They did not constitute frames. They not only had never been annexed to the barque, but they were not ready to become a part of it, for they could not be annexed to the barque till they had been framed. They were sticks of timber cut to be used in the construction of the barque, but had never been so used in fact. These sticks were scattered about the ship-yard, and a part of them lay on the opposite side of the ship in which the fire broke out. It is true, the proof shows that these sticks, being cut for the frame of the barque, were useless for any other purpose. But I do not see how that fact tends to show that they were part of the barque. It only shows that in getting them ready to make them a part of the bar- que, they had been rendered unfit for any other use. That may be a misfortune to the owners, if they are not covered by the subsequent insurance on ' lumber and building materials,' but it is not an argument tending to show that they were part of the barque. If it were necessary, however, to the decision of this case to decide which policy covered the sticks of timber in question, I should have no hesitation in saying that they continued to be 'building materials' at the time they were destroyed. The insured party seems to have taken a similar view of this question, and to have selected appropriate words, when, in his preliminary proofs, he called the property 'timber and lumber,' and described it as '462 pieces of timber ready to be put into the frame of the barque.' The property to be insured was a barque -«n the stocks, building, that is to say, being built for Howes, Godfrey & Co. Now, it 132 The Risk and its Incidents. said building, situated on D. Street near the F. railroad in N — " it was held that the words " contained in said building situated on D. Street," etc., applied to the machinery and stock, as well as to the furniture ; and that nothing was covered by the policy but the " pottery building " and its contents.^ A policy on " fixtures and gas metres, belonging to and rented by the company, placed or to be placed in the buildings, stores or dwellings of subscribers, for seven years," was held to cover all fixtures and metres placed after the policy issued, as well as those placed before, and that though the number and value of them was largely increased, the insurers were liable for a loss on any, to the extent of the amount insured.^ A policy on " merchandise," without describing it, covers all articles kept for sale, including books and stationery, furniture, and all species of goods in which the assured deals^ whether inci- dent to any particular class of merchants or not.^ Where a policy covers " the stock of the assured or held hy him in trust," it will cover stock intrusted to him for the purposes of manufacture.* So goods held by him in pawn.* The profits of a business are insurable, but in order to be covered by a policy they must be insured qua profits.® was onlythe barque on the stocks wMeli was insured. The sticks scattered arovmdthe yard, though they had been ready to be annexed, were not on the stocks. 1 suppose the term ' on the stocks' is descriptive of tlie wliole property insured ; and that it would do violence to the language of the contract to make it extend to property, only part of which was on the stocks. The description of the barque as being near the ship, and the privilege being given to build another vessel along side of it, shows that it referred to what was on the stocks alone. Such language was not applicable to property scattered all over the yard. Any other rule of construction than that I have adopted would lead to gi'eat uncertainty and confusion. If the sticks become part of the vessel before being actually incorporated in it by annexation, when did they become so ? At what point did they cease to be ' building materials and be- come ' a barque ? ' When the timber was cut in the forest ? It may have been so selected and cut as to be fit for no other vessel. Or was it when the sticks were brought to the yard ? or when the work was commenced on them to fit them for the barque ? or when they were ready to be framed ? or when they were framed and ready to be annexed ? If all this would make the sticks a barque, which I deny, it is one step more than had been taken in this case, for the sticks had not been framed. It is apparent that as soon as we leave the safe rule, which requires actueil annexation, there is no point of preparation at which the thing changes its entire character. If it were the building of a house instead of a ship, none of the materials furnished would lose their character as personal property and become part of the realty, until actually annexed. Ferard on Fix. 9, note a. ' Ubi eadem ratio, ibi idem jus.' " 1 N. Y. Gas Light Co. v. Mechanics' F. Ins. Co., 2 Hall CN. T.) 108; 1 Bennett's F. I. C. 279. 2 Siter V. Morris, 13 Penn. St. 218. 3 Stillwell V. Staples, 19 N. Y. 401. * Rafel V. Nashville, etc. Ins. Co., 7 La. An. 244. 6 In re Wright v. Pole, 1 Ad. & El. 621. The Policy. 133 A policy issued upon different classes of property, and divided into several sums and valuations ; as, " $500 on building, f 500 on machinery, and $1,500 on stock therein," if renewed by a receipt which simply states that the policy is renewed for $2,500, is thus changed, so tliat the distribution of the risk ceases, and it becomes a policy for $2,500 upon all the property .^ A policy upon " property," kept in a certain building, covers articles kept for use as well as for sale ; but a policy upon " merchandise " only covers property kept for sale, and excludes that kept for use.^ Thus, a policy upon "a jeweler's stock in trade," was held not to cover blankets, purchased with the con- sent of the insurer, to protect the store from a fire burning in an adjoining building.^ And even where certain classes of property are incident to the business insured, yet, if the policy specifically designates the classes of property covered, all other is excluded. Thus, where a policy was issued " on stock in trade, consisting of corn, seed, hay, straw, fixtures and utensils in business," no other kind of property, except that designated, is covered by the policy, even though it was in fact a part of the stock in trade at the time when the policy was issued.* So, where a policy was issued upon " jewelry and clothing, being stock in trade," it was held that it did not cover musical or surgical instruments, guns, pistols, books, etc., although they were a part of the assured's stock in trade, because the classes of property insured were specifically designated, and no other classes could be included,^ So a policy upon a " stock of hair, wrought, raw, and in process, as a retail store," does not extend to fancy goods made of other materials, although they are such as are usually kept in a retail hair store .^ Thus it will be seen that the question whether a particular class of property is 1 Dnggs v. AJhany Ins. Co., 10 Barb. (N. Y.) 440. ^ Burgess v Alliance Ins. Co., 10 Allen (Mass.) 221. In Kent v. London, etc,, Ins. Co., 26 Ind. 294, the term " merchandise," in a policy of insurance against loss, ■etc., by fire, on grain and other merchandise, in each of two warehouses, which Tvere kept by the assured, who were grain merchants, for the purpose of receiving and storing grain, was held not to include a platform scale, bedded in the floor of one of the warehouses, or belting, or a com-sheller, or a beam-scale, which things had been dispensed with in the business, but which had not been offered for sale; or tools, implements, or articles of property purchased for use in the warehouses, as being necessary or convenient in the business, and which were used as occasion required. 8 Wells V. Boston Ins. Co., 6 Pick. (Mass.) 182. * Joel V. Haroey, 5 W. E. 488. ' Bafel V. Nashville, etc., Ins. Co., 1 La. An. 244. « Medina v. Builders' Ins. Co., 120 Mass. 225. 134 The Risk and its Incideitts. covered by a policy not naming it, will deT^end, first, upon whether it is impliedly excluded by the language of the policy ; and second, whether it belongs to the class insured, either as a natural incident thereof, or by usage. If the property insured is specifixially designated, all other is excluded, even though usually of the same tribe of that insured. If, however, the policy is general in its descrip- tion of the property, it may be shown that a certain species of property is usually included in the same class, and so covered by the policy.^ So, if the classification is evidently intended to enlarge, rather than to restrict the risk, as if the word including is used instead of the words " consisting of," the classification does not exclude other articles not enumerated. Thus, where a policy covered " a. stock of ship timber, including planks, futtocks, knees, locust standards, staves, blocks, falls, clamps, screws, augers and tools contained in the yards and buildings, etc.; " it was held that locust capstans, partly prepared, were embraced in the risk.^ The naming of particular articles, as covered by the policy, does not exclude all others, when such is not the obvious intent, and natural construction of the language used. When the jjolicy covers a " stock in trade consisting of " none other than articles belonging in one or the other of the classes named are covered, because the obvious intent of the parties is to particularly define the risk ; but when the policy covers a " stock in trade, including, etc.," the obvious intent of the parties is to enlarge the scope of the risk be- yond what would otherwise be included therein. Under a policy which insures a certain sum " on all or either " ^ In Crosby v. Franklin Ins. Co., 5 Gray (Mass) 504, a doctrine apparently in con- flict with this, was held. In that case, the poUcy was for a certain sum " on their stock of watches, watch trimmings, etc,," and the court held that the word stock included the general stock, and was not limited to watches, watch trimmings and material. The doctrine of this case is in conflict with the case cited supra from the 120th Mass. ; and is also in conflict with the current of authority. The word " stock,'' when employed generally, as a " jeweler's stock," a " stock of groceries," " drug- gist's stock," etc., includes all articles v^ually kept as a part thereof; hut, when the word " stock " is defined by the insurer, and limited to a certain class of goods, as was done in this case, there is no rule of law that will permit a different construc- tion to be placed thereon. In such a case, the court, by permitting evidence as to what is " usually " a part of such stocks, permits an addition to be made to the con- tract, which is in contravention of that actually made by the parties. Medina v. Builders' Ins. Co., ante; Rafel v. Nashville, etc., Ins. Co., ante; .Joel v. Harvey, ante. A policy taken out by sureties in a distiller's bond, who were also part-owners, of the whisky distilled and in store, is intended to furnish an indemnity against any loss they might incur in virtue of their liability to make good the tax due the gov- ernment on the whisky, as well as any they might sustain as owners. Ins. Co. v. Thompson, 95 U. S. 547. 2 Webb V. National F. Ins. Co., 2 Sandf. (N. T.) 49T.. The Policy. 135 of certain buildings, the insured are liable for the fall amount of a loss, not exceeding the sum insured, occasioned by the burning of either or any of the buildings.^ Silver forks, spoons, knives, etc., are not covered by a policy insuring " silver plate."^ "When a policy covers a particular business, or class of property, as " a starch manufactory," ^ it covers all fixtures, machiner 7/, im- plements, tools, etc., necessary or incident to the business. A policy covering an " engine and machinery for the manufacture of tin ware," covers all the implements used in connection with the machinery, as a part thereof, even though not attached to it. Thus, under such a policy, it was held that it covered 600 dies, used to give form to various articles manufactured, although a single pair of these dies only could be used at one time, and when not in use, they were taken out and kept upon shelves.* A policy upon the stock of a mechanic includes all the tools and implements used by him in his business. Thus, a policy upon the assured's " stock in trade as a baker, and upon household furniture con- tained in a frame dwelling and bakehouse," was held to cover all the implements necessary for carrying on the business, as pans, sieves, ' Com. V. Hide and Leather Ins. Co. ,112 Mass. 136. 2 Hanover v. F. Ins. Co. v. Mannasson, 29 Mich. 316. ' Peoria, etc., Ins. Co., v. Lewis, 18 111. 553. In Liebenstein v. JEtnalns. Co., 45 111. 303, insurance was effected on " chair lumber and such other stock as is usually used in a chair manufactory, contained in the chair factory situated on Superior street, Chicago." The establishment consisted of a main building, and also an en- gine-house standing ten feet in the rear of the main building, and connected with it , by a platform, and by the belting passing from the engine to the machinery in the main building. A iire caught in the engine-house, and consumed a portion of the chair material which had been placed therein. Held, that the material in the en- gine-house fell within the description of the property insured as " contained in the chair factory." In Mark v. ^tna Ins. Co., 29 Ind. 390, an open or running policy stipulated not to cover a loss accruing fron any disaster by explosion or otherwise, " which occurrence might be known to the applicant, the public, or the company, at the time of such application being made, whether such property was known to be involved thereby or not, without such contingency is expressly provided for in writ- ing on this policy," was held not to cover the loss of a package of money sent by the assured by express, and without his knowledge placed on a steamboat, which, at the time of the application,had exploded its boiler and sunk, the explosion being known to the public and the insured. In Home Ins Co. v. Favorite 46 111. 263, the policy covered goods held in trust or on commission, and it was held that this included goods held on storage, but it was also held that whether a policy " on hogs and cattle, salt, cooperage, boxes, and articles used in packing the same," covered coal on the in- sured premises, was a question of fact for the jury, and depended for its solution upon the question whether it was necessary or incident to the business of packing. Insurance was effected upon property " contained in the two-story frame building occupied by the assured as a chair manufactory, situated on Superior street." The factory comprised a main building of two stories, and a two-story building ten feet distant, used for an engine and dry-house. The main building was called the chair factory, where the work was carried on. Held, that the insurance covered only the property in the main building. Liebenstein v. JEtna Ins. Co. 45 111. 303. * Seavey v. Central etc., Ins. Co., 111. Mass. 540. 136 The Risk and its Incidents. bread troughs, etc.^ So a policy upon " articles used in packing hogs, cattle, etc.," was held to cover coal used upon the premises, necessary to be used in the process, and reasonable in quantity, for the business done.* A policy upon " stock in trade, being mostly chamber furniture in sets, and other articles usually kept by fur- niture dealers," was held to cover varnish and oils necessary for use in such business, to the extent that they are usually kept by such dealers, as well as all other articles usually kept by persons en- gaged in that business,^ So a pojicy covering " blacksmith and car- riage maker's stock, manufactured and in process of manufacture," covers raw or unmanufactured stock used in the business.* " Grain," ■what is. Sec. 56. It often becomes an important question as to what is em- braced under the term " grain " in a policy, as, where it covers "hay and grain" in a barn, or "grain and flour in a storehouse, or "grain," in an elevator. Webster defines " grain " thus : " Grain signi- fied corn in general, or the fruit of certain plants which constitute the chief food of man and beast, as wheat, rye, barley, oats and maize." Worcester says : " Grain, all kinds of corn ; the seed of any fruit." It is certain that Webster's enumeration does not in- clude all kinds of grain, because buckwheat, India wheat, rice, peas, beans, etc., come clearly within that class of the fruit of plants which constitute the chief food of men or beasts. In a South Carolina case,^ under a statute making it larceny to take cotton, rice, corn or " other grain " from a field, it was held that " peas " were included under the head of other grain. In Georgia,^ under a statute which provided that it should not be lawful " to make any spirituous liquors out of any corn, wheat, rye, or other grain " it was held that sugar-cane seed and millet were included within the meaning of the words " or other grain." In an Iowa case ^ the policy covered " grain in stacks " and it was held that it cov- ' Moadinger v. Mechanics^ etc., Ins. Co., 2 Hall (N. Y.) 490. 2 Phcenix Ins. Co. v. Favorite et aU, 49 111. 259; Home Ins. Co. v. Same, 49 id. 263. ' 3 Haley v. Dorchester, etc., Ins. Co., 12 Gray (Mass.) 545. * Spratley v. Hartford Ins. Co., 1 Dil. U. S. (C. C.) 392. 6 State V. Williams, 2 Strath., (S. C.) 474. « Holland v. State, 34 Ga. 84. ' Hewitt V. Watertown F. Ins. Co., 55 Iowa, 323; 39 Am. Rep. 174. The Policy. 137 «red a stack of " flax " raised solely for the seed. Seevees, J., after referring to Webster's definition of ' grain ' said : " It does not necessarily follow from the fact that certain kinds of grain are named, that there may not be others that as clearly come within the definition as those named. Certainly buckwheat is grain although not specially named. It is so because it is clearly an article of food, when prepared as usually used. But we believe it is seldom, if ever, used as food in its natural state. Measurably at least this can be said as to flax seed. After it has been ground and the oil largely extracted, the residue is the " oil cake " known to commerce, which is largely, if not exclusively, used as food for cattle and other beasts, and is highly nutritious." From the cases which have been cited, it would seem that all seed of plants which Jorm a part of the food either of man or beast, and such others as enter into and are known to commerce as such, or which were evidently intended hy the parties to be treated as such, will be covered by a policy insuring " grain." Intention of parties must be gathered from the policy. Sec. 56. When the policy is specific as to the subject-matter of the risk, it cannot be extended by implication, nor is evidence admis- sible to show that the parties intended to hvve it cover matters not specified, Thus, where a policy covered " oil mill occupied for ■crushing linseed and grinding dye wood, j£ 1,000 ; on fixed machinery and millwright works, including all the standing and growing gear therein, £1,000 ; one enginehouse adjoining the mill, £200 ; one steam engine therein, £300; one logwood warehouse in which chopping dyewood is performed, £200 ; one warehouse on the other side of the mill, £300." The assured claimed that the policy covered the machinery and gear in the logwood house, and offered to show that the parties intended that the policy should so cover, but the court held that, as the policy was specific as to the subject-matter of the risk, it could not be con- strued to cover any risk not named, and that the intention of the parties must be gathered from the policy, and could not be shown hy evidence aliunde?- In an Illinois case,^ the policy covered ' Hare v. Barstow, 8 Jur. 928. In Ins. Co. v. Express Co., 95 U. S. 227 a policy- issued to an express company, insuring goods and merchandise in its care for trans- portation while on board cars or other conveyances, contained the following provi- sion: " It is a further condition of this insurance, that no loss is to be paid in case " Liebenstein v. ^tna Ins. Co., 45 111 303. 138 The Risk and its Istcidents. chair lumber, contained "in tlie two-story frame building occupied by tbe insured as a chair manufactory, situated on the north side of Superior street ; " there was an engine-house near this building, connected with it by a platform, and used as a part of the plaintiffs- factory, and a considerable quantity of chair lumber was stored therein. The plaintiff insisted that it was the intention of the parties to embrace the chair lumber therein, in the risk, and that the policy should be construed as covering it, but the court held that the intention of the insurers must be gathered from the policy, and that, as the risk therein was restricted to the lumber in the two-story frame building, the insurer was only liable for the lumber lost therein.^ A policy " on stock in trade," consisting of corn, seed, hay, straw, fixtures and utensils in business, does not cover hops and matting, although they were in fact a part of the stock in trade when the insurance was made, and were usually kept by persons, engaged in that business.^ of collision, except fire ensue, and then only for the loss and damage by fire. And that no loss is to be paid arising from petroleum or other explosive oils." Certain goods in the possession of the company, and in the course of transportation by- it, were in an express freight-car, forming part of a railway train, which collided with another train composed mainly of oil-cars loaded with petroleum. Immedi- ately upon the collision, the petroleum burst into flames, which enveloped and de- stroyed the freight-car and the goods. It was held that the loss thereby sustained by the express company was not covered by the policy. The court said the lan- guage thus employed plainly implies that, in contemplation of the parties, a loss by fire might arise or be caused by petroleum. That would be impossible, unless the petroleum were ignited in some way. It must, therefore, have been understood that bm-ning peti-oleum, distinguished from the match, coals, or coUision that ignited it, might originate a fire, and that a loss might arise from it. Such a loss, therefore, must have been the one intended to be excepted, as truly as the excepting a loss from gunpowder would mean from ignited gunpowder, not merely from the loss caused by the match which ignited it. Keeping in mind the general intent of the contract, insurance against fire, the imderstanding of the parties may be learned by following the succession of provisions the policy contains. After having acknowl-' edged the receipt of the premium for insurance of the property against fire generally, the thought seems to have occurred that railroad collisions might take place, caus- ing damage and resulting in fire. The policy, therefore, stipulated that in suck cases only the damage caused by fire, as distinguished from that caused by the col- lision, should be covered by the policies. Then It seems to have been considered that collisions might result in setting fire to pretoleum, a known dangerous sub- stance, which, when ignited, produces uncontrollable fires; and, therefore, it wa* stipulated that no loss arising from petroleum should be paid for, even though its ignition should ensue as a consequence of collision. The meaning of the language used by the insurers, then, is this. We will insure you against fire; and, if fire en- sues from a collision, we will pay the damages caused by fire, though not that caused by.the collision; but if a fire ensuing a collision arising from petroleum or other ex- plosive oils, we do not undertake to pay the loss. All other losses caused by fire re- sulting/j-oHi cullisioti we will pay." ' See Annapoli» li. E. Co. v. Baltimore P. Ins. Co., 30 Md. 37; Lycoming Ins. Co. V. Upderjraff, 40 Penn, St. 311, ^ Joel V. Harvey, 5 W. R. 488. The Policy. 189 Neither a watch, nor other articles of jewelry, although used for personal adornment, are comprehended under, or covered by a policy upon household furniture or wearing apparel.^ ' Clary -v. Protection Ins. Co., ante; 2 Johns. (N". T.) 261. A policy contained this clause: " Carpenter's risk granted during the term of this policy; and it is un- derstood and agreed, and this policy is upon the express condition, that the prop- erty shall not be operated as a distillery during the term of this insurance, it being intended by this policy to cover carpenter's risk only." It was held that the word " only," must be construed as excluding merely the extraordinary risk named (viz., running the property as a distillery), and not as excluding the general risk common to all property ; and that the assured might recover for a loss occurring after the oc- cupation for carpenter work ceased. Alkan v. New Hampshire Ins. Co., 53 Wis. 136. The term named in the policy was one year, and the premium $30; it had been renewed for a second year on payment of a like premium, and upon the agreement for a second renewal, the same amount of premium was paid, but the testimony did not show that anything was said as to the time the renewed policy was to run. It was held that the renewal was for one year. Scott v. Home Ins. Co., 53 Wis. 238. A policy Insuring against " all loss or damage by fire," and making the insurer liable " for any loss or damage caused by lightning," — It was held, to cover all known effects of lightning, and not merely those arising from combustion. The property was destroyed by a tornado. It was held, that the evidence so tended to show the presence in the tornado of electrical disturbance presenting the usual characteristics of lightning, and that such lightning was an active agent in destroying the property, that it was error to order a nonsuit. Spensely v. Lancashire Ins. Co., 54 Wis. 433. A policy was issued by the defendant upon the plaintiff's " hop-house while dry- ing hops," from Aug. 15 to Oct. 15, 1875. The hop-house was destroyed by a fire which occurred within the time specified, but after plaintiff had ceased drying hops. In an action upon the policy, it was held, that defendant was not liable. Lang- worthy V. Oswego & Onondaga Ins. Co., 85 N. Y. 632. Plaintiff, a commission merchant, insured the goods of a customer by four several policies taken out in the name of the customer, and by five taken out in plaintiff's name, attaching first to goods of the customer, then to plaintiff's goods. Plaintiff took out, also, three policies on goods, his own or held in trust or on commission , or sold but not delivered. It was held, that upon the question of whether these three policies should contribute to a loss upon the goods of the customer aforesaid, al- though the language of the three policies was comprehensive enough to include said customer's goods, yet that evidence, outside of the policies, was admissible to show that they did not in fact, and were not intended to, cover these goods. Bichardson V. Home Ins. Co., 47 IST. Y. Super. Ct. 138. A breaker at a coal mine was set on fire at night by a party of men, who fired a number of shots, drove the watchmen away, and then burned the breaker. It was held to be a '" riot," within a policy exempting the company from liability "for any loss by fire caused by means of an invasion, insurrection, riot, civil commotion," &c. ; and this, without proof of a previous unlawful assembling, accompanied by force or violence. Lycoming Fire Ins. Co. v Schwenk, 95 Pa. St. 89; 40 Am. Rep. 629. A policy declared the interest of the insured to be,— A.'s, an undivided two thirds, B.'s, an undivided one third. It was held a declaration to the company of the interest of each, the contract being with them jointly, not severally. Northrup V. Phillips, 99 111. 449. A policy purporting to be for five years stipulated that the company might, at any time, cancel it on returning the unexpired premium pro rata, and permitting the as.sured to have it cancelled on paying the customary short rate for the period expired. It also provided that, in case of loss, the company might deduct any note or instalment thereof given as a consideration for the policy. An instalment note given on the policy provided that, in case of the non-payment of any instalment at maturity, the policy should be void until revived, and the whole amount of instal- ments remaining unpaid on said policy should be considered earned. It was held, that these provisions distinguished the policy from one under which there was no absolute insurance for the whole period for which it was taken. Cauffield v. Conti- nental Ins. Co., 47 Mich. 447. 140 The Risk and its Incidents. Construction of policies. Sec. 68. The legal maxim henignaefaciende sunt interpretationes propter implicitatem laicorum ut res magis valeat quam pereat ; et verba intentione, non e contra, debent insevire, is as applicable in the interpretation of policies of insurance as of other written instru- ments, and the courts are inclined to construe them liberally, and so as to carry out and effectuate the real, true intention of the parties thereto.^ Every part of the instrument will be made operative and effective, if possible, but, if it is evident that one part of the instrument expresses the real intent of the parties, and another part of it is inconsistent therewith, the part which is inconsistent with the in- tention of the parties must be rejected and yield to that part of it ■which will effectuate their real purpose. Thus, where the written and printed portions of a policy conflict, effect is given to the written portion of it, because, being incorporated into the contract at the time when it was made, it is presumed that it expresses the actual agreement made, and that the parties intended thereby to override that portion of the contract expressed in type, which is inconsistent therewith.^ The maxim, quando res non valit ut ago, valeat quantum valere potest applies, and the courts will look to the intent of the parties and effectuate it in some form, if possible, and, if necessary to do so, will reject that which is inconsistent.^ But, if there is no real inconsistency, and the evident intent of the parties can be effectuated by interpreting the instrument as a whole, that is, by 1 Riggin v. Patapsco Ins. Co., 7 H. & J. (Md.) 279; CrauisUat v. Bnll, 8 Yeates (Penn.) 375. The rule that ambiguous language must be construed against the in- surer, was applied to a clause in the policy of reinsurance as follows: " This insur- ance to be on the excess which the T. insurance company may have on all their policies on cotton, sugar, and molasses, issued at their office in New Orleans, or at their Shreveport agency, to wit, on the excess of $ 10,000 on boats from places on the Mississippi River, but said excess not to exceed $5,000 by any one boat;" and it was held that the words " on boats " indicated that more than the freight was in- cluded. Teutonia Ins. Vo. v. liuylston Mut. Ins. Co., 20 Fed. Kep. 148. 2 Nicoll V. American Ins. Co., 3 W. & M.(U. S. ) 520. 5 Maugher v. Holyoke Ins. Co., 1 Holmes (U. S. C. C.) 289. In Bowman v. Paci- Jic Ins. Co., 27 Mo. 15, the policy contained stipulations that " if there shall be kept or stored therein any articles denominated hazardous or extra hazardous, or includ- ed In the memorandum of special rates, so long as the same shall be appropriated, these presents shall cease;" also: "No greater amount than 25 pounds of gun- powder shall be placed at any time in the building described in this poUcy." In- sured kept from four to six pounds of powder in his store. Gunpowder was includ- ed in the memorandum of special rates. It was held that the two clauses will harmonize if one be imderstood as modifying the other; the general was to be controlled by the special clause, for, to give a preponderating importance to the general provision wotild interpolate a material qualification upon the special clause; that keeping less than 25 lbs of powder did not affect the right of the insured to recover. The Policy. 141 retaining both the written and printed portions thereof, effect will be given to the whole.^ One of the golden rules of interpretation was well expressed by Lord Hale.^ : " The judges," said he, " ought to he curious and subtle to invent reasons and means to make acts effectual according to the just intent of the parties ; they will not therefore cavil about the propriety of words, when the intent of the parties appears, but will rather apply the words to fulfil the intent, than destroy the intent, by reason of the insufficiency of the words" The language of a policy is to be construed according to its natural meaning, its ordinary and usual signification, except where such construction would render the words used, senseless, or it is evident from the general scope and intent of the instrument that the words were used in some other sense. In all cases the words of a policy are to be taken most strongly against the insurer. The maxim verba chartarum fortius accipintur contra prof erentum, is rigidly enforced in all cases where other rules of construction fail. This is upon the theory that, as the insurer makes the policy, and selects his own language, he is presumed to have employed that which expres- ses his real intention and the actual contract entered into, and has left nothing to be inferred or supplied by reference to extraneous matters.^ But this does not permit either party to show how they understood the contract. The court is to construe the instrument from the language used, and so far as there is any inconsistency, give to it a construction most favorable to the assured. It was well said by the court in a Kentucky case,* " there is no principle of law which allows the understanding of one of the parties to determine the meaning of the contract. The rule is sometimes applied in cases of ambiguity, that words are to be construed most strongly against the party using them. That is founded upon a principal of common honesty and good faith, that, when a promise or stipulation is susceptible of two meanings, it should be construed and effectuated in that sense in which the party making it knew, or had reason to believe it was understood and received by the other farty." Thus, in a case in New York,^ the defendants issued a 1 Staeey v. Franklin Fire Ins. Co., 2 W. & S. (Penn.) 44. 2 Crossing v. Scudamore, 2 Lev. 9; Brink v. Merchants' Ins. Co., 49 Vt., 442. ^Palmer-v. Warren Ins. Co., 1 Story (U. S.)360; Nicoll\. The American Ins. Co,, ante; Ins. Co. v. Wright, 1 Wall. (U. S.) 529. ' Montr/ornery v. Fireman's Ins. Co., 16 B. Mon. (Ky. 427. « Marco v. Llv., Lon, & Globe Ins. Co. 35 N. Y. 664. 142 The Risk and its Incidents. policy to the plaintiff upon " a stock of goods " in a certain build- ing. Subsequently the goods were removed to another building, and the insurer indorsed thereon, " This policy is transferred to the frame building owned by Marco on the east side of Whitehall street." The defendants claimed that thereby the policy was ap- plied to the frame building, and did not cover the stock. But the court held that the indorsement must be construed in view of the circumstances, and according to the intent of the parties, and as the plaintiff had aright to understand it. Where a policy referred to the goods as " stored in " a certain warehouse, but provided that " if the interest of the assured . . . be any other than the . . . sole ownership of the property ... it must be so expressed in the policy," and there was no such ex- pression, it was held, that the policy did not cover goods not the assured's own stored in the warehouse. ^ But where the terms ofa policy are susceptible, without violence, of two interpretations, that construction most favorable to the in- sured should be adopted. Thus in a Pennsylvania case the policy providing that, in case of loss, the company should pay to the mortgagee " such proportion of the sum insured as the damages by fire to the premises mortgaged or charged shall bear to the value immediately before the fire," it was held that the words " premises mortgaged " should be construed to mean so much of the mortgaged premises as was insured at the time of the fire ; in this case, the value of the building insured, and not merely the proportion of the sum insured, which the value of the building bore to the value of the whole lot mortgaged, with the building thereon. ^ So where a policy insured a stock of music and musical instru- ments, " his own or held by him in trust or on commission." It also provided that goods held on storage must be separately and specifically insured. The insured received a piano from the owner to be forwarded to another city for repairs. It was held, that the piano was covered by the policy to the extent of its value. ^ So where a policy insured two barns and certain articles " con- tained therein," and also a horse "in barn or in fields," it was held that the horse was insured, though in a barn not one of those speci- fied.* 1 Fuller V. Phmnix Ins. Co. 61 Iowa, 350. 2 Teutonia Fire Ins. Co. v. Mund, 102 Pa. St. 89. » Lucas V. Liverpool & London & Globe Ins. Co. , 2 3 W. Va. 258 ; 48. Am. Eep. 383. -» Trade Ins. Co. v. Barrdiff, 45 N. J. L. 543. The Policy. 143 All the stipulations in a policy, both printed and written, are to te given effect, if it can be done without defeating the written stipulations. If it cannot be done, then the written stipulation is to prevail.^ If the words written in the policy, have received a judicial construction, and also a peculiar commercial construction by usage, variant with such judicial construction, the judicial con- struction is to control, ^ but if no judicial construction has been ^iven to them, and by usage they have acquired any meaning variant from that in which they are ordinarily used, such meaning by usage may be shown, unless from the whole instrument it is ■evident that they were used in their ordinary sense. ^ Thus, in the case cited from Massachusetts, to an inquiry in an application for insurance upon a manufactory, " are there casks of water in each loft kept constantly full?" the answer was, "there are casks of "water in each room, kept constantly full," and the court held that ■evidence was admissible to show that, in the general use of language among manufacturers, the whole of a loft or story, appropriated to a particular department, was called " one room," although the same was divided by partitions with doors ; and that the meaning of the word "room," and whether there was any such general use of language, were questions for the jury and not for the court j also, that if such use of the word " room " was general among manufac- turers, it need not he known and general among insurers, in order to ■effect a contract of insurance upon manufacturing property ; for the insurers must be presumed to have so understood it, when they in- sured such property." * 1 GossY. Citizen's Ins. Co., 18 La. An. 97; Bargettv. Orient Ins. Co., S Bos. {N. Y. ) 385. In Lettiner v. Granite Ins. Co. , 5 Duer (N. Y. ) 394, the court says that no part of the words of a policy are to be rejected as insensible or inoperative, if a rational or intelligible meaning can be given to them consistent with the general design and object of the whole instrument. ^Bargett v. Orient, etc., Ins. Co., 3 Bos. (N. Y.) 385. ' Daniels Y. Hud. Biv. Ins. Co., 12 Gush. (Mass.) 416; Mobile, etc., Ins. Co. v. McMillan, 27 Ala. 77. * In WMtmarsh v. Conway Ins. Co., 16 Gray (Mass.), 657 it was held that evidence of a well-settled custom, by which the words of a policy covering " store fixtures " are applied to all furniture in the store, whether fixed or movable, necessary or con- venient for use in the course of trade, was admissible. " If," said CHAPMAif, J., " the term store fixtures is a term of trade, commonly used among traders and in- surers, and is used in such a signification as to include any or all the articles men- tioned as such in the report, those were insured by this policy. The parol evidence on this subject was proper and admissible." In a case before the United States Circuit Court for New Hampshire in 1883 in Thurston v. Union Ins. Co., 17 Fed. Rep. 127,28. Alb. C. J. , 490, the policy covering a building expressly excepted from its operation " store fixtures " and the question in the case was what articles under the head even outside the protection of the policy 144 The Risk and its Incidents. In construing the language of a policy its ordinary and usual import will be given to it unless it is shown that certain words: have as usage acquired a peculiar meaning, or unless its technical meaning is so universally understood that it may be presumed that it was intended in its technical sense. Thus in an action on an insurance policy upon "electrotype, stereotype and steel plates and cuts," belonging to plaintiffs, who were a firm of book pub- lishers, there were certain brass plates which, it was claimed by plaintiffs, were included in the policy under the name " cuts," be- cause they were embraced in the natural and ordinary meaning of that word, as defined in the dictionaries, and used in the common speech of people. The defendant contended that the word " cuts " was understood among book publishers, engravers and all other persons who used dies and cuts, to include onl}'- wood-cuts and steel-engravings and plates, and did not include the articles in question ; and gave evidence to that effect. The defendant at the Lowell, J. , said : There is no doubt that an exception of fixtures out of a policy upon buildings refers to things which are, under some circumstances, removable, and not necessarily and always a part of the buildings. If we could suppose a printed exception in a policy to be intended to adapt itself to the various relations of landlord and tenant, mortgagor and mortgagee, heir and executor, so that fixtures; refer to what may be removed in the particular case, all the disputed items in this case would be within the policies, because they are undoubtedly irremovable, as be- tween the plaintiff and the mortgagee. But if these same things had been affixed by a tenant, there is no doubt that he might remove them during his term. Such a \ shifting construction would be unreasonable. We must look for a meaning of " store fixtures" which has a more general application. And I find it in the context and the popular meaning of the words. I hold it to mean, in this connection, store fit- tings or fixed furniture, which are peculiarly adapted to make a room a store, rather than something else. It is plain that " store fixtures " does not refer to the fixtures of the shoe factory, for the written part of the policies distinguishes the stores from the factory, and so does the common use of the words. Store is the American word for shop or warehouse, and is never applied to a factory. The words "store fix- tures" are construed in Whitmarshv. Conway Fire Ins. Co. 16 Gray, (Mass) 359, though that case is not of special importance in deciding this case. For the convenience of counsel I number the items in a copy of the referee's re- port which I place on file. And first I will say what items I find to be covered by all the policies. These are items 1 and 2, which were admitted by the defendants' counsel to be within the contract; they are the walls, roofs, floors, partitions, doors, and windows, including the show windows which last had not plate-glass of the pro- hibited size. 11. Boiler fixtures in boiler-room. The boiler cannot be removed without taking down part of the boiler-house, and is used, among other things, to heat the building. 13. Elevator machinery, which in recent usage is as much a part of the house as are the stairs. 14. Steam piping, radiators, and iron tanks, which both from their mode of annexation and their use, which is equally applicable to a dwelling-house, a factory, or a shop, are part of the building. 16. Gas piping, for similar reasons. 10. Speaking tube, for similar reasons. I exclude from all the policies, items 6, wooden tank; 17, gas-fixtures, which are chattels— the former by its construction, the latter by usage. Also as " store fixtures," 3, 4, and 5— shelving and covmters in the stores, and shelving and basin in the barber's shop. For all items not above excluded the three companies are liable. The fourth, or Howard Company, by my construction, escapes by virtue of "or other" from the fixtures of the shoe factory, which are items 7, 8, 9, 12, 15, and 18. I believe I have mentioned every item, and that the parties can assess the damages against each company without difficulty, In accordance with this opinion." The Policy. 145 trial asked for this instruction, that if the jury should find that the word " cuts " had among book publishers a technical meaning universally so understood among book publishers and the makers and users of cuts and dies, they might presume that the word was used in that sense in the policy. The court refused to give this instruction, but instructed thus : " Words are to be understood in their plain, ordinary and popular sense, unless they have in respect to the subject-matter, as by the known usage of trade or the like, acquired a particular sense, distinct from the popular sense of the same words. Where a word has both a popular and a technical sense, or where it has several different meanings, it is a question of fact for the jury to determine, from the subject-matter, the con- tract, the character of the contracting parties, or the nature of the contract and all the surrounding circumstances, in which sense the word was used by the contracting parties." It was held that the defendant was entitled to the instruction asked.^ If there is any doubt, in view of the general tenor of an instru- ment of writing, whether the words used therein are to be taken in an enlarged or restricted sense, all other things being equal, that con- struction should be taken which is most beneficial to the promisee. This rule of construction is especially applicable to the construc- tion of policies of insurance ; the provisions and conditions of which are, as admitted in the argument, prepared by the assurers themselves, and their advisers, persons thoroughly conversant with the principles and practice of insurance, with the utmost delibera- tion, " every word being weighed, and every contingency debated," and thus prepared are executed and delivered to the assured, who ordinarily have no part in their preparation. If an exception in a policy be capable of two interpretations, equally reasonable, that must be adopted which is most favorable to the assured, for the language is that of the assurer.^ No rule in the interpretation of a policy is more fully established, or more imperative and control- liag, than that which declares, that in all cases it must be liberally ' Houghton v. Watertown F. Ins. Co. The rule of law in relation to the construc- tion of contracts 4s correctly stated in Daniel V. Hudson Biver Iron Co., 12 Cush. 430. See also Whitmarsh v. Conway Ins., Ca., 16 Gray (Mass) 359. Upon this sub- ject, the decisions of courts in various, jurisdictions seem to be uniform, and to re- sult in this. That the jury should be instructed that when words have acquired an exact and technical meaning in any trade or business, and are used in a contract re- lating to such trade or business, prima facie they are to be construed in the meaning er sense which they have acquired in that business. ^Western Ins. Co., v. Cropper 32. Penn St. 357. Ins. Co. v. Berger, et. al. 42 Penn. St. 292; Insurance Co. v. O'Malley, 97 Penn. St. 400; Hoffman v. ^tna Ins. Co., 32 N. T 405. 10 146 The Risk and its Incidents. construed in favor of the insured, so as not to defeat, without a plain necessity, his claim to the indemnity, which in making the insurance it was his object to secure. When the words are with- out violence susceptible of two interpretations, that which will sustain his claim and cover the loss must in preference be adopted. Another rule of construction equally well known, is that the words of an agreement are to be applied to the subject-matter, about which the parties are contracting at the time. The matter in hand is always presumed to* be in the minds and thoughts of the speaker, though his words seem to admit of a larger sense, and therefore the generality of words used shall be restrained by the particular occasion. Words should not be taken in their broadest import when they are equally appropriate in a sense limited to the object the parties had in view. " All words," says Loed Bacon, " whether they be in deeds or in statutes, or otherwise, if they be general, and not express and precise, shall be restrained unto the fitness of the matter and the person." ^ Indemnity is the real ob- ject and purpose of all insurance ; that is what the assured bar- gains for, and what the assurer intends to provide. The pre- dominant intention of the parties in a contract of insurance is indemnity, and this is to be kept in view and favored in putting a construction upon a policy.^ Having indemnity for its object, the contract is to be construed liberally to that end, and it is presum- edly the intention of the insurer that the insured shall understand, that in case of loss, he is to be protected to the full extent which any fair interpretation will give.^ The spirit of the rule is, that when two interpretations, equally fair, may be given, that which gives the greater indemnity shall prevail. Therefore where there was a provision in a policy that in case of loss the company should pay to the mortgagee " such proportion of the sum insured as the damages by lire to the premises mortgaged or charged shall bear to the value immediately before the fire," it was held that the words "premises mortgaged" should be' construed to mean so much of the mortgaged premises as was insured at the time of the fue. That is the value of the building insured, and not merely the proportion of the sum insured, which the value of the building ^ Bacon Law Max. Reg. 10. ^Philips Ins., § 124. 'Dow V. Hope Ins. Co., 1 Hall (N. Y.), 174; Biggin v. Patavsco Ins. Co.,1 H. & J. (Md.) 279. K I, , yy if The Policy. 147 bore to the value of the whole lot mortgaged with the buildings thereon.i An indorsement upon a policy, so far as it contravenes any pro- vision of the policy itself, controls although the policy is under -seal and the endorsement is not. Thus an endorsement not under ■seal signed by the proper officer of the company, " a permission is hereby granted to assured to remove the personal property insured within to the property now occupied by him, and insured to J. S. by policy No. 832." One of the conditions annexed to and made :& part of the policy provided that " insurance on contents of build- ings shall be taken to include every species of personal property therein." The assured having sued the company in covenant to recover for a loss ; on demurrer, it was held that the risk which iihe policy covered as respects the property in question, continued only so long as it remained in the buildings in which it was at the time the policy was issued ; and the plaintiff, therefore, had no cause of action against the company for this loss, except by virtue of the permission indorsed upon the policy. And that as there was no provision in the policy authorizing the indorsement of the permission to remove the property from the original buildings, said indorsement was a new and distinct contract by parol, upon which the action of covenant would not lie.^ The consideration for the insurance named in the policy was single and entire. The amount of insurance was a gross sum, apportioned upon several distinct items of property, as specified in the policy. It was held iihat the contract of insurance was an entirety, the sole effect of the apportionment being to limit the extent of the insurer's risk, as to each item, to the sum so specified, and when such a policy ■contains a stipulation avoiding it in case the insured mortgages the property without notifying the secretary, a mortgage of a portion only of the property insured, without such notice, avoids the whole policy.^ In an application for a policy of fire-insurance were these ques- tions and answers: "What is your title to the property? Con- tract." " How much insured in other companies ? None." In an action upon the policy. It was held that the fair interpretation of the questions and answers was that plaintiff held the property l)j a contract for the purchase thereof, and had himself no other 1 Teutonia Ins. Co., v. Mund 102. Penn St. 89. 2 Skertzer v. Mut Fire Ins. Co., 46 Md. 506. Tlathv. Farmers, &c. F. Ins. Assoc, 23 Minn. 479. 148 The Risk and its Incideitts. insurance ; and that the fact that plaintiffs vender had an insur- ance upon his interest did not constitute a breach of warranty. Plaintiff signed a blank form of application, which was filled up by the defendant's agent without any knowledge or dictation from plaintiff; there were false answers and statements therein occa- sioned by the carelessness, mistake, or inadvertence of the agent. The policy contained a clause that he who procured the insurance should be held by contract to be plaintiff's agent ; also a condition that the application must be made out by defendant's authorized agent. It was held that there was no warranty binding upon plaintiff, and consequently no breach.^ Conditions in policies. Classification of hazards, effect of. Sec. 58. As has previously been stated, it is competent for the insurer to prescribe the terms and conditions upon which he will assume a risk, and, so long as those conditions are not in violation of law, or contrary to public policy, they are binding and obligatory upon the assured, and any violation thereof by him, releases the in- surer from liability, whether the loss resulted from such violation or not.2 Thus, the insurer may decide what risks are hazardous, extra hazardous or espeoially hazardous, and what are not so, and if they are named and specified in the policy, and prohibited there- in, a violation of the condition avoids the policy, even though in fact such articles or use are not hazardous. The question is not open, whether the hazards of the risk are increased thereby or not. The insurer, by electing to regard it so, and having so declared it in the policy, has precluded all inquiry in that direction, and, if the keeping of ice or water upon the premises was specified as hazardous, the keeping of either, without permission, would avoid the policy as much as the keeping of gunpowder or nitro-glycerine. * ^ Sprague y. Holland Purchase Ins. Co. , 69 iN. T. 128. 2 Wood V. Hartford Ins. Co., 13 Conn. 533. ''Mr. Marshall, in liis work on Insurance, 249, says: "It is quite immaterial for what purpose or with, what view it is made; or whether the assured had any view at all in making it; unless there has been a literal compliance, the assured can derive no benefit from the policy." On p. 251, he says: "It is also immaterial to what cause the non-compliance is attributable, for if it be not in fact complied with, although perhaps for the best reasons, the policy is void. In Faulkner v. Central F. Ins. Co., 1 Kerr (jST. B.) 279, the plaintiff took out a policy upon goods, which con- tained a provision that, if there should at anytime be more than twenty-five pounds' weight of gunpowder on the premises insured, or where any goods are insured, such insurance should be void, and no benefit derived therefrom. To an action for a loss under the policy, the defendant plead a breach of this condition, and the platntiEE replied that the powder was put there vMhout his privity, because a vessel in which it was intended to ship it had sailed without it ; and that he had used every exertion- The Policy. 149 The insurer having contracted upon that basis, the assured is estopped from denying that they are hazardous.^ But, under the rule that the written portion of a policy is to have effect over the printed, if the language used in describing the property insured is such as to import a license to keep any of the articles denominated hazardous, extra hazardous, or specially hazardous, the keeping of such articles, or the use of the premises for such purposes, does not avoid the policy. Thus, where a policy covers " a stock of dry goods and groceries, such as are usually kept in country stores" or simply " groceries," the term carries with it license to keep for sale any article usually kept in country stores of that class, or such as are usually embraced in a stock of groceries, even though it in- volves the keeping of many articles coming under the head of hazardous, etc. ^ But where the policy covers a stock of " merchan- tofind another conveyance without success. Also that it in nowise increased the risk, because before the fire which destroyed the building reached it, the powder was ■all removed and thrown into the harbor, so that no loss or damage was thereby oc- ■casioned to the goods. The court held that the repUcation was bad, and the policy- avoided. "This is," said Chipman, C. J., in delivering the opinion of the court, " a positive and unqualified condition inserted by the parties to prevent the intro- duction of gunpowders, * * * and it seems by the parties to have been regard- ed as a necessary clause, and we cannot but give effect to the words of a contract which seems clearly to manifest the intent of the parties, which they have used. I think, therefore, according to the meaning of the parties, to be collected from the ex- press words of the contract, that on the introduction of this gunpowder the policy became void." In Matsonv. Farm Buildings Ins. Co.,1ZN. F. 310; 22 Am. Rep 149, the policy covered a barn and contained a provision that the company should not he liable for a loss occasioned by the use of kerosene oil, burning fluids or any chemi- f. Y. 16; 43 Am. Rep. 138. * Haijht V. Continental Ins. Co., 92 N. Y. .51. 212 The Risk and its Incidents. ante,^ Miller, J., said : " It is insisted that the policy was bind- ing upon the defendant notwithstanding the premises were vacant and unoccupied. This position is based upon the ground that the defendant had ample opportunity to ascertain the actual condition of the property, and that it must be assumed that he knew, and he is estopped from contradicting that it was issued as such, or that the defendant's agent knew of its condition, or regarded it as immaterial, and made the insurance without regard to its occupa- tion. It is held that a neglect on the part of the insured to make known the fact that the building is unoccupied is not a breach of a condition in the policy avoiding it in case of any omission to make known every fact material to the risk ; that the applicant has a right to suppose that the insurer will make proper inquiries, and that in making inquiries as to material facts he considers all others as immaterial, or assumes to know or waives information in regard to them ; that when he fails to inquire as to occupation, unless there is proof of concealment, it is not evidence of bad faith which will vitiate the policy, and that where no statement is made in the policy as to the occupation, it must be assumed that the in- surance was made without regard to occupation.^ The agent of the defendant testified that for the purpose of making out the policy when no written application is presented, he makes inquiries and memoranda of such matters as he deems important and to suit him- self, and that he did so in this case, and being in the same city and knowing where the premises were situated, with ample opportu- nity to ascertain their condition, it is perhaps a legitimate infer- ence that he did not deem it important or material, and made the insurance without regard to its occupation. At least there was some evidence in this direction, and such being the case, it was a question of fact for the jury to determine whether the defendant's agent knew the condition of the premises, or regarded it as of any consequence, whether the premises were occupied or otherwise, and made the insurance without any reference whatever to the subject of occupation. If he did so, then the condition as to the future vacancy or non-occupation was nugatory and may be re- garded as waived. A contrary rule would be imputing a fraudu- lent intent to the defendant when the policy was delivered, not to 1 Short V. Home Ins. Co., ante. J Browning v. Home Ins. Co., 71 N. Y. 512; 27 Am. Eep. 86; Gates v. MadUon M. Ins. Co., 5 N. Y. 475. The Policy. 213 give a valid and binding policy, although receiving pay for such a ■one, and although plaintiff should labor under the impression that he had one. Such an imputation can only be avoided upon the theory that this condition was overlooked, and the defendant for- got or neglected to express the fact in the policy, or that it waived the condition or held itself estopped from setting it up.^ It is obvious from the discussion had, that there was a serious question whether the policy was binding, although the property was not occupied, and we think the court erred in directing a ver- dict in favor of the defendant, and that the case should have been submitted to the jury, as requested by the appellant's counsel, "upon the evidence in regard to the question last considered." Where a policy provides that, in case the premises shall be " vacated," immediate notice thereof shall be given or the policy shall be void, a substantial occupancy is referred to, and intended, and a person who removes his family from a dwelling-house, cannot save a policy with such a clause, hy leaving some of his furniture or goods in the house. The house is vacant when it ceases to he occupied ■as a dwelliug hy some person or persons who reside there either per- manently or temporarily? In a Massachusetts case,^ a policy upon a trip-hammer shop, and the machinery therein, contained a provision that the policy should be void if the building remained unoccupied for the period of thirty days without notice. During the life of the policy, and for more than thirty days prior to the loss, the shop remained unoccupied for the purpose of carrying on the business of the shop, or for any purpose, but the tools and machinery were there, and the plaintiff's son went through the shop every day to see that everything was right. But the court held that the shop was " vacant and unoc- cupied " within the meaning of the term, and could only be said to ' Van Schoick v. Niagara Fire Ins. Co., 68 N. T. 434; Woodruff y. Imperial Mre Ins. Co., 83 id. 140. 2 Phenix Ins. Co., v. Tucker 92, see 64 Sleeper v. Ins. Co. 56 K H. 401 ; Am, Ins. Co., V. Paddlefleld, 78 111. 167. In Chamberlain v. Ins. Co., 55 N. H. 249, it was held, under the statute providing that a policy should ijot be forfeited incon- sequence of any mistake of the assured, that a neglect to give notice that a build- ing was unoccupied for the space of nine months, was such a mistake as was <;outemplated hy the statute, and that the policy was not thereby avoided ; but "this case, so far as this point is concerned, was directly overruled by the case •cited from the 56th N. H., ante. ^ Keith V. Quincy Ins. Co., ante. Leaving a house vacant seventeen days to Ben- nisonv. Phenix Ins. Co., 52 Iowa 4.57, thirty days Galveston v. Long 51 Tex 89, works a breach of this condition, and leaving the premises vacant and unoccupied Soi any length of time may be said violate the condiLioi;, 214 The Risk and its Incidents. be occupied when employed for some practical use. Lokd, J., in the lower court, charged the jury upon this point, as follows : " It is not sufficient," said he, " to constitute occupancy, that the tools remained in the shop, and that the plaintiff's son went through the- shop almost every day to look around and see if things were rights hut gome practical use must have been made of the building; and if it thus remained without any practical use for the space of thirty days, it was, within the meaning of the policy, an unoccupied building ; " and this ruling was" fully sustained upon appeal. In a more recent case in the same State,i the rule as applied to a dwell- ing and barn, was held to be as stated in the text. " Occupancy," said Colt, J., " as applied to such buildings, implies an actual use of the house as a dwelling place, and such use of the barn as is or- dinarily incident to a barn belonging to an occupied house, or at least, something more than a use of it for mere storage. The insurer has a right, by the terms of the policy, to the care and su- pervision which is involved in such an occupancy." ^ ''■ Ashworthv. Builders,' etc., Ins. Co., 112 Mass. 423 ; 17 Am. Rep. 117. ^ In this case {Asliwortli\. Builders' Ins. Co., amte), the action was for a loss' under a policy upon a dwelling-house, and upon a barn described as " near by " the house. The application signed by the plaintiff, in answer to the question, " How are the premises occupied? " contained the answer, " For farming purposes- by the assured." The proof of loss contained the statement that at tlie time of tlie fire the buildings were unoccupied. The policy contained the following pro- visions : •' If the buildings insured shall be vacated and remain so more than thirty days without the consent of this company. * * this policy shall be void." " Buildings ' unoccupied are not covered by this policy unless insured- as such." The plaintiff in opening the case stated that he should prove that the application was made to the company through the company's agent at Palmer, and that the policy was issued upon it ; that the buildings were situated upon a farm owned and carried on by him ; that the farm did not extend down to the road named in the policy, but that a lane a half mile in length ran from the road to the house and barn ; that the lane was made for communication with the road, and led no further than to the house ; that the house had no other communication with any road ; that the description in the policy of the house and barn was cor- rect, unless the statement that it was situated on the road was incorrect ; that he owned and occupied as his dwelling place, at the time of his application and the issuing of the policy, another house and barn, which were situated on another farm and directly on the road named in the policy, but that he should prove that these were insiired elsewhere at the time of the taking out of this policy ; that he- informed the agent of the defendants, when he made his application, , that the house and barn situated on the lane were the buildings he wished to insure ; that the agent assented and inquired the nearest public road to them, and on being told by plaintiff the road named in the policy, the agent wrote the description contained in the policy ; that at the time of taking out the policy, and up to the time of the fire, the buildings were occupied only as follows : " When the plaintiff was engaged in carrying on the farm contiguous to the buildings, he and his ser- vants took their meals in the house, and the barn was used for the usual purposes of a farm barn for storing hay and farming tools, but cattle were not kept in it ;■ that, at the time the application was made and the policy was issued, he told the agent the nature of his occupation of both house and barn, and the agent issued the policy, knowing all the facts ; that the agent assented to them, and wrote all the written parts of the application and policy ; that in about two months after The Policy. 215 Where a policy contains a provision that " if the premises shall be occupied or used so as to increase the risk, or shall become var cant and unoccupied, or the risk increased hy any other means within the control of the assured,^' etc., the policy will become void ; if the premises are vacated, the assured must show that they be- came so without fault on his part, and hy reason of causes not under his control, as, if the term of the tenant expired, that he had used reasonable efforts to secure another, and failing in such proof, his policy is avoided.^ Temporarily ceasing to occupy premises, which does not con- tinue until the premises were destroyed by fire, does not avoid the policy, nor does the fact that the tenant was absent on the night of the fire amount to a breach of the condition against the premises being " vacant or unoccupied " ^ nor does a mere temporary absence of the occupant.^ Thus, in the case last cited, the absence of the assured from Wednesday until the next Wednesday night, to at- tend a funeral during which time there was no occupant of this house, was held not to operate as a breach of this condition. But in a Tennessee case * a temporary vacancy of four or five days, con- sequent upon a change of tenants, was held sufficient to avoid the ■policy. But the distinction between this and the Pennsylvania case ig, that in the latter the premises did not become vacant, but the actual occupancy was suspended for three or four days by the absence of the family ; a contingency which may fairly be said to have been within the contemplation of the parties, and against which the condition was not intended to apply, while in the former the premises became yacant and unoccupied consequent upon a change of tenants, a condition which could not be said to tie policy was issued, the buildings were destroyed by an accidental iire, and that due notice and proof- of loss were given. The defendant contended that on the proof of such of the above facts as were competent, the plaintiff could not maintain this action, and the court so ruled, and a verdict was thereupon rendered for the defendant, and the case was reported by the presiding judge to the Supreme Court, where the ruling was sustained. ' American Ins. Co. v. Zaengers, 63 111. 464; Kelly v. Worcester, etc., Ins. Co., 91 Mass. 284. 2 Laselle v. Hdboken F. Ins. Co., 43 N. J. L. 468; ^tna Jus. Co. v. Myers, 63 Ind. 238. 'Franklin F. Ins. Co. v. Kepler, 95 Perm. St. 492; Cummins v. Agricultural Ins. Co., 6*7 N. T. 260; Gibbs v. Continental Ins. Co., 13 Hun. (N. T.) 611, * Bidge v. Scottish, etc., Ins. Co., 9 Lea. (Tenn.) 507. 216 The Risk and its Incidents. have been contemplated by the parties.^ In an earlier case in Tennessee ^ a policy of fire insurance was issued upon a furniture factory which contained a condition that, if the premises became and remained vacant or unoccupied for thirty days, " or cease to be operated" the policy should be void. The operation of the factory ceased for several days because of the prevalence of the yellow fever, and it was held that the policy was not thereby avoided. The court held that the claim as to the cesser of the operation of the factory, related to a permanent, rather than a temporary cesser which was unavoidable. In a Connecticut case ^ where the tenant moved out of the house, taking all his furniture, and at two o'clock the next morning the house was burned, it was held that there could be no recovery under a policy containing a condition that the policy should be void " if the dwelling-house hereby insured shall cease to be occupied as such." * Where a J But see Contra, Alston v. Old North State Ins. Co., 80 N. C. 326. 2 Paso V. Western Assurance Co., 7 Lea. (Tenn.) 704; 40 Am. Eep. 68. In. Alkan V. N. II. Ins. Co., 53 Wis. 136, a policy by its terms was to become void if the in- sured premises should become vacant or unoccupied. The property consisted of distillery buildings and machinery, presumably available for no other use; but the policy prohibited that use during its term, (three months), while expressly covering a carpenter's risk. The carpenter work contemplated was finished before the end ' of the term, and the building then remained unoccupied until destroyed. It was held that under the circumstances the insurer would not be heard to allege a forfeit- ure because the premises were unoccupied. 3 Bennett v. Agricultural Ins. Co., 50 Conn. 420. ' In Sonnilora v. Manufacturer's Ins. Co., 44 N. T. S. 220; the defendant in January, 1881, issued to plaintiff a policy of insurance on his household furniture contained in a frame building to be occupied as a private summer residence. In the body of the policy immediately following the description, was inserted in writ- ing the following provision: "It is hereby understood and agreed that the said premises are not to be used as a hotel or boarding-house, and that they are not to be left unoccupied any portion of the year." At the time the plaintiff purchased, an employee of the former owner lived in, and with his family occupied four rooms in one wing of the building, and continued to live there until April 5th, 1881. In March the plaintiff employed H. to take charge of the place as gardener; he was to move there and occupy the same rooms in the wing. On March 22, 1881, H. went to the place and engaged board at a neighbor's, his family not accompanying him, owing to the sickness of his wife. H. slept at his boarding-house, but had the keys of the house and assumed general charge of the place. On April 19th, the buUd- ing took fire from leaves H. was burning on the grounds, and was entirely, consumed with the insured furniture. In an action on the policy it was held, that the build- ing was unoccupied within the meaning of the policy, which was therefore for-, feited by the breach of the warranty, said Gkeen, "According to well settled rules of construction the written agreement in this policy, as to the use and occupation of the premises containing the insured property, must be construed as an express promissory warranty on the part of the plaintiff, in the nature of the condition precedent. An actual and literal compliance with this condition and warranty is essential to the plaintiff's right of recovery. Vewees v. Manhattan Ins. Co., 34 N. J. L. 244; Carson v. Jersey City F. Ins. Co., 43 N. T. S. 300. A dwelling-house is only occupied within such a condition, when human beings habitualiy reside in it, and it is unoccupied when no one lives or dwells in it. The phrase "left unoccu- pied " will not be construed as implying an abandonment or wilful vacation of the The Policy. 217 tenant after moving from a house continued to occupy the barn and carriage house upon the premises, and left some furniture in the house, which were destroyed by fire, it was held to be a ques- tion for the jury whether the house was vacant and unoccupied, i The fact that the premises are vacated without the fault of the owner, as by the removal of a tenant without his knowledge or con. sent, will not prevent an avoidance of the policy. 2 Thus, in a Miss- ouri case ^ the assured, a few days before the fire, went to another city to reside taking a car load of furniture and leaving the bal- ance. She engaged a person to sleep in the house nights. A few days before the fire the latter went away leaving the ieys with a person whom the assured had authorized to rent the house. The house was held to be unoccupied. In an Illinois case * it was held that while the question as to what is meant by the terms ' vacant and unoccupied' is for the court, the question as to whether the premises were at the time of the loss vacant and unoccupied is one of fact for the jury, and the assured having permanently moved from the premises leaving only a bed and bedding, and while he was temporarily absent from the house awaiting the arrival of a person to whom he had let the house, the house was burned, the jury having found that the house was not vacant the verdict was sustained. It has been held in Iowa that if a company knowing that a building is vacant and unoccupied, insures it with a condition that the policy shall be void if the premises are " vacant or unoccupied " it is estopped from setting up a breach of this condition to avoid the policy.^ But in New York 1 a different doctrine is held, and when a summer residence was insured under a policy containing such a provision the insurer knowing that the premises were used only for a summer residence, Folgbr, J., in commenting upon this point said, " But it is said that the defendant made its con- premises, leaving them imcared for, Serrman v. Merchants Ins. Co., 81 N. Y. 184; Merrman v. Adriatic Ins. Co., 85 id. 162. 1 Woodruff y. Imperial F. Ins. Co., 83 K. T. 133. = McClure v. Watertown F. Ins. Co., 90 Penn. St. 211; 35 Am. Kep. 656. » Cook V. Continental Ins. Co., 70 Mo. 610; 35 Am. Eep. 438. ^ Phenix Ins. Co. v. Tucker, 92 111. 64. Williams v. Niagara F. Ins. Co., 50 Iowa, 561; Aurora F. Ins. Co. v. Kranch, 36 Mich. 289; See Contra No. America Ins Co. v. Hotchkiss 108 111.220; Hotch- kiss V. Home Ins. Co., 58 K. T. S. 297. 5 Herrman v. Adriatic Ins. Co., 85 N. Y. 162, 39 Am. Rep. 644 218 The Risk and its Incidents. tract with a view to just the state of things that existed with this property ; that it was chargeable with a knowledge of the character and use of the premises, and that there would be a change of oc- cupancy such as in fact occurred, we cannot yield to that view. It may be that the defendant knew that it was but the place of summer abode for the plaintiff. Its contract was issued in the summer when the property was in strict occupancy, and it pro- vided for the coming of the fall, when that occupancy should be abandoned or modified ; for the policy was not void at once on a cessation of occupancy. That cessation must last for thirty days and be unnotified to the defendants and continue thereafter with- out its consent. There was opportunity for the plaintiff to keep up that indemnity or to get other ; and to the defendant to retaia the risk, or to be freed from it, when that occupancy was about to cease, and notice was given." In a case before the Superior Court of New York, when the condition was that, " if the premises," shall remain unoccupied, the policy shall be inoperative, the word premises was construed as applying to the whole property, and the fact that one of two or more buildings embraced in the policy was^ unoccupied, was held, not to avoid the policy even as to the build- ing not occupied.! But the doctrine of this case was overruled by the Court of Appeals ^ and the policy was held to be invalidated as to the vacant buildings by allowing them to become vacant. This condition does not require that the premises shall be occu- pied by the assured personally, but by some person, therefore a dwelling left in charge of a servant with all its furniture etc., was held not to be vacant and unoccupied within the meaning of the condition.^ Where a policy provides that it shall be void if the building insured is vacated without notice to the company of " the particulars of such vacation or removal " any material false state- ment in reference thereto, will avoid the policy. Thus, in a case where the policy contained such a condition the assured gave notice that the occupant was going away on a visit, hut should not take his household goods. He took substantially, the whole of them, it was held that the policy was avoided.* ^ Herrman v. Adriatic F. Ins. Co , 45 N. T. Superior Ct. 394. 2 Herrman v. Adriatic Ins. Co., 85 N. T. 163; 39 Am. Rep. 644. ^ Herrman v. Merchants' Ins. Co., 4A N. T. Superior Ct. 444; when a person slept nights in a building while it was, being repaired, it was held that it could not be said to be unoccupied, Hartford F. Ins. Co., v. Smith 3 Col. 2, 422. * Hill V. Equitable Ins. Co., 58 K H. 82. The Policy. 219 An applicant for insurance was asked if the mill was in charge of a faithful person residing upon the premises, and he answered that it was. It was held that no recovery could be had for a loss occur- ring while the mill was idle and not in charge of some faithful per- son residing on the premises.^ A by-law adopted by an insurance company providing that policies should be void if the buildings in- sured should be vacant for twenty days, cannot operate against pol- icies issued before its adoption, nor, indeed, can the company by notice or otherwise, impose any conditions upon an insurer with- out Ms consent, except those contained in the policy itself .^ Consenting to the transfer of a policy knowing that the premises are vacant, ^ or even renewing the policy, does not operate as a waiver of the condition against vacancy * but insuring premises knowing them to be vacant, does. ^ Where a policy provides that if the premises shall become " vacant " without immediate notice and indorsement on the policy, if immediate notice of the fact is given to the company of the vacancy, and the company does not cancel the policy, it remains liable thereon although an indorse- ment is made upon the policy. ® The rule is that a continuing ' Miller v. Germania F. Ins. Co. 18 Phila. (Penn.) 551. '' Becker v. Farmer's Mut. F. Ins. Co., 48 Mich 610; said the court, "There is nothing in the recognized law of Insurance which would authorize an Insurance company to so change an existing policy as to create a forfeiture on account of vacancy of the building insured. Leaving property vacant is not such a change of risk as would without express agreement avoid the policy. New by-laws adopted by the company cannot be allowed to destroy express contracts, and a contract once made with a member of a mutual company cannot differ in its essence from one made with any one else. Residence Fire Ins. Co. v. Hanawold, 37 Mich. 103. If the contract was valid when made, there was no power in the cor- poration to avoid its own agreement by one means any more than by another. Existing by-laws are in such cases of mutual insurance very properly regarded as entering into the contract and binding the members, and open therefore to inquiry. But a contract once made with a member cannot differ in its essence from one made with any one else, and he cannot without his consent be brought into changed responsibilities, which import new terms into the agreement Itself. Whatever force new by-laws may possibly have in regard to other matters, they can- not be allowed to destroy express contracts. This principle has been repeatedly recognized as applied not only to by-laws, but to other action of a similar character Ins. Co. v. Connor, 17 Penn. St. 136; New Enyland Mut. Ins. Co. v. Henry, 45 N. H. 290; Hamilton Mut. Ins. Co. v. Hobart, 2 Gray (Mass.) 543; New England Mut. his. Co., V. Butler, 34 Me. 451; Revere v. Boston Copper Co., 15 Pick. 363; American Bank v. Baker, 4 Met. (Mass.) 176. 3 North American Ins. Co. v. Garland, 108 111. 220. « Hotchkiss V. Home Ins. Co., 58 "Wis. 297. * Aurora F. Ins. Co. v. Kranch, 36 Mich. 289. " Wakefield v. Orient Ins. Co., 30 Wis. 532 American Ins. Co. v. Foster, 92 111. 331 But Contra see Dennison v. Phoenix Ins. Co., 52 Iowa 457. 220 The Risk and its Incidents. warranty in a policy of insurance, the breach of which (whether injurious to the insurer or not) avoids the policy, being in the nature of a forfeiture, must be construed as strongly against the insurer, and as favorably for the insured, as its terms will reasonably permit.^ Therefore when a fire insurance policy declares that if the premises shall become vacant " without immediate notice to the company, and indorsement made on the policy," the contract of insurance shall become void and also provides that the insurance "may also be terminated at any time at the option of the company, by giving a written notice to that effect to the insured," and that " in such case the assured shall be entitled to claim a ratable proportion of the premium," etc., it was held that the zWorsemewi here mentioned cannot be construed to be an indorsement of the consent of the compa- ny to a continuance of the insurance during such vacancy but merely of the fact that notice of the vacancy had been given, and that where such a notice has been promptly given, if the company would relieve itself from further liability on the policy, it must notify the insured of its option to do so, and return the unearned part of the premium. The want of such notice from the insurer to the assured is not waived or cured by knowledge on the part of the assured that the insurer's agents had general instructions not to carry pol- icies in such cases. ^ By a condition in a fire policy on a dwelling it became void if the house should " become vacant or unoccupied without the assent of the company. The insured used the premises as his own dwell- ing. About ten days before a fire by which jt was destroyed he received a despatch summoning him to the bedside of his dying daughter, in another State, and with his wife left the house alone, and did not return until after the fire. A son who lived near by, under the direction of insured, visited the house daily during his absence to look after the premises and stock thereon. It was held that the house was not " vacant or unoccupied, within the terms of the policy.^ 1 Lowe V. Hyde, 39 Wis. 345; Lyman v. Babeock, 40 id. 503; Morse v. Ins. Co., 30 id. 534, 540; Appleton Iron Co. v. B. A. Ass. Co., 46 id. 23, .32; Ins. Co. v. Wright, 1 Wall. U. S. 468; Western Ins. Co. v. Cropper, 32 Penn. St. 351; Hoffman V. 7ns. Co., 32 N. T. 414; Clinton v. Ins. Co., 45 id. 454, 464; Livingston v. Stickles, 7 Hill. N. Y. 255; Cullen v. Springfield Ins. Co., 1 Sum. TJ. S. 43, 44; Breasted v. Farmer's Loan & Trust Co., 8 N". Y. 305; Veaton v. Fry, 5 Cranch. U. S. 341; Nat. Bank V. Ins. Co., 5 Otto, 678; Smith v. Ins. Co., 32 N. Y. 399; Boon v. ..^tna Ins. Co., 40 Conn. 586; Schunck v. G. i|^. & W. F., 44 Wis. 369. 2 Boone v. ^tna Ins. Co., 40 Conn. 586; Wakefield v. Orient Ins. Co., ante. * Stupetski V. Continental Ins. Co., 43 Mich. .373, 38 Am. Rep. when the condi- The Policy. 221 A " ten-tenement frame block," or what are termed apartment- houses or French flats, are held not to be " unoccupied " within the meaning of insurance policies while two of the tenements were in actual use and occupation as residences.^ Where the only occupancy of an island hotel at the time of its loss by fire was by two workmen, who took their meals and were employed elsewhere during the day, but kept their trunks and clothing and slept at night in one of the rooms, it was held that this would not justify a jury in finding compliance with a warranty in a policy of insurance, that " a family live in said house through- out the year." ^ The agent of a company upon being informed that a house in- sured by him was vacant, replied " all right " and it was held that this operated as a waiver of any breach of the condition on ac- count of vacancy.^ A temporary suspension of actual business in a mill or other manufacturing establishment, resulting from a de- rangement of machinery, etc., does not render the mill vacant and unoccupied.* By allowing the premises to be vacant, the policy is suspended and re-attaches upon the the re-occupation of the premises.^ Where the owner of a dwelling, who, after a tenant has vacated the premises, moves his furniture into and cleans up the house with an intention of making it his residence, but during that time does not actually occupy it at night, subsequently leaves it tem- porarily on business, and puts a party in possession until his re- turn, the house cannot be considered as " vacant or unoccupied," within the meaning of a clause in the policy providing that if the tion is that the policy shall be void if the premises are left " vacant and unoccupied" a removal of the owner temporarily, with the intention of returning within a few months, leaving the house furnished, and engaging a person near to look after it, does not operate as a breach of the condition, Herman v. Merchants' Ins. Co.. 81 K. T. 184, 37 Am. Rep. 488, Cummins v. Agricultural Ins. Co., 57 K. Y. 260, it was held that a removal by a son and his family to his father's house in the neighbor- hood of his own, to remain with his mother in his father's house while she needed their company, but with the intention of returning to his own house, which was not dismantled, was not a vacating by removal of the son's house, although the ab- sence actually continued about three months. But see Herrman v. Adriatic F. Ins. Co.. 86 N. Y. 162, 29; Am. Rep. 644. ' Sarington v. Fitchburg Mut. F. Ins. Co., 124 Mass. 126. ^ Poor v. Humboldt Ins. Co., 125 Mass. 274. ' Palmer v. St. Paul F. & M. Ins. Co., 44 Wis. 201. * Whitney v. Black Biver Ins. Co., 72 N. Y. 117. 5 ^tna Ins. Co. v. Meyers, 63 Ind. 238. 222 The Risk and its Incidents. * insured building shall " be or become vacant or unoccupied " the policy shall be void unless consent in writing is indorsed thereon, and he will be entitled to recover for a loss occurring during such temporary absence. In contemplation of law his occupation of the house would have been continuous.^ The only question in such a case, is whether the fact that for the few days the assured re- mained at home before starting on the business trip she did not sleep in the house or take her meals there should make any difference. In a Michigan case,^ Coolby J., said : " Under the cir- cumstances we think not. The insured had taken possession of the house, as the jury must have found, for the purposes of permanent occupancy. She had moved in her household furniture and other goods, and was cleaning and doing other work preliminary to liv- ing there in person. Nothing apparently was wanting to com- plete personal possession, except that she lodged and took her meals at her father's, a few rods off. Those facts were not con- clusive against her occupancy. It could not be justly claimed, we think, that if a family, for the purposes of cleaning and interior decoration, were thus to sleep and take meals at a neighbor's, while busy in the house in working hours, they would in doing so vacate the house. But the case of such a family would be analog- ous to that of the party insured in this case. Cases are cited and relied upon on the part of the defense which we think are distin- guishable on their facts. The Wisconsin case ^ was the case of a policy of insurance, which by its terms required unoccupied property to be insured as such. The building insured was not occupied, but was not insured as unoccupied, and the policy was held inoperative for that reason. In the Massachusetts case * it was decided that merely using a home for the purpose of taking meals in it was not occupancy within the meaning of an insurance policy. Occu- pancy," it was said, "implies an actual use of the house as a dwelling-place." " The insurer has a right, by the terms of the policy, to the care and supervision which is involved in such an oc- cupancy." This we think is true ; but as we have seen, it does ' Stupetski V. Transatlantic Mre Ins. Co., 43 Mich. .373, 5 N. W. Rep. 401; Cum- mings v. Agricultural Ins. Co., 67 N. Y. 260; Herman v. Merchant's Ins. Co., 81 id. 184; Phmnix Ins. Co. v. Thicker, 92 111. 64; Bennison v. Phoenix Ins. Co., 52 Iowa, 457; 8 N. W. Rep. 500. 2 Shackleton v. Sun F. Ins. Co., (Mich.) 21 N. W. Rep. 343. ' Wustum V City Fire Ins. Co., 15 Wis. 138. * Ashworth v. Builders, etc., Ins. Co., 112 Mass. 422. The Policy. 223 not follow that the presence of the occupant in the building should be continuous and uninterrupted. The necessity for temporary- absences on business, or for family convenience or pleasure, is recognized, and the insured is understood to contemplate an assent to them. In a later Massachusetts case ^ the question was whether a tenant who had occupied a house, but had moved with his family out of it and was taking his meals elsewhere, could be said to be occupying it merely because some of his furniture remained in it, and he had not surrendered the key ? It was very properly held he could not.2 " Vacant or unoccupied."—" "Vacant and unoccupied." Sec. 92. A broad distinction is made between a condition that ■" if the premises shall be left vacant and unoccupied," and a con- •dition " if the premises shall be left vacant or unoccupied." In the former case both elements, to wit, vacancy and non-occupancy must concur,^ while in the other either vacancy, or non-occupancy avoids the policy.* In this case Folgbk, J., referring to the de- cision of the court in the case cited in the previous note, pointed out the distinction thus : " The decision went not on the ground that the two words were used to mean, or that they meant the same condition of the building, but that with the use of the copu- lative conjunction with them there was a contract framed of which there was no breach unless the house was at the time in the •double state expressed by the phrase ; that is, both vacant and ■unoccupied at the time of the fire." In the case cited from the •81st N. Y., the condition was "vacant and unoccupied," and the assured having left his furniture in the dwelling — which was used as a summer residence, — and left it in the care of a person residing near it, it was held that the condition was not broken, because, al- though unoccupied, it was not vacant. Earl, J., said, " We should have had a different question for consideration if the condition had been that the policy should become void if the house should become " vacant or unoccupied," or simply " unoccupied." Here 1 Corrigan v. Conn. Ins. Co., 122 Mass. 298. 2 Herman v. Adriatic Fire Ins. Co., 85 ST. T. 162. ' Herman v. Merchants Ins. Co., 81 N. T. 184. 37 Am. Rep. 488. * Herman v. Adriatic Ins. Co., 85 K. T. 162. 39 Am. Eep. 644. An express waiver of this condition by parol is binding on the company. Same in Adams v. 224 The Risk and its Incidents. we have the two words joined together, " vacant and unoccupied ;"■ and what do they mean ? They should not be taken in any tech- nical or narrow sense. They need not be taken in the sense in which they may have been understood by underwriters, as both parties to this contract were not underwriters, supposed to be fa- miliar with the meaning of such words when used in the business, of fire insurance. But they must be taken in their ordinary sense, as commonly used and understood ; and if the sense in which they were used is uncertain, as they are found in a contract prepared and executed by the insurer, they should be construed most favor- ably to the insured.! "We do not progress much by ascertaining what the insurer meant by these words ; but we must endeavor to ascertain how the insured understood and could properly un- derstand them — in other words, the meaning which they convey to the common mind. A dwelling-house is unoccupied when no one lives therein, but is not then necessarily vacant. A house filled with furniture throughout cannot be said to be " vacant," the primary and ordi- nary meaning of which is " empty." To avoid the policy, the premises must not only be unoccupied but also vacant. Force should be given to both words. This is not a casual contract drawn in haste, in which language has been carelessly used ; but is a form of contract used by the defendant in its business, prob- ably adopted with great deliberation, every word of which, as we may suppose, has been carefully weighed. It was not intended that mere non-occupancy should avoid the policy ; if it had been, it cannot be supposed that the word " vacant " would have been superadded. It is not necessary to hold that a house with a few articles of furniture in it, from which the owner or tenant has re- moved, with no definite intention of returning, might not be re- garded as vacant, or found to be so by a jury. It is sufficient to hold that a house thoroughly furnislied, from which the owner has removed for a season, intending to return again and resume pos- session, is not, in any proper sense, a vacant house. There are many houses in and about the city of New York, and elsewhere. Greenwich Ins. Co., 9 Hun. (N. T.) 45, assured notified the secretary of the com- pany that the house was vacant, and requested him to endorse it on the policy, and he said: " We waive all that," and the court held that the company was bound by the waiver. See also Walsh v. Hartford Ins. Co., 9 Hun. (N. Y.) 424. 1 Hoffman v. ^tna Ins. Co., 32 N. Y. 405 Bann v. Home Ins. Co., 59 id 387. The Policy. 225 which are occupied only in the summer as summer residences, or only in the winter as winter residences, the furniture remaining in them all the time ; and for aught we know, these two words were adopted with a view to insurances upon such houses. These precise words in conjunction have not often come under consideration in the reported cases. In a North Carolina case ^ there was a condition in the policy like the one under considera- tion. A tenant who was in possession of the house removed there- from December 16, 1876, leaving some of his furniture in the house, and no one lived in the house thereafter until January 29 of the next year, when the house was destroyed by an incendiary fire. It was held that the policy was violated and avoided. It did not appear how much furniture was left in the house. As the oc- cupancy had been by a tenant who had removed, the quantity was probably small ; and it does not appear that the tenant intended to resume possession of the house, and there was no discussion or question as to the meaning of these two words used in conjunc- tion. In an Illinois case,^ the policy contained the same condition, but the proof showed that the insured premises were not only un- occupied but absolutely vacant. In a later case in the same State,^ there was the same condition in the policy, and the tenant removed from the house insured, and surrendered up the possession and control thereof to the insured. He left in the house simply a table, a crib and a straw tick belonging thereto, without, so far as appears, ever intending to return to the house or take the property thus abandoned. It was properly held that the house was vacant and unoccupied. It is true that the judge writing the opinion said (and I think erroneously) that to comply with the condition, some one must live in the house, and that such is the popular meaning of the words used. He said further : " For some pur- poses, the law might regard the leaving of a few such articles in a house as carrying with them possession in their owner, but in such cases, there must be an intention to thus take and hold possession ; but here there was no such intention by the tenant. On the con- trary, he disclaimed all possession ; but such possession is not oc- cupancy, in the popular sense." In a recent case in Wisconsin,* when a policy contained a pro- ' Alston V. Ins. Co., 80 N". Ct. 326. ^ North America F. Iiis. Co. v. Zaenger, 63 111. 464. 3 Am. Ins. Co. v. Padjiem, 78 111. 167. * Fitzgerald v. Conn. F. Ins. Co., (Wis. S. C.) 25 N. E. Kep. 785. 15 226 The Risk and its Incidents. yision as to occupancy similar to that in the New York case last cited, it was held that a farm house which was only occupied by the men working the farm during the time so employed, for cook- ing their meals, and sleeping, is not occupied within the meaning of the term. Dwellings — warranties in present! and continuing. Sec. 93. The fact that a building is described in the application as a " dwelling," does not imply that it is occupied ; and the ques- tion whether the failure of the insured to disclose the fact that it was unoccupied was a fraudulent concealment of a material fact is a question for the jury, and their finding is conclusive.^ ^In Sill V. Hibernia Ins. Co., 10 Hun (N. Y.) 26, the defendant Issued to the plaintiff a policy of insurance on the 5th of January, 1874, to expire in one year. The subject of the insurance was " the two-story frame dwelling, composition roof, standing detached on the west side of Bennett avenue, about 125 feet north of Duryea avenue, East New York, Long Island." The house was entirely destroyed on the 17th of June, 1874. At the time of the insurance this house was vmocoupied, and so continued until the fire. The house stood about seven feet from another house. Upon the trial the defendant offered to show that the words " standing de- tached " in a policy meant, " amongst insurance men generally," that the subject of the insurance should be at least twenty-five feet from external exposure. This offer was rejected, and the plaintiff had a verdict. The defendant made two principal objections to the recovery: First. That the word "dwelling" in the policy im- ports a warranty that the building was then occupied as a dwelling, and being broken, the policy was void. Second. That it was error to exclude the evidence as to the special meaning of the words "standing detached." Baknabd, P. J., said: "If the policy is made out different from the application, the policy should conform to it. XJarroU, defendants' agent, does not deny that there was a written application, but says that Bond left it — importing that Bond drew it. No matter who drew it, the evidence is conclusive, that the written paper contained a statement that the house was unoccupied. Bond says Carroll drew it from what he stated, and that the fact of the house being unoccupied was a part of it. Carroll says, I don't remember Bond telling me so, but ' he left a written memorandum of what he wanted.' In filling out the policy, Carroll was defendants' agent, and his error in filling out the policy should not destroy the policy. Rowley v. TAe Empire Ins. Co., 36 N. Y. 550. As to the second objection taken by defendants, there are two reasons why it should not prevail: First. There is no ambiguity in the words ' standing detached.' Second. There is no offer to prove that the particular mean- ing claimed for the words was known to the assured. When the usage is as to a particular trade or profession, a party to be bound by it ' must be shown to have knowledge or notice of its existence.' Walls v. Baily, 49 K. Y. 464." Gilbert, J., said: "The defense in this case seems to be entirely destitute of merit. The company received a verbal notice of the loss immediately after the fire, and nine days after the fire proofs of loss were served, which also contained a formal written notice of the loss. All these were received and retained without objection, and the company put its refusal to pay the loss upon other grounds than a non-compliance witli Jie conditions of the policy in relation to these matters. Such conduct is a waiver of the strict performance of such conditions. The building insured is de- scribed in the policy as a dwelling as and ' standing detached.' This is the language of the insurer; No survey or statement, showing whether the building was occupied or not, or the distance between it and adjacent buildings was required of the assured or furnished by him. The insurance was effected through a broker, who had been engaged in that business twenty years. He testified that he informed the insurer before he effected the insurance that the building was vacant, and that he was will- ing to pay an extra premium on that account. We think that the use of the word The Policy. 227 Where the application describes the property as occupied for a certain purpose, and the application is made a part of the policy, "the statement is a warranty that the building is so occupied at the time when the contract was made, and if untrue, although the real •occupancy was less hazardous than that described, the policy is void. Thus, the application for insurance described the property to be insured as situated in a building occupied by the applicant as a tavern barn. By the terms of the policy, loss or damage was to be paid only " after due notice and proof thereof made by the in- sured in conformity to the by-laws and conditions annexed to the policy ; " and the policy also stated that it was made and accepted subject to the terms, by-laws, and conditions of the company, which were to be resorted to to explain and ascertain the rights and lia- bilities of the parties. One of the conditions annexed to the policy was, that as a part of the preliminary proofs, there should be a statement that there had been no alteration or occupation of the premises not assented to by the company, which increased the hazard of the property. It was held that the terms of the policy in connection with the terms of the conditions controlled the con- struction of the contract of insurance, and bound the insured by an agreement that the premises should not be occupied so as to increase the risk after the insurance. Also, that an occupation of a part of the barn as a livery stable was such a change in the use of the premises as was material to the risk, and entitled the com- pany to notice ; and that it was immaterial that the person keep- ing the livery stable was a mere tenant at will of the insured, and subject to be removed at pleasure. ^ Where there is a provision in a policy of insurance of " a dwel- ling-house," that if the building be used for carrying " on any ' dwelling' does not imply that the building is occupied, but if it does, the use of it by the insurer alone does not create a warranty by the assured. The question whether the fact that the building was vacant was fraudulently suppressed by the as- sured, was fairly submitted to the jury, and their conclusion upon it is fully sup- ported by the evidence. The defendants having knowingly insured a vacant build- ing, the condition, that if the building should afterwards become vacant or unoc- cupied, without their assent indorsed on the policy, affords them no shield. That condition by its terms, applies only to an insurance upon an occupied dwelling, which is vacated after the insurance was effected. The building, did stand detached. It was seven feet from any other building. The attempt to show that the phrase ' standing detached' meant that it was distant twenty-five feet, or thereabouts, from any other building, was properly rejected. The phrase is not in the slightest degree ambiguous, and extrinsic proof was not admissible to give it a meaning different from its plain import. A new contract cannot be made Jn that way. Reynolds v. Commerce Ins. Co., 47 N. Y. 605." ^Sobleyy. Dana, 17 Barb. (N. Y.) 111. 228 The Risk and its Incidents. specially hazardous trade or occupation," the policy shall be of no force and effect," and classifying " all workshops, manufacturing- establishments, trades and mills" with certain exceptions as " specially hazardous," is equivalent to a stipulation or warranty that the building shall not be so used, to the knowledge of the policy holder, and the truth or fulfilment of this covenant is a con- dition precedent to his right to recover on the policy, and if the holder of such policy of insurance knowingly permits a part of such building to be used as a workshop for any of the purposes specified as hazardous, even though he continues to reside therein, and calls it " a dwelling-house," such use constitutes a breach of the covenant, and entails a forfeiture of the policy.^ In a Connecticut case,^ a survey embraced in the application c6ntained the following interrogatory : " How are the several sto- ries occupied?" which the applicant had answered as follows: " Unoccupied, but to be occupied by a tenant." " When a policy is issued upon a survey and description of the property, such a. survey and description shall be deemed to be a part of the policy,, and a warranty on the part of the assured." The court held that the answer was not to be considered as a stipulation that the house should be occupied by a tenant, but as a reservation on the part- of the applicant, of the right to have it so occupied, and to avoid the inference that it was to remain unoccupied. The plaintiff, however, offered evidence to prove that he had made all reasonable effort to let the premises, from the time of the insurance in Jan- uary down to the time of the fire, in September following, but without success ; and the court instructed the jury that even if the answer was a stipulation that the iiouse should be occupied by a tenant, yet as no time was specified when such occupancy was to commence, the warranty would not be broken if such occupancy was procured within a reasonable time, and left it to them as a question of fact upon the evidence whether the stipulation was broken by a non-occupation beyond a reasonable time, and the court held that this construction was correct. Permission to violate condition. Sec. 94. When permission is endorsed upon a policy to devote the premises to any prohibited use, or to keep or use any prohib- ^ Gasner v. Metropolitan Ins. Co., 13 Minn. 483. 2 Hough V. City Fire Ins. Co., 29 Conn. 10. The Policy. 229 ited article, the condition to that extent is waived, and if the per- mit contains any limitations accidentally exceeding them, will not avoid the policy. Thus, where seventy-five pounds of gunpowder were permitted to be kept, it was held that the accidental presence of more, did not avoid the policy.^ There is, of course, a distinc- tion between an agreement to assent to a breach of a condition and an actual assent thereto. While a court of equity might en- force such an agreement when it had in good faith been acted upon by the policy holder, yet, a court of law is powerless to do so. Thus, a letter expressing willingness to give consent to the insured's taking out additional insurance was held not to satisfy a condition in a policy that, if the insured takes out other insur- ance without obtaining a consent of the company indorsed on the policy, the policy shall be void.^ But otherwise if the policy had been transferred, and a letter giving consent had been written. Under the usual clause against double insurance, a policy taken out by owner, " loss, if any, payable to " mortgagee, is avoided by a subsequent policy taken out in another company by the owner for his own benefit ; they cannot be sustained as issued on distinct interests.^ Unla'wful use of buildings — effect upon insurance. Sec. 95. The fact that the insured permits a building to be tem- porarily used for an unlawful purpose, that does not materially increase the risk, as a building insured as a shoe factory to be used for drawing a lottery upon a single occasion ;* or where the build- ing, without the knowledge or consent of the insured, is used by a tenant for an unlawful purpose, as a building insured and rented as a hotel, when it is in fact used as a house of ill fame,^ the policy is not thereby rendered void ; but if the policy specially provides that, in case the building shall be used for any unlawful purpose, the policy shall be void, it will become so, when habitually devoted to an unlawful use, whether with or without the knowledge or con- sent of the insured, as for the sale of intoxicating liquors in States 1 State Ins. Co., v. Hughes, 10 Lea. (Tenn.) 461 2 AUemania Fire Ins. Co. v. Surd, 37 Mich. 11. 3 Van Alstyne v. .Mtna Ins. Co., 14 Hun. (N. T.) 360. * BoardmanY. Merrimack Mut. F. Ins. Co., 8 Cush. (Mass.) 386. ^Hall V. People's Mut. F. Ins. Co., 6 Gray (Mass.) 185. 230 The Risk and its Incidents. where such traffic is prohibited ; ^ and in all cases, where the build- ing is let for an unlawful use with the knowledge of the assured, unless he truly discloses the use to which it is to be devoted, the policy will be void, as where he lets a dwelling-house to be used as a house of ill fame.^ All prohibitory clauses and conditions in a policy are to be reasonably construed so as to execute the actual intent of the parties, rather than the strict letter of the policy. Thus, where, by a clause in the policy, it was provided that "smoking shall be strictly prohibited in or about the buildings," it was held that the mere fact that there had been smoking upon the premises, without the knowledge or consent of the insured, and contrary to his instructions, did not invalidate the policy. All that can be required in such cases is, that the act should be pror hibited by the assured, and reasonable precautions adopted to pre- vent it.^ If a building covered by insurance is Ttnowingly devoted to unlawful uses by the assured, as, if a building insured as a hotel is kept as a hotel without a license, when a license is made neces- sary by law, the policy is thereby avoided if the poKcy provides that " all unlawful business or trade is prohibited."* So too, if prohibited articles are kept or used therein, as if burning fluid is used as an illuminator, when its use for that purpose is specially prohibited.^ Contingent interests not covered unless so expressed. Sec. 96. A contingent interest of the insured in the property of others, will not be presumed to be covered by a policy, unless words appropriate to express such intention are used, when the in- sured has property of his own to which the policy is applicable. Thus, a railroad company procured a policy of insurance upon " all the wood and logs cut and piled along the line of their railroad? from Winchendon, Mass.,.to Peterboro, N. H." i At the time of taking out the policy, as well as at the time of the fire, the plain- tiff had wood cut and piled along the line of its road, upon its own 1 As keeping hotel therein without a license, Campbell v. Charter Oak Ins. Co., 10 Allen (Mass.) 213; selling liquors, Kelly v. Home Ins. Co., 97 Mass. 288. 2 Com. V. Harrington, 3 Pick. (Mass.) 36. Mbtcalf J. in Boardman v. Merri- mack Ins. Co., 8 Gush. (Mass.) 594. 3 The Aurora F. Ins. Co. v. Eddy, 55 111. 213. < Campbell v. Charter Oak Ins. Co., 10 Allen (Mass.) 213. ^ Campbell v. Charter Oak Ins. Co., ante; Cerfy. Home Ins. Co., 44: Cal. 346. The Policy. 231 premises and in its woodsheds, but it never owned any logs. A quantity of wood and logs piled upon the land of the ownier, along the line of the plaintiff's road, were, by sparks from its engines, ig- nited and destroyed, which the plaintiff claimed were covered by the policy, and notice of the loss was duly given. The defendant claimed that the policy only applied to property owned by the plaintiff, and this view was sustained by the court. Ames, J.,i in discussing the question, said : " There is nothing upon the face of the policy to indicate that it was intended to cover anything more than the plaintiff's own property ; prima facie, they were in- sured as owners simply. It is true that railroad companies are' liable for fires kindled by their locomotive engines, and that to' enable them to protect themselves against risk, they are held to have an insurable interest in the property of others exposed to' danger from that cause, but this special and contingent interest is different from that of an owner. Whether it can be insured in' the same form of words, as if the assured were the exclusive owner, it is not necessary to decide. . But where the assured is the owner of property/ such as is described in the contract, we must assume, in, the absence of any indication to the contrary, that he was insured as the owner of that property. If the parties meant anything more than that, they should have expressed their intention in appropri- ate language." By 'w^hat lavr governed. Sec. 97. A contract of insurance is to be governed by the law, of the place where its execution was completed and it became a, binding and operative contract, and not necessarily by the law of the place where dated.^ 1 Monadnock R. M. Co. v. Manufacturer's Ins' Co., 113 Mass. 77. 2 A question of interest in respect to fire insurance contracts arose in the case of Todd V. State Ins. Co. of Missouri, recently decided by the Lancaster, Penn., Com- mon Pleas, and reported in 3 Weekly Notes of Cases, 330. The defendant, a Mis- souri corporation, and having general agents in New York, through such agents insured certain real and personal property situated in New Jersey. Tlie policy of insurance purported to be signed by the president, and attested by the secretary of the company, at Hannibal, Missouri. It contained, however, a condition that "this policy shall not be valid unless countersigned by the duly authorized agents at New York city." It was so countersigned, and the premium was paid to the agents in New York. The question was by what law the contract was to be gov- erned. The court held that it was by the law of New York, following the doctrine enunciated by Lord Eldon in Male\. Roberts, 3 Esp. 168, that " the law of the country where the contract arose must govern the contract." The same rule is followed in Coe v. United States, 6 Peters, 172; Duncan v. United States, 7 id. 435; 232 The Policy. Duty of assured to save property. Sec. 98. When a policy provides that the assured shall use all possible efforts to save the property the burden is upon the defendant to show that he did not, and it is for the jury to say whether the assured did or not comply with the condition. Thu.s, a policy stipulated that the company would not be liable " for any . loss or damage occasioned by neglect to use all possible Efforts to save the property." The complaint, in an action upon the policy averred that the loss was not occasioned by " neglect to use all possible efforts by the plaintiffs to save and preserve the prop- erty." The answer put this allegation in issue. Evidence was given tending to show a breach of the condition. It was held, that defendant was entitled to a charge substantially in the words of the condition.! gy^ i}^q -vvord "possible "in this connection will be construed to mean reasonable efforts, in view of the circumstances. Assignment of policy. Sec. 99. Although a policy provides that an aesignment thereof, without the consent of the company, shall render it void, yet this only applies to an assignment before a loss under it. After a loss, it may be assigned, like any other obligation, against a third per- son, and such assignment does not destroy the insurer's liability. The contract while the risk is active, is personal, and the parties' contract, in reference to the delectus personce of each other, there- fore the obligation cannot be changed without the insurer's consent, but, when liability actually attaches under the policy, the entire relation is changed, and the relation of insurer and insured is changed to that of debtor and creditor, and the delectus persorue of the contract is no longer material.^ And a clause in the policy Pomeroy v. Manhattan Life Ins. Co., 40 HI. 398; Kennebec Co. v. Augusta Ins. Co., 6 Gray, 208; Hubner v. Eagle Ins. Co., 10 id. 131; Daniels v. Hudson River Fire Ins. Co., 12 Gush. 416. In a recent ease in Massachusetts {Thwing v. Gt. Western Ins. Co., Ill Mass. 93), a policy was issued bythe defendant company in New York, and dated there, but it was delivered in Boston, and the premium note was there executed, and it was held that the contract must be governed by the law of Massa- chusetts. See also, Hubner v. JSagle Ins. Co., 10 Gray (Mass.) 131. 1 Ellsworth V. ^tna Ins. Co., 89 N. Y. 186. 2 In Franklin Y. National Ins. Co., 43 Mo. 491, a policy of instu'ance was issued to .John Franklin, payable to P. H. French. After loss, French assigned to the Union Savings Association, and the latter assigned to Jotui Franklin. In an action on the policy by Franklin as assignee of French, it was held that French as payee of the policy had a sufficient interest in the contract to sustain the validity of the policy. It is to be regarded in the same light as if assigned at its inception to The Risk and its Incidents. 233 that the policy shall not be assigned after loss, is null and void, because it seeks to prevent the assignment of a chose in action.^ I^or is it rendered void by a general assignment for the benefit of ■creditors, as such an assignment only includes such policies as the insured could legally assign, and, if he still retains an insurable interest in the property, he will be entitled to recover thereon not- withstanding the general assignment.^ 3lelative rights of mortgagor and mortgagee. Sec. 100. In the absence of any special contract therefor, a grantee or his assignee, who has procured insurance with his own money for his own benefit, cannot, after a loss, be required to account therefor to a grantor or assignor who has reserved a right to re- deem or repurchase, as security for a debt.^ Where a mortgagor ■covenants to keep the buildings insured for the benefit of the mortgagee for a certain sum, but without his knowledge procures a policy for a less sum in his own name only, and kept it, and the company, not knowing of the terms of the mortgage, pays the amount of the loss to the mortgagor, the mortgagee had no equit- a.ble lien upon the policy which he can enforce against the com- pany in the name of the mortgagor.* But generally an adjustment of a loss by a mortgagor with the insurance company does not bind a mortgagee to whom the in- surance is payable in case of loss, if made without the knowledge or consent of the mortgagee.^ If, when a policy is made payable to a mortgagee the company Trench with the consent of the company. Miller v. The Hamilton F. Ins. Co., 17 JSr. T. 609; Walters v. Washington Ins. Co., 1 Cole, 404; Courtney^. N. Y. City Ins. Co., 28 Barb. {N. Y.) 116; Carters Humboldt Ins. Co., 12 Iowa, 287; Brichtu v. Jfew York, etc., Ins. Co., 2 Hall (N. Y.) 372; Pennebaker-v. Tomlinson, 1 Tenn. Ch. 598; West Branch Ins. Co., v. Halfenstein, 40 Penn. St. 289; Goit v. National Ins. ■Co., 25 Barb. (N. Y.) 189; Carroll v. Charter Oak Ins. Co., 38 id. 402. 1 West Branch Ins. Co. v. Halfenstein, 40 Penn. St. 284; Carroll v. Charter Oak Ins. Co., 1 Abb. Dec. Ct. of App. (IST. Y.) 316; Mershon v. National Ins. Co., 34 Iowa, 87 ; Courtney v. N. Y. City Ins. Co. , 28 Barb. (N. Y. ) 116 ; Bradley v. Priexto, S Ves. 324. But in Dey v. Poughkeepsie Ins. Co., 23 Barb. (N. Y.) 623, where the policy expressly provided that an assignment "before or after a loss" should avoid it, it was held that the condition was valid ; but the doctrine of this case has been repeatedly repudiated by the courts of New York in later cases. 2 Lazarus v. Ins. Co., 19 Pick. (Mass.) 81. s Mclntire v. Plaisted, 68 Me. 363. * Stearns v. Quincy Mut. Fire Ins. Co., 124 Mass. 61. * Harrington v. Fitchburg Mut. Fire Ins. Co., 124 Mass. 126. 234 The Risk and its Incidents. endorse a stipulation thereon that the policy shall not be invali- dated by any act or neglect of the assured, a breach of any of the conditions of the policy by the assured will not invalidate it. Thus, a policy issued to S. on her dwelling-house provided that,, in case of other insurance, she could only recover upon the policy its proportionate share of any loss. Afterwards, the company in- dorsed on a mortgage held by H. on the premises, that any loss- was payable to H., adding a " mortgage clause," that the insurance, as to the interest therein of the mortgagee only, should not be in- validated by any act or neglect of the mortgagor or owner, and that whenever the company should pay the mortgagee any sum; for' loss claiming that as to the mortgagor or owner no liability therefore existed, the company should be subrogated to all the rights of the mortgagee in any securities held for the mortgage debt, not affecting, however, the right of the mortgagee to re- cover the whole of his claim ; or that the company might, at its- option, pay the whole of the claim, and receive an assignment. At the time of the issuance and the indorsement, S. had other in- surance on the house, of which H. and the company were ignorant. In an action by H. on the policy, it was held that the mortgage clause operated as an independent insurance of H.'s interest, and therefore the clause limiting the company's liability in case of other insurance did not apply, as H. had procured no other insur- ance.^ Mistakes in policies, w^hen may be explained by parol. Sec. 101. When there is a latent ambiguity in a policy, parol evidence is admissible to explain it. Thus, where the insured had a policy upon " hay and grain," which was described as being in a. barn upon the plaintiff's premises, but he had two barns on the place, and the policy did not state which ham was covered by the policy, parol evidence was held admissible to show which barn was; intended to be insured.^ But when the policy is specific as to the property covered, parol evidence is never admissible to prove that, by mistake it was made to cover other property than that intended.^ 2 Hastings v. Westchester F. Ins. Co., 78 N. T. 141, Affd. 12 Hun. (N. Y.) 416; Howard Ins. Co. v. Scribner, 5 Hill (N. Y.) 298. In North British etc. Ins. Co., v. Londan Ins. Co., S. K. 5 Ch. 569. ^ Bowman v. Agricultural Ins. Co., 59 N. Y. 521. 2 Holmes v. Charlestown, etc., Ins. Co., 10 Met. (Mass.) 211 ,• Ewer v. Washing- ton Ins. Co., 16 Pick. (Mass.) 502 ; Miller v. Travers, 8 Bing. 244. The Policy. 235 The only remedy if any, in such a case, is in an action to reform the poKcy.^ Requirements of policy, as to notice or consent, must be complied with. Sec. 102. If a policy provides that if any change in the risk shall be made, or that if " subsequent to the making of the application any new fact shall exist, either by a change or any fact disclosed in the application, the erection or alteration of any building, etc., by the assured or others, or any change made, not named in the ap- plication, and specifically permitted in the policy," the policy shall be void ; the alteration of a building, or any material change therein, made without consent, will invalidate the policy.^ And, in the case of a mutual company, the officers of the company cannot waive express stipulation, of their policies or by-laws which relate to the substance of the contract, although they may waive such as merely relate to collateral matters as proofs of loss, etc.^ But as to all matters relating to the substance of the contract, the officers of the company are powerless to waive the rules established in refer- ence thereto, however much the same might be sanctioned by strict equity.* In all such cases the consent must be obtained in the mode, and from the person designated as authorized to give it % and an agent, authorized merely to take applications, receive cash premiums and issue " a binder " therefor, has no authority to give 1 HuBBABD, J., in Holmes v. Charlestown, etc., Ins. Co., 10 Met. (Mass.) 216. 2 Evans v. Trimountain M. F. Ins. Co., 9 Allen (Mass.) 329. ^ Mulveyv.Shawmut Ins. Co., 4 Allen (Mass.) 116; Priest v. Citizen's Ins. Co., 3 id. 602 ; Buffum v. Fayette Ins. Co., 3 id. 360 ; Brewer v. Chelsea Ins. Co., l4 Gray (Mass.) 208. * Worcester Bank v. Hartford Ins. Co., 11 Cush, (Mass.) 265 ; Loring v. Manu- facturers' Ins. Co., 8 Gray (Ma,ss.)2S ; Pendar V. American Ins. Co., 12 Cush. (Mass.) 469. In Evans v. Trimountain Ins. Co., ante, this doctrine, in a case of great hardship to the plaiatiff, was well illustrated. Thus, the plaintiff tooli out a policy for J800, in the defendant company, containing a provision identical with that previously stated in the text. Being desirous of altering the house, the policy was talien to the office for that purpose. 'Die secretary indorsed a written per- mission up on the policy, as follows: "Boston, February 25th, 1864. Permission is hereby given to the within insured to occupy the dwelling insured by policy No, 1084, by mechanics, for the purpose of making such improvements and alterations- as he may think necessary. The rislc continues on said property and the policy is not vitiated," The secretary and the director to whom application for consent was made being under the impression that the president must sign the contract, retained the policy for the purpose of procuring the president's signature thereto, but neglected to obtain it, and the' building was afterwards burned. In fact, the secretary was the person to sign the consent. The court held that no recovery could be had, because the consent of the company to the alterations was not in- dorsed upon the policy. 236 The Risk and its Incidents. such consent, nor is he a proper person to -whom to give notice of any change, notice of which is required to be given the company.^ Thus where, as in the case last cited, immediate notice was required to be given to the company, in case the premises were vacated, it Avas held that notice to an agent whose powers were limited, as previously stated was not a compliance with the requirements of the policy .2 But where the agent is clothed with power to make and execute contracts of insurance, notice to him, and his assent to changes in the risk, is binding upon the company, unless other- wise specially provided in the policy, because within the scope of his apparent power.^ Must be consequence of ignition. Injury by heat -without ignition, not covered. Sec. 103. Where fire is employed as an agent, either for the or- dinary purposes of heating the building, for the purposes of manu- facture, or as an instrument of art, the insurer is not liable for the consequences thereof, so long as the fire itself is confined within the limit of the agencies employed, as, from the effects of smoke or heat evolved thereby, or escaping thereform, from any cause whether intentional or accidental. In order to bring such consequences within the risk, there must be actual ignition outside of the agen- cies employed, not purposely caused by the assured, and these, as a consequence of such ignition, dehors the agencies.* In the case referred to, the plaintiff was the owner of a sugar manufactory, seven or eight stories high. On the ground floor were pans for boiling the sugar, and a stove to heat them. A chimney or flue extended to the top of the building, and registers were inserted therein upon each floor, with an aperture into the rooms to introduce heat as desired. The upper floors were used for drying the sugar. One morning the fire being lighted as usual, below, the servant, whose duty it Avas to have opened the register, forgot to do so, and as a consequence the smoke, sparks and heat from the stove were entirely intercepted, and, instead of escaping through the top of the flue, were forced into the rooms where the sugar was drying, and from the combined effects of the smoke, 1 Harrison v. Citg F. Ins. Co., 9 Allen (Mass.) 231. ^ = Snow V. Perry, 9 Pick. (Mass.) 542 ; Lohdell v. Baker, 1 Met. (Mass.) 201. ° See chapter on " Agents," * In Austin v. Drew, 4 Camp. 361. The Policy. 237 sparks and heat, the sugar was damaged to the extent of several thousand pounds. The flames were confined within the stove and flue, and no actual ignition took place outside thereof. It was held that the loss was not covered by the policy. " There was," said GiBBS, C. J., "no more fire than always exists when the manu- facture is going on. Nothing was consumed by fire. The plaintiff's loss arose from the negligent managment of the machinery. The sugars were chiefly damaged by the heat and what produced that heat? Not any fire against which the company insures, but the fire for heating the pans which continued all the time to burn without any excess. The servant forgot to open the register by which the smoke ought to have escaped, and the heat to have been tempered." At this point a juryman in- terposed: "If my servant by negligence sets my house a fire, and it is burnt down, I expect, my lord, to be paid by the in- surance office." "And so you would, sir," replied the Chief Justice, " but then there would he a fire, whereas, here, there has been none. If there is a fire, it is no answer that it was occasioned by the negligence or misconduct of servants ; but in this case there was no fire except in the stove and flue, as there ought to have been, and the loss was occasioned by the confinement of heat. Had the fire been brought out of the flue and anything had been burnt, the company would have been liable. But can this be said where the fire was never at all excessive, and was always confined within its proper limits ? This is not a fire within the meaning of the policy, nor a loss for which the company undertakes. They might as well be sued for the damage done to drawing-room furniture by a smoky chimney." The doctrine of this case has been considerably misconceived, both by the courts and by text-writers, and some absurdity and conflict of doctrine has been the result. This, in a measure, and perhaps entirely, has resulted from discrepancies in the report of the case by different reporters, and from a miscon- ception of the doctrine or a misapplication of it by text-writers. For these discrepancies the reader is referred to the following re- ports and text-books.^ The case as given above is, however, be- lieved to be correct, and corresponds with the report of it as given in Holt. N. P. 126, and the doctrine evolved therefrom is, in the main, sustained both by Marshall, vol. 2, 3d ed., 790, and by Beau- 1 Austin V. Drew, 6 Taunt. 436 ; 2 Marshall on Ins. 130 ; Ellis on Ins. 25 ; Beau- mont on Ins. 37 ; Hughes on Ins. 507-511. 238 The Risk and its Ixcidents. mont, 37, and is the doctrine held by all the better class of both English and American cases.^ Explosion, loss by. Of the loss. Sec. 104. There must he an accident by fire, to lay the foundation of a claim. By this it is not meant that the property itself must have been on fire, but that there must have been either an ignition of the property itself, or of other substances or property near to it, which was the proximate cause of the logs. Fire must have been the proxi- mate cause of the loss. This rule does not require that the property itself should have been burned by the fire, or even injured directly iy fire at all, but simply, that fire must have been the proximate cause of the injury. Thus, an injury to buildings by lightning, when actual ignition does not transpire, is not within the loss covered by ordinary policies ; ^ and the same is true of a building 1 In Millaudon v. New Orleans Ins. Co., 4 La. An. 15, the policy covered sugar, in the plaintiff's sugar manufactory. The boiler used in the manufacture thereof exploded, and seriously damaged the sugar. The boiler exploded from excessive heat. Held, that the loss was not within the policy. Kenniston v. Ins. Co., 14 N. H. 341 ; Perrin's Admrs. v. Protection Ins. Co., 11 Ohio, 146 ; Grim v. Phenix Ins. Co., 1.3 John. (N. Y.) 451 ; Jameson v. Eoyal Ins. Co., 7 Irish L. E. 126 ; Geisick v. Crescent, etc., Ins. Co., 19 La. An. 297 ; Babcock Montgomery, etc., Ins. Co., 6 Bark. (N. Y.) 637. ^ In Babcock v. Montgomery Ins. Co., 6 Barb. N. T. 637, the court reviewed the questions involved in this class of cases, in a very thorough and able manner. In that case the building was rent and torn to pieces by lightning, but without being burnt, and the question was, whether the insurer was liable as for a loss by fire. The court held that there was no liability. Pratt, J., said: "This action was brought upon a policy of insurance against loss by fire. The word iire, in contracts of this kind, should be construed in its ordinary signification. 6 Bac. Ahr. 658. It should not be confined to any technical and restricted meaning which might be applied to it upon a scientific analysis of its nature and properties, nor should it receive that general and extended signification which by a kind of figure of speech is sometimes applied to the term ; but it should he construed in its ordinary popu- lar sense. Nor is the damage, for which fire insurance companies are liable, to be confined to loss by actual burning or consuming ; but they are liable for all losses which are the immediate consequences of fire or burning. City Fire Ins. Co., v. Corlien, 21 Wend. 367. Thus, goods injured by being removed to save them from fire, or by water in extinguishing a fire, are within the provisions of the policy. So other cases migUt be mentioned, where tlie insurers are liable for damgaes which can be traced directly to fire as the immediate cause of the loss, and yet the insured article itself be in no danger of being burned or consumed. But giving to the plaintiff in this cause the benefit of the most liberal rule yet established by legal adjudication, I am wholly unable to arrive at the conclusion that tlie damage done to the plaintiff's house was a loss within the provisions of the policy. "First. The plaintiff has the omis pro?)anc7/ upon himself. In order to entitle him to a recovery he must prove that the loss was occasioned by fire ; and as the building was not consumed nor set on fire, be must be able to show that electricity of sufficient intensity to rend a building, is fire, in the popular and ordinary sig- nification of the terra. It is not sufficient to show that fire is one of its constitu- ent principles. He must be able to demonstrate that the rending and destruction of the building were the result of that particular principle. That I think cannot be done in the present state of the science of electricity. It can neither be proved The Policy. 239 or property destroyed by an explosion from gunpowder,^ steam boilersj^ or from any cause when actual ignition does not transpire that fire, in Its ordinary signification, is a constituent element in electricity ; nor if that be so, that its mechanical or rending effects are the consequences of such rSie. Of the actual nature of what we call electricity, but little is pretended to be Tmown with certainty. It is even a disputed point among scientific men, who have made it the subject of their investigation, whether it be an actual fluid, or merely a property of other matter. Ed. Ency. tit. Electricity. The only real knowledge which we possess, in relation to it, is a knowledge of its properties derived from observation of its effects. We find that under certain conditions it exhibits phe- nomena, or effects, whicli are the most wonderful as well as the most powerful -within the observation of man. These phenomena are divided, by writers upon the science, into three classes, the mechanical, the cliemical and the magnetical ; and some writers add a fourth, termed the physiological. Ed. Enc. tit. Eleetri- ■city ; Sturgeon's Lectures on Elec. 124. When the fluid (if we may be allowed the expression) is excited to a high degree of intensity, the mechanical effects of an ■electric discharge are manifested by perforating or rending any non-conducting substance against which such discharge may be directed. Excited to a high degree •of intensity, its chemical effects are also manifested by fusing metals, and igniting ■combustible substances. These effects belong to different classes of phenomena, and are, for aught we know, entirely distinct in their character. I liave not been able to find any writer, nor was our attention on the argument directed to any author, who insists that the mechanical effects of electricity are produced by its calorific properties, except M. Arago. His theory was that the explosive effects of lightning were caused by its heating properties upon the water and moisture con- tained in the subject of the explosion. But this theory has not been generally adopted. See Lardner's Lectures, subject Electricity. Whilst it is admitted that jiothing is absolutely known of the method by which heat is evolved in electric phenomena, the theory which is the most generally adopted makes it the result, and not the cause, of the mechanical action. Ed. Enc. tit. Heat. Mr. Sturgeon an able and lucid lecturer upon the subject of electricity, suggests the existence of two separate fluids which prevade all matter — the electric and the calorific ; that heat is evolved, and ignition produced, by the mechanical action of the electric fluid upon the calorific. Stur. Lee. p. 162. Without assenting to any of the numerous theories wliich have resulted from speculations upon the subject by men of science, I only allude to them to show that nothing is known with sufficient certainty to form a basis for legal adjudication. I may remark, in passing, that it is with a considerable degree of diffidence that I dissent from the positions taken by the learned jurist, Judge Willard, who has written an opinion upon the points involved in this case, and which was cited upon the argument. If I understand the position taken by him, it is that if the lightning had not torn the building to pieces it would have set it on fire, and hence he deduces an argument in favor •of holding the company liable. In the first place, I am unable to find any ■evidence that there was any such alternative in the case. The phenomena of nature are constant: like causes produce like effects; and there is no evidence that the electric fluid wlaich demolished the house was, under the existing circum- stances, capable of setting it on fire, or exhibiting any different phenomena from those which it did exhibit. In the second place, if it were so, it would not alter the case. The contract of the insurers was to indemnify the insured against loss by fire. It by no means follows that they are liable for the damage done by "violence to the insured property because the agent by which the violence was ef- fected might have set it on fire. A heated ball or bombshell may injure the building against which it is hurled. It would not do to hold the insurers liable, because, if the force which caused it to perforate the wall had been less, or the lesistance greater, it might have lodged in the walls and set them on fire. "Secondly. If it could be demonstrated that the mechanical action of lightning ' Tauntony. The Royal Ins. Co., 2H. & M. 235; Merettv. The London Assurance Co., 19 C. B. (N. S,) 126. 2 Millaudon v. New Orleans Ins. Co., 4 La. An. 15, 240 The Risk and its Incidents. unless the explosion itself was occasioned by an accidental burning, or fire.^ Where a policy provided that the company is the result of its calorific properties, it by no means follows that the damage is occasioned by fire. Tlie terms caloric and fire admit of very different significa- tions. One is the cause and the other the effect. That which is termed caloric seems to pervade every material substance. It may be evolved from a snowball or a piece of ice. Fire, on the other hand, is not an elementary principle, but is. the effect produced by the application of heat, or caloric, to combustible substances, Walker says that in the popular acceptation of the word, ' fire is the effect of com- bustion.' It is therefore equivalent to ignition or burning. Unless, therefore, there be actual ignition, and the loss be the effect of such ignition, the insurers, are not liable. Xot that the identical property to which the damage occurred should be consumed, or even ignited, but there must be a fire or burning which is. the proximate cause of the loss. It is immaterial how intense the heat may be; unless it be the effect of ignition, it is not within the terras of the policy. The- heat of the sun often contracts timber, from which losses occur; but they would, not be considered losses by fire. Ellis on Fire Ins, 273; Steph. N. P. 1079; 11 Petersd. Ab. 18. Hence in the case of Austin v. Drewe, 6 Taunt. 436: 4 Camp. 360, it was ruled in the case of an insurance upon the stock of a sugar house, that damage to the stock by the heat of the usual fires in consequence of the accidental mismanagement of the dampers, was not within the policy against loss by fire. GriBBS, Ch. J., ruled, and his ruling was sustained by the court, that if there was a lire it was no answer to say that it was occasioned by negligence or misconduct of servants; but in this case there was no fire, except in the stove where it ought to be, and the loss was occasioned by the confinement of the heat, and not by fire. " Thirdly. The terms of the policy exclude the idea that It was intended to cover damage by lightning when there was no ignition. The words of the policy are that the company will be liable for fire by lightning. 1st. If the company intended to insure against all damage by lightning, it seems strange tliat they should have used that form of expression — that they had not used tlie phrase directly, ' damage or loss by lightning.' If the word fire includes in itself lightning, then one of tliose words was entirely superfluous. It seems obvious to me, therefore, when the: parties to the contract make use of the term ' fire by lightning,' they use the term lightning not as fire itself, but as an agent capable, under certain circumstances, of causing fire. 2d. The use of the same expression, in the books, strengthens this position; for the parties will be deemed to use the term in its legal acceptation. Ellis on Fire Insurance, page 25, says ' that it is sometimes expressly stated to remove any doubt, thougli little could exist, that losses occasioned by fire from, lightning will be made good.' Kent, in a note to his Commentaries, third volume,, edition 1886, says that it has been usually held that losses by fire from lightning are within the policy. It is hardly probable that two writers so correct in the use of language would put in the word fire where it would be utterly superfluous if they did not mean convey the idea of ignition or burning by it. Lord Ellenborough said, in Gordon v. Beminyton, 1 Camp. 123, ' Fire is expressly mentioned in the policy as one of the perils against which the underwriters undertake to indemnify the assured, and if the ship is destroyed by fire it is of no consequence whether this was occasioned by a common accident, or by lightning, or by an act done in duty to the state.' 1 Phil, on Ins. 632. And in the Traits des Assurance Terrestes, by De Qtierault, cited by Judge Willard, I infer it is used in the same sense. I have not had access to the work, but in the citation by the learned judge, the term lightning is evidently spoken of as the cause of fire, and not fire itself. 'La campagnie assure contre I'incendie meme contre celui provenant du fue ciel,'^ as I translate it, reads, ' The company insures against burning (conflagration) even against that which proceeds from lightning.' So also Potheir, in his Traite du Contract d'assurance, chapter 1. under the head of fire, says, ' Les assurers en sant tenus, lorsquec'est par un cas forfuit comme par le feu du ciel on dans un combat ' Scripture v. Lowell, etc., Ins. Co., 10 Gush. (Mass.) 3.56; ffaywardv. London, etc., Ins. Co., 7 Bos. (N. Y.) 38.5; Waters v. Louisville Ins. Co., 1 McLean (U. S.) 275; Greenwald v. Ins. Co., 3 Phila. (Penn.) 52; Citizen's Ins. Co., v. Glasgow, 9 Mo. 406; Perrin v. Protection Ins. Co., 11 Ohio, 147. The Policy. 2il would not be liable for a loss caused by explosion, except by such fire as should result therefrom, nor for that unless the privilege was given in the policy to keep the explosive substance. There was in the premises an explosive material, known as flour dust, which was necessarily present, and which exploded on being reached by fire, destroying and consuming the premises. It was held, that the company was liable for the loss.^ In a Louisiana case ^ an insurance policy provided that the insurer should not be responsible for losses occasioned by explosion. In a suit for a loss, it appeared that there was an explosion, from which followed a fire. The fire was apparently extinguished, but it broke out again twice within forty-eight hours. It was held that the loss from the two last fires, as well as from the first fire, must be presumed to have resulted from the explosion, the contrary not having been proven. The rule where an explosion is occasioned by fire, is thus formulated by Cushing, J,^ " Where" said he, " the effects produced are the immediate results of the action of a burning sub- stance in contact with a building, it is immaterial whether these results manifest themselves in the form, of combustion or explosion, or of both combined. In either case, the damage occurring is by the ac- que le feu a pres au vaisseaiu' ' The insurers are liable when the vessel takes fire by accident, as by lightning, or in battle.' In marine policies losses by fire and by perils of the sea are usually specially mentioned as losses for whicti the insurer- will be liable. Among the former is uniformly classed burning or fire by lights ning; and among the latter, damage by lightning. Philips on Insurance, speaking of marine policies, under the head ' loss by fire ' (vol. 1, p. 631), says, ' That the insurers are answerable for the loss when the property is consumed by lightning or takes fire in an engagement with another vessel ; ' citing Pothier. And under the head, perils of the sea (p. 635), he enumerates 'losses by the winds, waves, lightning, rockshoals,' etc. See 2 Bac. Ab. 661. 3d. The practice of other com- panies, to the by-laws or proposals of some sixteen of which we were referred upon the argument, instead of weakening, strengthens the view which we have taken of the construction of the present policy. Doubtful terms in a written instrument are to be construed according to the ordinary usages of trade. The practice and usage of so many companies restricting their liability to losses occasioned by actual burning by lightning shows that the general usage is not to be liable for damage by lightning, unless accompanied by burning. A fair construction of those policies would not require that the property should be actually consumed, to entitle the assured to indemnity, but that the lightning should cause a fire, which fire should be the proximate cause of the loss ; the same as a loss by fire in ordinary cases. If that view be correct, I do not see as the terms of the policies in those cases differ, substantially, from that under consideration. Losses from burning by lightning, and losses by fire from lightning, it seems to me, are equivalent terms, and should be construed as imposing upon the parties the same rights and liabilities. We are, therefore, of opinion, that the damage which the plaintiff has sustained is not within the provisions of the policy, and that the defendants are not liable in this action." Kenniston v. Merrimack Ins. Co., 14 N. H. 341. ^Washburn v. Miama Valley Ins. Co., 2 Flip. (IT. S. C. C.) 664. '^ Tanneret v. Merchant Mut. Ins. Co., 34 La. An. 249. i * Scripture v. Lowell, etc., Ins. Co., 10 Cush. (Mass.) 356. 16 242 The Risk and its Incidents. tion of fire and covered by the ordinary terms of a policy against loss hy fire." In this case, the plaintiff was in the possession of a building occupied by a tenant. Tiie tenant's son carried a cask of gunpowder into the attic witliout the plaintiff's knowledge or con- sent, and fired it with a match. The gunpowder took fire, ex- ploded, set fire to a bed and clothing, charred and stained some of the woodwork, and blew off the roof of the house. The court held that the whole damage was within the policy insuring " against loss or damage by fire.* ^ This rule does not include da- 1 Duncan Y. Sun Insurance Co., 6 Wend. (N. Y.) 488; Ch-im v. Phcenix Insurance Co., 13 John. (N. Y.) 451. In Waters v. Merchants Louisville Insurance Co., 11 Pet. (U. S.) 21.3; 1 Bennett's Fire Insurance Cas. 615. Stoet, J., in a very able opinion reviewed the cases and laid down the rule applicable in such cases. He said: "As we understand the first question, it assiunes that the fire was directly and immediately caused by the barratry of the master and crew as the efi&cient agents ; or in other words, that the fli-e was communicated and occasioned by the direct act and agency of the master and crew intentionally done from a barratrous purpose. In this view of it, we have no hesitation to say that a loss by fire caused by the barratry of the master or crew is not a loss witliin the policy. Such a loss is properly a loss attributable to the barratry as its proximate cause, as it concurs as the efficient agent, with the element co instanti, when the jury is produced. If the master or crew should barratrously bore holes in the bottom of the vessel, and the latter should thereby be filled with water and sink, the loss would properly be deemed a loss by barratry, and not by a peril of the seas or of rivers, though the flow of the water should co-operate in producing the sinking. The second question raises a different point, whether a loss by fire remotely caused by the negligence, carelessness, or unskilf ulness of the master and crew of the vessel, is a loss within the true intent and meaning of the policy. By unskilf ulness, as here stated, we do not understand in this insm-ance a general imskilfulness, such as would be a breach of the implied warranty of competent skill to navigate and conduct the vessel, but only imskilfulness in the particular circumstances remotely connected with the loss. In this sense it is equivalent to neligence or carelessness in the execu- tion of duty, and not to incapacity. This question has undergone many discussions in the courts of England and America, and has given rise to opposing judgments in the two countries. As applied to policies against fire on land, the doctrine has for a great length of time prevailed that losses occasioned by the mere fault or negMgence of the assured or his servants, imaffected by fraud or design, are with- in the protection of the policies, and as such recoverable from the underwriters. It is not certain upon what precise grounds this doctrine was originally settled. It may have been from the rules of interpretation applied to such policies containing special exceptions, and not excepting this; or it may have been, and more prebably was founded upon a more general ground, that as the terms of the policy covered risks by fire generally, no exception ought to be introduced by construction except that of fraud of the assured, which upon the principles of public policy and morals was always to be implied. It is probable, too, that the consideration had great weight that otherwise such policies would practically be of little importance, since, comparatively speaking, few losses of this sort would occur which could not be traced back to some carelessness, neglect, or inattention of the members of the family. Be the origin of it, however, what it may, the doctrine is now firmly >■ tabji:;hed both in England and America. TVe had occasion to consider and decide the point at the last term, in the case of The Columbian Insurance Company of Alexandria v. Lawrence, 10 Pet. 517, 518, which was a policy against the risk of fue on land. The argument addressed to us on that occasion endeavored to established the proposition, that there was no real distinction between policies against fire on land and at sea, and that in each case the same risks were included, and that as the risk of loss, by fire occasioned by negligence was not included in a marine policy, unless that of barratry was also contained in the same policy, it followed that as the latter risk was not taken on a land policy no recovery could The Policy. 243 mages resulting from a mere explosion, " not involving ignition and combustion of the agent of explosion, such as the case of steam or te had. In reply to that argument the court made the comments which have heen alluded to at the bar, and the correctness of which it becomes now necessary to ^iecide. "It is certainly somewhat remarkable that the question now before us should never have been directly presented in the American or English courts, namely, whether, in a marine policy (as this may well enough be called), where the risk of fire is taken, and the risk of barratry is not (as is the predicament of the pres- ent case) a loss by Are remotely caused by negligence, is a loss, within the policy. But it Is scarcely a matter of less surprise, considering the great length of time and Mar. Ins. Co., 11 N. Y. 516; 3 Bennett's Fire Ins. Cas., 761 the policy contained a clause providing that "this company will be liable for loss on property hurnthy lightning, Initnotfor any loss or damage by fire happening by means ofanin- va.iion, riot or civil commotion, of any military or usurped power, nor for any loss oc- casioned by the explosion of a steam boiler, or explosions arising from any other cause unless specially spacifled in the policy. The proofs or loss were properly made, and in tliem the fire and the manner in which it originated are stated and described as follows ;" That on the 4th day of February, 1850, a fire occurred in the said building, Nos. 5 and 7 Hague streets, whereby great and immediate loss and damage were sus- tained by deponents, by the injury done to their property insiu-ed as aforesaid. That The Policy. 249 surance against fire contained a condition that if the premises in- sured " be damaged or destroyed by the bursting of a boiler, or the said fire originated on the said 4th day of February, 1850, and was immediately preceded by an explosion of a steam-boiler on the said premises, whereby the walls ■of the said building were mostly thrown down, and the fire which was used in the furnace of the steam-boiler and in stoves in various parts of the said building was -communicated to the frame and woodwork of said building, and the materials and machinery contained therein." At the close of the plaintiifs' case the counsel for the defendants moved the court to dismiss the complaint, on the ground that it ap- peared from the evidence that the insured property was brought into contact with the fire solely by means of the explosion of the boiler, and that thus the loss, so far a.s the same was caused by fire, was occasioned directly by such explosion of the boiler; and that, by the express conditions of the policy, the defendants were not liable for loss so occasioned. The justice granted the motion, aftd ordered judg- jneut dismissing the complaint, and the counsel for the plaintiffs excepted. This judgment was afHrmed by the superior court at general term; and the plaintiffs appealed, and the judgment was affirmed upon appeal. Denio, J., said : "As the sole peril insured against by this policy of insurance was loss or damage by fire, we should naturally expect, in examining exceptions contained in the contract, to find pointed out some circumstances under which the insurers would not hold themselves liable, though a loss by fire should take place. Hence a loss occasioned by invasion, insurrection, riot, and the like, has usually been found excepted in such policies ; and, although in this, and perhaps in policies generally, the exception in this re- spect is in terms of losses by fire, the clause would be equally definite and intelligible if those words were omitted in the clause stating the exception. When, therefore, this policy proceeds to declare that the defendants will not be liable for any loss ' oc- ■casioned by the explosion of a steamboiler,' it refers, prima far^ie to such a loss as by the prior provisions of the contract the defendant s would be bound to indemnify against, and not to one which would not be embraced in the general terms of the policy, and as to which there was no occasion to introduce an exception. The most usual consequence of the explosion of a steam-boiler is the breaking and rending the l)uilding in which it is contained and the movable property therein ; and if this were the only consequence to be apprehended from such an occurrence, the exception in- troduced into this policy would be quite unnecessary, and we may presume it would not have been inserted. It would not be a loss or damage by fire, unless there was ■combustion, and then only to the extent of the damage properly attributable to the •combustion. Millaudon v. New Orleans Ins. Co., 4 Kob. La. E. 1.5. In one sense, it is true, the explosion is the consequence of fire, as steam is created by the applica- tion of heat ; but it is understood that where fire is applied by design, as in culinary and several manufacturing processes, and a loss occurs in consequence of overheating •or other misapplication of fire to the subject upon which it was intended to operate, and the injury is limited to that particular subject, such damage is not considered a loss by fire within the meaning of this class of contracts. Beaumont on Ins. 37, and ^eq. But another very usual concomitant of the explosion of a steam-boiler is, that the place in which it is situated is set on fire. Though this is not universally the •case, it is sufficiently common to constitute a subject of consideration in entering into contracts for insurance. As the furnace is required to be in immediate prox- imity to the boiler, and as the explosion usually overturns and displaces everything in its vicinity, the danger of a loss by burning is very imminent. 1 think, therefore, we must understand by the assertion that the company wiU not be liable for any loss occasioned by the explosion of a steam-boiler, that the defendants contracted for an exemption, not from responsibility for such losses as they would not be bound to make good if no such clause had been insertrd, but for those which, by the preced- ing terms of the policy, they had agreed to indemnify against, and which were very likely to be caused by an explosion. It is true, as argued by the plaintiff's counsel, that the language would have been more distinct and certain if the words, by fire, had been inserted, as in the earlier member of the sentence, where losses Ijy invasion, •etc. , are excepted ; but where we see that the comprehensive words, ' any loss are ■used in the place of ' any loss or damage by fire,' we cannot, upon any authorized Tules of interpretation, hold that a restricted meaning was intended. " Itis also true, as was insisted at the bar, that where the proximate cause of a loss, either in a marine or a fire policy, is one of the perils expressly insured against, 250 The Risk and its Incidents. by explosion from any cause, this policy shall be null and void the instant the casualty by explosion occurs." It was held that the insurer cannot escape responsibility by showing that the property was brought within that peril by a cause not mentioned in the contract. The familiar example of a loss attributable to the negligence of the servants of the assured has recently been before this court, and we have recognized the principle to be as stated by the plaintiffs' counsel. Mattheios v. The Howard Init. Co., 11 N. T. 9. If, therefore, there had been nothing said in this poliOT respecting a steam-boiler, this loss, having been occasioned by fire as its proximate cause, would have rested on the insurers, though it had been shown, as it might have been, that the fire was kindled by means of the explosion. But this principle does not, I think, aid the plaintiffs. The doc- trine is, that the court, will not go back to the remote cause where the immediate one belongs to the class insured against. Hence, as before remarked, the negligence of servants does not relieve the insiu-ers. But suppose, by the very tenns of a policy against fire, the parties agree that the insurers shall not be answerable for losses oc- casioned by the negligence of the servants of the assured, and it isfoimd that a dwel- ling insured had been burned by the neglect of some necessary precaution which should have been taken by the housekeeper of the assured. It would clearly be a. loss within the very terms of the exception, and the insurers would be discharged. The case is the same here. The parties 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. The loss is within the terms of the exception, ac- cording to its popular meaning as well as its grammatical construction, and I do not see anytliing in the nature of the case which would warrant us in indulging in a. criticism which should give the language a different meaning. There is, as was- mentioned on the argument, a possible case where the language in question would not be entirely unmeaning upon tlie construction contended for by th.e defendants' counsel. An explosion may be caused by a fire exterior to the boiler or furnace, and the building and movables may be injured by the force of the steam, though no com- bustion takes place, and it may be true that the insurer would be protected from answering for that loss by the exception in question. But this theoiy requires a set of circumstances so unlikely to happen, that I cannot think that the contract was framed with any view to them. We shall, I am persuaded, be more likely to con- strue the contract according to the intention of the parties by adopting that inter- pretation which is most natural and obvious, rather than to suppose possible cases, very unlikely to happen, and which it is improbable the parties had in view. I am. of opinion, therefore, that the judgment of the superior court should be affirmed. Johnson, J. " The question in this case is, whether the loss sustained by the plaintiffs by the burning of their property, xmder the circumstances of this case, was a loss occasioned by the explosion of a steam-boiler. If it was, the defendants have expressly stipulated that they shall not be charged with it. Several interpretations of the clause in question offer themselves for consideration. In the first place, it may be that the clause was introduced to exclude the mere injury by explosion with- out fire; and that although such an injury is not by law to be borne by an insurer against fire, yet that the insurers thought it wise to guard against tlie possibility of its being considered a loss by fire. That such a loss has been sought to be recovered as a loss by fire, though unsuccessfully (Millaudon v. New Orleans Ins. Co., 4 La. Eep. 15), and that the clause in question immediately follows astipulation in respect to liability for property burnt by lightning, which undeniably is merely a statement of the exact measure of the liability which the law imposes in the absence of any stipu- lation, are grounds for taking the view suggested of the clause in question. Another interpretation suggested applies the exception to damage produced by explosion, when the explosion is caused by a fire which itself comes within the perils insured against; as in case a fire should occur in the engine-room, and its heat should cause the boiler to explode. Upon the interpretation suggested, the damage occasioned would not be re- coverable against the company. Still another interpretation applies the exception to any loss by fire occasioned by the explosion , and so exempts the company from respon- sibility for the loss in this case. This interpretation was adopted by the Superior Court, upon the ground that every stipulation in a contract should be so expounded as to give it some operation, and that this clause could have none unless it was so construed. Though the principle of exposition on which that court proceeded is The Policy. 251 the word " casualty " refers to the damage or destruction of the premises mentioned in the condition, and not to &fire caused by sound, we have already seen that the clause is capable of meaning, without recourse to the particular interpretation put upon it in that court. Neither of these proposed interpretations is entirely satisfactory. The general peril against which the defend- ants undertook to indemnify the plaintiffs was ' immediate loss or damage by fire.' That was the subject-matter, and the only one about which the contract was made. All the defendants' relations with the plaintiffs grow out of that one subject-matter, and any qualifications of their liability, contained in the contract, presumptively re- late to the indemnity which they have contracted to afford to the plaintiffs, and to cases which but for those qualifications would or might be covered by the contract for indemnity. The language used, construing it with reference to the subject-mat- ter, is equivalent to a, declaration on the part of the insurers that they are not to be held responsible for any loss, whether it comes within the general peril of fire or not; and without undertaking to consider whether it does or not, if such loss happen to be occasioned by the explosion of a steam-boiler. This is, I think, the fair sense of the language employed. The prominent intention is to exclude the risk from the explosion of steam-boilers — not the risk merely of the exploding force, but all risk. That peril the insured were content to bear. Among the risks consequent upon, an explosion, the most prominent, next to the direct destruction by the explosive force, is the hazard from the fire of the furnaces and other fires in the building being thrown about among combustible matter. So patent is it, that no one one can con- template the event of an explosion without recognizing this risk as one of the most obvious and important hazards attending upon such an event. Only one casualty happened to the premises and occasioned the destruction of property which the de- fendants are called upon to answer for. That was the explosion of the boiler. The burning was the direct and natural consequence of the explosion of the boiler, al- though it did not necessarily follow that fire would take place. It was as direct a consequence as the falling of the walls would have been in case the explosion had broken but a single timber, and the walls had not fallen for some hours. In such case it might be argued that the explosion broke but one timber, which brought the great weight upon some other, which giving way produced the catastrophe, and that therefore the fall of the whole was not a direct consequence of the explosion. The answer in both cases is, that the resulting destruction followed from the original casualty, without the intervention of any new cause, and followed from the nature and condition of the subject at the time of the casualty. The breaking of the beam in the supposed case, and the scattering of the coals from the stoves in the actual case, are the direct and immediate consequences of the explosion of the boiler; the fall and the fire are the natural consequences, due to no new casualty, but resulting from obvious natural forces, operating under the circumstances produced by the original exploding force. The whole loss in both cases is the immediate consequence of the explosion of the boiler. It was urged upon the argument that as lire was the actual means of destruction of the property in question, the court could not look back beyond the fire, upon the familiar principle, causa proxima non remota specta- tur. It is undoubtedly true, that if the policy contained no exception this loss would clearly have been a loss by fire. There would be no occasion to consider how the fire happened, the parties not having contracted for indemnity against fire occurring only in particular ways, but generally against fire. The existence of the exception ren- ders the inquiry necessary to enable us to say whether the loss is within its terms, and the meaning of those terms we have already considered. It was also argued, that if the parties had intended to except loss by fire occasioned by the explosion of a steam-boiler, those words should have been used ; but that would have narrowed the exception to losses by fire only, whereas the language now used is broad enough to cover all losses so occasioned, whether by fire or explosive force, or in any other way in which losses by the excepted peril could be produced. The judgment should be affirmed." Pakkeb, J. " In this policy of insurance against fire was an excep- tion in the following words: 'This company will be liable for losses on property burnt by lightning, but not for any loss or damage by fire happening by means of any invasion, insurrection, riot, or civil commotion, or of any military or usurped power, nor for any loss occasioned by the explosion of a steam-boiler, or explosions arising from any other cause, unless specially specified in this policy.' It is a question of law whether the facts of the case, which are undisputed, are covered by this ex- 252 The Risk and its Incidents. the explosion. Also that the condition, is valid and unambiguous ; and an explosion and consequent damage to the insured premises terminates the policy. Where the policy contained a provision exempting the company from liability for losses occasioned " by lightning or explosion of any kind unless fire ensues," and then for the loss or damage by fire only ; the plaintiffs were engaged in the business of rectifying spirits. There was a small lamp stand- ing in the building which was brought there by a person engaged in repairing the machinery. The vapor from the works filled the room where the lamp was, and coming in contact with the flame of the lamp, an instantaneous explosion ensued. The roof was blown off, and the principal part of the walls of the building were blown down, and the machinery was greatly injured. Soon after ception of the policy. The policy must/ be so construed, if practicable, as to give ef- fect to all its parts and make them severally consistent with each other. The in- surance being against damage by fire alone, the exception of loss occasioned by the explosion of a steam-boiler would be needless and entirely inappropriate to the subject of the contract, unless it had some reference to damage done by fire. I thinlc this clause was inserted with reference to the agency of fire, not in burning after the explosion, but in causing the explosion itself. All explosions of steam- boilers are referable to the action of iii'e. Without fire there could be no steam and no explosion ; and I think it was to save all doubt as to the question whether the de- struction consequent upon an explosion was caused by fire, that the exception was inserted. That doubt may have been suggested by Waters v. Merchant's' Lous. Ins. Co., 11 Peters, 21-3, and Millaudon v. The JV. 0. Ins. Co., 4 Louis. R. 15. The in- sured premises, having on them a steam-engine and boiler, were much more exposed to injm'y than they would have been without them ; but by making an exception, which threw upon the insured the risk of injury from explosion, the premises could he insured at the same premium as other premises on which there were no engine and boiler. The ordinary risk was thus cast upon the insurer, the extraordinary risk upon the insured. I do not think the parties to the contract had in view at the time it was made any other fire than that which, by its heat, caused the explosion. But they provided in express terms, that the insurers should not be liable for any loss occasioned by the explosion of a steam-boiler. This is a full and complete pro- tection against loss of every description which might be occasioned by such explosion Such explosion might occasion loss in different ways. It did so in this case ; and be- cause fire happened to be one of the means of destruction, it does not take that por- tion of the loss out of the exception and bring it within the general terms of the policy. The burning was as much a consequence of the explosion as the breaking and destruction from expansion. All were ' occasioned ' by the explosion. The ex- plosion was caused by fire, but, with all its immediate consequences, it was excepted from the operation of the policy. The injury by fire is plainly within the exception, as the injury would have been if the property had been destroyed by water in con- sequence of the breaking of the water-pipes by the explosion. As to the extent to which consequential damage may be traced and charged to the moving cause, I sup- pose the same rule applies to the exception as to the policy itself. In an action on the policy for loss by fire, the insured would be indemnified not only for goods actu- ally burned, but also for those wet and soiled, for furniture cracked and warped, and under some circumstances, for goods stolen and lost by the removal of goods. The construction I have put on the extent of the exception is certainly not broader. The fire was an immediate consequence of the explosion, and the loss of property by fire, as well as by breaking and displacement, was clearly occasioned by it. The plaintiff could not recover for any damage caused by the explosion ; and I think he had no more claim for that done by burning than for that portion broken and crushed by the concussion. The judgment of the superior court should be affirmed. The Policy. 253 the explosion a fire ensued from the flame coming in contact with the spirits in the rear of the building. The damage caused by the explosion was considerable, while that caused by the fire was comparatively small. The court directed the jury to find the damage done by the explosion, and also that done by the fire, separately, and rendered judgment upon the verdict for the dam- age done by the fire alone ; and, upon appeal, the judgment was sustained.^ " There was," said Peckham, J., " no fire prior to this explosion. The burning lamp was not a fire, within the policy. The machinery was not on fire, within the meaning of the term, until after the explosion. The explosion here was the principal and the fire the incident. In such a case, there can be no doubt that the defendant is not liable for the damage caused by the explosion. Where, however, the explosion is the incident, and the fire tlie principal, a different question would be pre- sented. Had the building been on fire, and in the course of a general conflagration there had been an explosion which had injured the machinery, which was rapidly consuming, different views and considerations might well obtain." The rule, as held in this case, is that in all cases where the policy contains an exemption from liability for damages caused by an explosion, in order to entitle the insured to recover, where an explosion ensues, an accidental fire must have been the proximate, and the explosion the remote cause of the loss.^ This has been held to be the 1 Briggs v. North American, etc., Ins. Go., 53 IST. Y. 447. 2 In United States Life, F. & M. Ins. Co. v. Facte, 22 Ohio St. 340; 10 Am. Rep. 735, McIlvanb, J., said: " The testimony shows that, at the time of taking out tlie policy, and until the time of the fire the plaintiffs were engaged in the business of rectifying whisky, and manufacturing fine spirits by the use of steam, in the building occupied by them as a liquor store, and in which the insured stock of mer- chandise, consisting principally of liquors, etc., was kept. The size of the building was sixty by one hundred and eighty feet, and was four stories high. There was communication between the stories through open stairways and hatches. The busi- ness of rectifying was carried on in the basement story, where the stills— large me- tallic vessels — were located. The upper stories were chiefly used for storage of liquors and cooperage. The process of rectifying was conducted as follows : The raw spirits or liquor was conveyed by means of pipes, called leaders, from tubs situate in the upper stories to the stills below; when the stills were thus charged, the liquor therein was converted into vapor by means of steam which passed through the stiUs in copper pipes, called worms ; the vapor thus evolved was conducted by other pipes to a condenser, where it was reduced to a liquid state. The vapor evolved in the process of rectification is an inflammable substance. It readily mixes with the at- mosphere, and when so mixed, in certain proportions, is explosive, and when such mixture is brought in contact with flame it explodes. On the morning of the fire a large still was being charged through a leader about two inches in diameter, which passed the still through a vacuum valve (an aperture in the still near its top), the diameter of which was about four inches. At the same time steam was passing through the worm, converting the liquor in the still into vapor, which escaped 254 The Risk and its Incidents. case even when the explosion and the fire originating there- from occurred outside the premises of the assured, if the fire result- through the vacuum valve into the still room, and thence no douht into other parts of the huilding. The process of thus charging the still, accompanied with the dis- charge of vapor, had continued for some time — perhaps an hour — preceding the fire. During the progress of this process, two jets of gas were huming in the still room, one at a distance of three or four feet from the vacuum valve, and the other in an- other part of the room. There was no other fire or flame in the room or in the huilding at the time. Such being tlie circumstances, an explosion took place in the still-room. A sudden and violent combustion of the vapor, accompanied with a noise — described by one witness as being like the crack of a gun ; by another, as if a hundle of iron had been thrown on the pavement; by another, as a crash, and by another, as a gush of fire ; and at the same instant the flame was driven through a doorway into another building, whereby a witness was badly burned. Imme- diately after the explosion, a flame was discovered escaping from the still through the vacuum valve, and at the same time, the building was discovered to be on fire throughout the several stories. From these facts and circumstances, we think, it was clearly shown that the fire, by which the building and stock of mer- chandise insured were consumed, was occasioned by, and resulted from, an explosion of spirit vapor mixed with atmosphere, and that the explosion was caused by the mixture coming in contact with the burning gas-jet. " 1. The first question that we notice particularly is this: Was the explosion, which in fact occurred, such, in degree of violence, as was contemplated by the parties to the policy ? The word ' explosion ' is variously used in ordinary speech, and is not one that admits of exact definition. Its general characteristics may be described, but the exact facts which constitute what we call by that name, are not susceptible of such statement as will always distinguish the occurrences. It must be conceded that every combustion of an explosive substance, whereby other property is ignited and consumed, would not be an explosion within the ordinary meaning of the term. It is not used as the synonym of combustion. An explosion may be described generally, as a sudden and rapid combustion, causing violent expansion of the air, and accompanied by a report. But the rapidity of the combustion, the violence of the expansion, and the vehemence of the report, vary in intensity as often as the occurrences multiply. Hence, an explosion is an idea of degrees, and the true meaning of the word, in each particular case, must be settled, not by any fixed standard or accurate measurement, but by the common experience and notions of men in matters of that sort. In this case, although the building was not rent asunder, nor the property therein broken to pieces, there was a sudden flash of flame, a rush of air, and a report like the ' crack of a gun,' which certainly brings the occurrence within the common meaning of the word, as used in many instances. ' Any explosion whatever ' is the phrase used in the condition to the policy, and it is qualified by the context only to the extent that it must be ' an explosion ' of some 'explosive substance,' and of sufficient force as to result in loss or damage to the property insured. And these characteristics we have found to exist in the oc- currence that resulted in the loss of this property. " 2. It is claimed that the fire which destroyed the property insured did not result from the explosion, but, on the contrary, that the explosion was incident to and caused by the fire, which, if there had been no explosion, would have accom- plished the whole loss and damage; or, at least, that such inferences may be drawn from the facts in the case as fairly and legitimately as contrary inferences. The proof unquestionably shows that the origin of the fire and the explosion were simultaneous. It may be true, in a strictly scientific sense, that all explosions cause by combustion are preceded by a fire. The scientist may demonstrate, in a case where gunpowder is destroyed by fire, or in any case where the explosion is caused by or accompanies combustion, that ignition and combustion precede the explosion; but the common mind has no conception of such combustion, as a fact independent of the explosion where they occur in such rapid succession that no appreciable space of time intervenes. The terms of this policy must be taken in their ordinary sense ; and we are satisfied that the proof shows, according to the ordinary sense and understanding of men in reference to such matters, that the explosion occasioned the fire which destroyed the property insured or, in other words, that the loss resulted from an explosion within the true intent and mean- The Policy. 255 ing could he traced directly to the explosion as the proximate cause, und no near cause had intervened between the fact accomplished and ing of this policy. It is true that the explosion was caused hy a burning gas- jet, but that was not such Are as was contemplated by the parties as the peril insured against, The gas-jet, tliough burning, was not a destructive force, against the immediate effects of which the policy was intended as a protection ; although it was a possible means of putting such destructive force in motion, it was no more the peril insured against than a friction match in the pocket of an Incendiary. The conclusions to which we thus arrive are mere inferences from ■other facts — facts, however, about whicli there was no conflict in tlie testimony — jet they are so manifestly true that we think it was error of law, under our stat- ute, to reverse the judgment rendered thereon at the special term of the Superior ■Court, upon the strength of contrary inferences drawn from the same facts by the reviewing court. " 3 The next question arises upon the terms of the policy, and is one of con- ■struction purely : Was it intended, by the provisions of the seventh condition, to exempt from the risks assumed by the policy, losses ty fire occasioned by an •explosion ? It is claimed that the clause exempting losses by explosion taken ^lone, or construed in connection with other clauses in the condition, does not show such intention. It is true that the words ' by fire,' or their equivalent, are omit- ted in this clause, though expressed in some of the former clauses. The founda- tion point, however, in construing this condition, is found in the general under- taking of the policy. It will be observed that the underwriter undertook to insure against loss and damage hy fire only ; but, nevertheless, against loss and damage by fire generally, and the maxim, causa proxima non remota spectatur, applies. Now, we think, without doubting, that the purpose of inserting this condition was to relax the vigor of this maxim, and exempt from the general risk of the policy •Stertain losses, which would otherwise fall within its scope and meaning. The first clause of the condition provides that ' this company is not liable for loss or ■damage by lightning or tornado, unless expressly mentioned or insured against.' If this were the whole of the clause, and it were not understood that the loss and damage referred to, were such as might result from^re occasioned by lightning or tornado, it would be utterly meaningless and nugatory, for the reason that tlie underwriter had not undertaken to insure against lightning or tornado. So far tlie construction is plain enough, but a difficulty arises from the conclusion of the -clause, to wit, ' but will be responsible for loss or damage to property consumed by fire occasioned by lightning.' The exception to the rule of exemption from loss by lightning appears to be as broad as the rule itself. Biit I apprehend that a ■case miglit arise in which effect and operation could be given to all the terms of this clause, including those which are implied as well as those expressed. At all -events, it is perfectly clear that loss and damage by lightning and tornado are not within the expressed risks of the policy, unless a fire supervenes ; nor is there anything in the policy from which such risks can be implied. The condition con- tinues : ' Nor will the company be responsible for any loss or damage to property consumed by fire happening by reason of, or occasioned by, any invasion, insurrec- tion, riot, or civil commotion, or any military or usurped power.' The exemptions lere provided for ai'e expressly limited to losses within the terms of the general Tisk of the policy. But if such limitation had not been expressed, it would have been implied. The next clause is as follows : ' Nor when the loss is occasioned •or superinduced by the fraud, dishonesty, or criminal conduct of the insured. There is no pretext for holding that the loss here contemplated is other than loss "by fire, although no such qualification is expressed. Then follows the clause in ■question, which, to all intents and purposes, is framed like the preceding one : ' Nor to'any loss or damage occasioned by, or resulting from, any explosion what- -Gver, whether of steam, gunpowder, camphene, coal oil, gas, nitroglycerine, or any explosive article or substance, unless expressly insured against and special pre- mium paid therefor.' Unless there is something in the subject-matter of this •clause that indicates that the words ' by fire' were omitted, for the purpose of showing a design to adhere to, and continue the general risk in case an explosion .should result in a fire, we think that they, or their equivalent, should be supplied by implication or construction. Is such purpose indicated by any fair use of the terms employed? That a loss, other than by combustion, resulting from an explo- 256 The Risk aito. its Incidents. the cause. Thus, in a ease decided by the United States Supreme Court,^ the plaintiff held a policy upon .a quantity of cotton stored sion, when the explosion itself is caused by a destructive fire already in progress, comes within the general risk of a policy against fire only, is a doctrine not only- reasonable in itself, but is sustained by authority. Waters v. La. Mer. Ins. Co., 11 Pet. 225 ; Scripture v. Low Mut. Fire Ins. Co., 10 Gush. 357 ; MiUaudon v. N. 0. Ins. Co., 4 La. Ann. 15. And it is quite clear that a loss by fire, which is. occasioned by an explosion, is within the like risk. Now, the express terms of this clause are, ' any loss or damage oecasioned by, or resulting from, any explo- sion whatever.' These terras are certainly comprehensive enough to include both descriptions of loss — whether loss by the explosive force, or loss by superinduced combustion. And that such is their legal effect has been directly decided In the case of Stanley v. Western Ins. Co., Law Rep. 1868 ; 3 Excheq. 71. It is not. necessary at this time to either approve or disapprove, to the whole extent, the doctrine in Stanlej/'s case, as in this case no damage was sustained from the explosion without the intervention of a fire, nor, indeed, was the explosion caused by a fire within the meaning of the policy. But we can find no good reason for doubting that loss and damage 6^ fire, resulting from an explosion, was intended to be exempted by this condition from the general risk of the policy, and are of opinion, therefore, that this clause properly construed should read, ' nor any less- or damage hy fire occasioned by, or resulting from, any explusion whatever.' " 4. It is claimed by defendants in error, that the peril by which the property insured was destroyed, was witliin the exception to the seventh condition ; that is, it was ' expressly insured against, and special premium paid therefor ; or, in other words, was excepted out of the exception. The reasoning by which this proposition is sought to be maintained is thus stated : ' The body of the policy covered loss by fire on liquors, etc., with the privilege of rectifying and manu- facturing fine spirits by steam not generated in the building. The property insured was whisky, as well in the process of rectification and manufacture as. manufactured — whisky in the still ; as well as spirits in the barrel — the whisky vapor itself, while passing through the columns to the cooler, or wherever else it might make its way, If it was in this form an explosive substance or article, such as is intended by the language of the condition, or if, in the process of manufac- ture allowed by the policy, it was likely to become such by escape and mingling- with the air in the building, then the insurance was upon it, as an agent known to be explosive under certain circumstances likely to happen, and with the express assent of the company to the carrying on of that process, in the course of which its explosive nature would naturally and probably be developed.' The principle sought, by this argument, to be applied, is announced iu Harper v. New York City Ins. Co., 22 N. Y. 441 ; Fitton v. Accidental Death Ins. Co., 17 Conn.' Bench N. S. 112. In the case of Harper v. N. York City Ins. Co., the condition exempted the company from liability for loss occasioned by campkene. The fire was occasioned by a workman's throwing a lighted match into a pan upon the floor containing camphene. The risk was upon a printing stock, privileged for a printing office, camphene not being expressly enumerated. But it was shown that that article was a usual part of such a stock, and its use was therefore authorized. For this reason alone, because it was impliedly insured, it was held that the exception did not apply. The following extract from the opinion ex- presses its doctrine : ' A policy can be so framed as to allow the presence of a dangerous article, and even so as to insure its value, while, at the same time it might exempt the insurer from less if occasioned by the presence or use of the article. But I think it would need very great precision of language to express such an intention. When camphene or any hazardous fluid is insured, and its use is plainly admitted, the dangers arising from that source are so obviously within the risk undertaken, that effect should be given to the policy accordingly, unless a different intention is very plainly declared. In answer to this claim, we say : 1. That the spirit vapor, having escaped from its confinement and passed into tlie still-room, where it became mixed with atmosphere so as to form an explosive substance, under circumstances that precluded all possibility of reclaim- ing and utilizing it, was no longer a part of the stock of merchandise insured, and 1 Insurance Co. v. Tweed. 7 Wall. (TJ. S.) 44. The Policy. 257 in a warehouse. The policy contained a stipulation, among other things exempting the insurer from " any loss or damage that may happen by means of any * * * explosion * * *." An explosion occur- red in a warehouse directly across the street, some fifty feet distant, which threw down the walls of the warehouse in which the explosion occurred, and scattered the cotton and other combustible materials in the street, and an extensive conflagration ensued, in which the plaintiff's warehouse was consumed. The fire was not communi- cated directly to it from the building in which the explosion oc- curred, but, from another building fired by the explosion. The court held that, if the fire happened or took place hy means of the explosion, the insurers were not liable ; and to ascertain that fact it was important to ascertain whether any near cause had intervened between the explosion and the fire that consumed the warehouse, that was of itself sufficient to stand as the cause of the misfortune. The fact that the fire did not reach the plaintiff's warehouse directly from the building fired by the explosion, or that the wind carried the flames there, supplied no near force suffi- cient to stand as the cause of the burning and the loss must there- fore be attributed to the explosion as the proximate cause. But ib is believed that the doctrine of this case is really untenable, and not fairly within the spirit or intention of the policy or the par- ties thereto. It is evident that the exemption was only intended or expected to apply to cases of an explosion in the building itself, and not to fires occurring by reason of explosions elsewhere. Again, applying the rule advanced in the case, a whole city might be consumed, and yet the insurers who had taken the precaution to insert such clauses in their policies, would escape liability in •was not under the protection of the policy. 2. If from the nature of the property- insured, the parties, at tlie time the risk was talien, might reasonably have anti- cipated the peril by which it was afterward destroyed, it is reasonable to suppose that such peril was in contemplation at the time, and that they contracted in reference to it. Hence, if the general risk of the policy was expressed in terms broad enough to include the peril, it must he presumed that they intended to do so ; and, on the other hand, if an exception to the risk was made in terms which fairly and plainly took such particular peril out of the general risk, it must be presumed that they intended to exempt such particular peril from the risk. Again, if it be claimed that there was an exception to such exemption, wherel)y the particular peril was saved from the exemption and left under the general risk, it is reasonable that the terms of exception should be at least as explicit as Die terms of exemption. How is it in this case ? The risk was against all loss by fire. The exception from the risk was ' any loss or damage occasioned by an ex- plosion of steam, gunpowder,' etc. The exception to this exemption was ' unless expressly insured against, and special premium paid therefor.' Therefore, it only remains to be said, that no loss or damage occasioned by an explosion of any of these substances named was expressly insured against, uor was any special pre- mium paid for any such special risk." 17 258 The Risk and its Incidents. case the fire originated from an explosion, unless some extraordinary cause intervened that, in the language of the court, " would stand for a new cause." This rule is very proper as applied to the building in which the explosion occurred, but to apply it to other buildings consumed by reason of the ignition of buildings standing apart therefrom, is not only contrary to the evident intent of the parties and a fair construction of the instrument, but is also unjust, unreasonable and unwarranted, and is in defiance of the rule that exemptions in a policy of insurance will be construed according to the evident intention of the parties, and most favorably for the as- sured. The better doctrine is that exemptions in a policy, as well as conditions, will be strictly construed, and wiU not be operative to protect the insurer, unless the case is brought strictly within the letter of the exemption. This principle was well illustrated by a novel case which came before the Connecticut Supreme Court.i In that case, goods stored in a town occupied by the United States forces during the war, were insured against fire by a policy exempting the insurers from liability for damage by fire, arising by means of any invasion, insurrection, riot or civil com- motion, or of any military or usurped power. The town, being at- tacked by a superior force of the enemy, was abandoned by the troops, who, by order of their commanding officer, set fire to a building containing military stores, to prevent their falling into the hands of the enemy. The fire spread to the building contain- ing the insured goods, destroying them. The court held : 1. That the fire which destroyed the plaintiffs' goods did not happen or take place by means of the attack by the rebels on the city, nor by means of invasion or insurrection, riot or civil commotion, within 1 Bacon v. The ^tna Ins. Co., 40 Conn. 57-5 In a case before the United States Supreme Court, Ins. Co. v. Boon 95 U. S. 117, the military forces of the United States, in defending a city against the rebels, set fire to certain buildings in order to prevent military supplies stored in them from falling into the possession of the rebels. The fire spread (beyond what was intended) and burned, while the battle was still continuing, and before any surrender, a store and stock of goods insured under a policy which contained an exception, in usual terms, that the company should not be liable to make good any loss by invasion, insurrection, military power, &c. It was held that the loss was within the exception, and the company was not liable. The rebel invasion and act of the military power was the " proxi- mate cause." By proximate cause, in applying the maxim, causa proxima non remota spectatur said the court is meant, not necessarily the cause nearest in time or place to the catastrophe, but the efficient cause, the one which necessarily sets the other causes in motion. The causes that are merely incidental or instruments of a superior or controlling agency are not the proximate causes and the responsible ones, though they may be nearer in time to the result. It is only when the causes are indepen- dent of each other that the nearest, is, of course, to be charged with the disaster. The Policy. 259 the meaning of the proviso in the policy. The attack by the rebels furnished a motive to the setting on fire of the city hall, but w^as not the proximate cause of the fire. 2. That the terms " military or usurped power," in the proviso, do not include the lawful acts of the military authorities of the government, but re- late to organized unlawful force, acting in hostility to the govern- ment or in subversion thereof. A fire caused by the lawful or- ders of the officer in command of the military forces of the United States would not, therefore, be within the exception. 3. That the defendants were liable for the loss. The court further laid down the rule that it is the duty of an insurance company, ■seeking to limit the operation of its contract of insurance hy special provisos or exceptions, to make such limitations in clear terms, and not leave the insured in a condition to he misled. The insured may reasonahly he held entitled to rely on a construction favorahle to himself where the terms will rationally permit it?- All conditions in a policy are to be construed reasonably, and if a policy contains a condition prohibiting the keeping of certain explosives,^ or of any species of explosive, it will not be applied to 1 In Commercial Ins. Co. v. Robinson, 64 III. 265, the policy stipulated against liability for " damages by fire caused by means of an invasion, insurrection, riot, <;ivil commotion, or military or usurped power, nor from any loss caused by the ■explosion of gunpowder, camphene or any explosive substance, or explosion of any fcind." Under this peculiar wording of the restriction as to liability, inasmuch as the last clause of exemption did not provide that the insurer should not be liable ior afire resulting from •' an explosion of any kind," it was held that, as the fire was not caused by the explosion of gunpowder or camphene, the insurers were liable. In Boatman's Ins. Co. v. Parker 23 Ohio St. 85, where the policy stipu- lated, " not liable for damages occasioned by the explosion of a steam boiler, nor Jor damages resulting from such explosion, nor explosions caused hy gunpowder, gas or other explosive substances," it was held that the insurers were liable for a loss by fire occasioned by an emission of gas fi'om oil in the process of distillation, which settled near the floor and came in contact with the fire under the stills. The fire extended into tlie receiving-house, where gas and oil were ignited and the explosion occurred, and the ignited oil being thus spattered over the worlds, they were consumed. But in United States, etc., Ins. Co. v. Foote, 22 Ohio St. 340, a contrary doctrine was held. See statement of case, ante. ' In Washburn v. Miami Valley, Union and Fidelity Ins. Cos., 9 Ins. Law Jour. 761, the insurance was on a flour mill in which a fire was followed by an explosion •of flour dust which destroyed the mill. The policy of the M. Company stipulated that it should not be liable for loss by explosion unless fire ensued, and then for loss by fire only, and enumerated certain explosive articles whose keeping was prohibited. The policy of the F. Company, after prohibiting the keeping of certain explosives, provided that the company should not be liable ' ' for any loss caused by the explo- sion of gunpowder, or any explosive substance, nor explosion of any kind, unless fire ensues, and then for the loss or damage by Are only." The policy of the U. Com- pany provided that it should not be liable " for loss or damage occasioned by the •explosion of a steam-boiler, gunpowder, or any other explosive substance, except only .such loss as shall result from fire that may ensue therefrom ; nor shall the company be liable for any loss by such fire, unless privilege shall have been given in the policy to keep such articles." It was held, that there was nothing in the policies to with- 260 The Risk and its Incidents. include an explosive which is accidentally present, or one which is eliminated in the business which the policy covers, nor when draw their protection in case of fire, although an explosion was an incident of such fire. The companies were protected against fire resulting from an explosion, but not against an explosion as the result of a fire, and the term explosive does not apply to explosives accidentally present of a known fixed character, and an element of the business, like flour-dust. SwAYNE, J., said: " Giving a literal view to the language of the second clause, which I have just read, the policy was void at the outset, and never had any validity, because there was in the mill from the first an explosive substance, to wit, flour- dust, and there was no permit given in the policy to keep such substance." "Now I cannot suppose that that was the intention of this company. The policy must be construed, like all other instruments in writing, in the light of surrounding circumstances : and I am willing to construe this particular ' explosive substance ' as not within the terms or meaning of the particular language, of the policies upon that subject." It win be observed that the companies are protected with respect to explosives by making it fatal to the policies to keep them; the policies become void if such explo- sives are kept. Perhaps right here I might remark that the word ' kept ' must have a particular signification in this connection, and that it does not apply where explosives of a known fixed character — known to be such — were accidentally pres- ent in the structure insured, but it does apply where they were kept there, know- ingly, in violation of the terms, which the policy contains with reference to them. That must have been the understanding or intention of the parties in reference to the particular substance, flour-dust, which is highly explosive, hut which, as I have remarked, was pecessarily present, and from which arose the genesis of the explosion, out of which this controversy has arisen." " Explosives are named only in connection with fires which they have produced. There is nothing said about them in connection with fires which have produced them. The policies on that subject are wholly silent. Is not this somewhat re- markable, if the construction contended for by the companies be correct ? In that case, would not the language of the contract have naturally been that the company win not be liable for explosions, and will not be liable for fires which produce them, or fires which they have produced ? The first may define the liability of the com- pany, and the sentence I have just read is certainly important. Wovild not the policies have read, ' That they will not be liable for explosions caused by fires, or for fires caused by explosion ? ' " " But further, if it be suggested that this would leave the exception without any legal effect, I would say that there are several obvious answers. First, these clauses are frequently prepared by non-legal men, who do not know the legal effect of the language which they employ in such instruments, and I will add that these instru- ments go into the hands of individuals who know nothing of the legal effect of these special clauses which they contain. Again, if prepared by a legal hand, the writer may not have known, probably did not accurately know, the state of the law touching the subject to which the exception, and the exception within the excep-; tion, here in question, relate. Again, there is nothing which in terms— and this is substantially what I have said already — withdraws the exception here in question, from the clause of insurance, as it would be if the construction contended for by the plaintiff's counsel be sustained. There is nothing disclosed which tends to withdraw the subject of these exceptions (nothing in terms, there may be by impli- cation), of the clause here in question from the general language and operation of the clause employed; they refer to fires which the explosion shall produce, and are wholly silent as to the fires which produce such explosions. " Again, insurance policies, like all other written contracts, are to be reasonably construed ; yet, as with respect to all other written contracts, insurance policies are to be construed most strongly against the party making them, which in this case is the insurance company. I deem it proper to advert for a moment to the case, in Ins. Co., v. Tweed,! "Wall. (U. S.), in which I did not fully understand at the argument. The exception was somewhat similar, and the fire happened In that case from an explosion, producing a fire at a distant point from the site of the in- sured property. A wind prevailed at the time, and swept the fire a considerable^ distance, and the property insured and covered by the policy was destroyed by fire.. The Policy. 261 the company stipulates for immunity from a loss by an explosion, will it be construed so as to relieve it from a loss consequent upon The company was sued, and it defended on the ground that the case was covered by the exception, which was that the company should not be liable for a fire produced "by an explosion. That policy was at the opposite pole from the one here under con- sideration, and the assured was defeated. He recovered nothing. No doubt he thought that very unreasonable, as it seems to me most persons would regard it. He intended no doubt to have his property protected by that policy, and supposed it was protected. The Supreme Court of the United States held from principle that it was not. " It is very possible that the conditions of this clause (which were frequently Tjrought to my attention, for I had a great deal to do with this head of the law prac- tically), had produced a good deal of dissatisfaction, and hence this clause was changed. If that policy had been the same in this particular as those under discus- sion here, then, irrespective of the question of explosion, the party would have been entitled to recover, J)ut the policy being different, the result was different. A change was made, probably having had its origin in that case and others like it — a change was made to meet that difficulty, and hence it is, perhaps, we have these policies phrased as they are before us. Now, to recur again to the proposition to which I adverted at the outset, to wit, that there is nothing here which in terms withdraws the protection against fire, although that fire should involve an explosion. It seems to me that there would have been language to that effect if such had been the inten- tion of the parties. The ijitention of the statute constitutes the law ; the intention of the law-makers constitutes the law. The language may be within the letter of the statute and not within its meaning, and the language may be within its meaning, and not within its letter. That is a familiar proposition. If we can ascertain the intention and meaning of the parties here, that constitute the contract which it is the object of the court to carry out. According to the technical formality of the law of insurance this explosion canrot be recognized. It was a part of that fire, just as much a part of the fire, and admitted to be such, covered by the insurance, as if there had not been an explosion, by the general language, ' insurance against fire.' If the exception had not been made, it would have been considered (which was conceded at the argument) a part of the fire, and the policy would have been held, for the purpose of this view of the case, just as effectual, as it regards the effects of the explosion produced by the fire, if the policy is now effectual with re- spect to fire produced by an explosion, upon which the language of the policy is express." In Briggs v. North American and Mercantile Ins. Co., 53 N. Y. 446, the defend- ant had issued to plaintiffs a policy of fire insurance upon certain machinery used for rectifying spirits. The policy contained a clause excepting the company from liability for losses " caused by lightning or explosions of any kind unless fire ensues and then for the loss or damage by fire only." Vapors from the works came in con- tact with the flame of a lamp, and an explosion ensued which nearly destroyed the building and machinery. A fire resulted, which occasioned some damage, but slight compared with that caused by the explosion. Held that the defendant was not liable for the loss occasioned by the explosion. The court said: " It is not denied that this was an explosion. If it was in fact an explosion, then the policy provides that the defendant shall not be liable for damages caused thereby. The plaintiffs insist, however, that an explosion caused by fire is a fire, and therefore the defendant is liable for explosion, as for a fire. But that reasoning gives no force to the exception. It allows a recovery for the explosion, when the policy expressly stipulates that the defendant will not be liable for that. It may be conceded that in the absence of this exception a recovery could have been had for the whole damage, as for a loss by fire. The authorities referred to by the plaintiff's counsel tend to that result. I do not think that position will aid the plaintiffs. An explosion, without this exception, if it come under the general head of fire, might have afford- ed ground for recovery, but the defendant guarded against that result by this express stipulation. The exception, too, is general, including explosions by fire as well as others. There seems no reason for excluding an explosion like this from the exception. There was no fire prior to this explosion. The burning lamp was not a fire within the policy. The machinery was not on fire, as such a term is or- dinarily used, until after the explosion. The explosion here was the principal and 262 The Risk and its Incidents. an explosion -which was caused by a fire. A policy contained a. condition that the company shall not be liable to make good any loss or damage by fire which may happen by means of any inva- sion, insurrection, riot, or civil commotion, or of any military or usurped power. April 17, 1861, the ordinance of secession was passed ; and April 21, by order of the United States, the navy yard buildings at Portsmouth were fired ; the fire spread to the insured buildings, which were destroyed. It was held that as the ordinance required a vote to ratify it, the U. S. government did not become foreign to the State of Virginia by its passage, and therefore an action was maintainable upon the policy.^ Destruction of buildings to arrest fire. Sec. 105. When a fire is raging in the vicinity of a building or property insured, its destruction by explosion or otherwise, by the municipal authorities, to prevent the spread of the conflagration, is held to be a loss by fire within the terms of a policy ; ^ so in- the fire the incident. In such a case there can be no douht that the defendant is not liable for the damage caused by the explosion. Where, however, the explpsion is the incident and the fire the principal, a different question would be presented. Had the buildings been on fire, and the course of the general conflagration there had been an explosion of a boiler, which injured some machinery that the iire was rapidly consuming, different views and considerations might well obtain. ^Portsmouth Ins. Co. v. Reynolds, 32 Gratt. (Va.) 613. ' In City Fire Ins. Co. v. Corlies, Wend. (1!^". Y ) 367, Bronsok, J., in passing upon this question, said : " The building containing the goods was destroyed by order of the mayor of the city, for the purpose of arresting the progress of a con- flagration. Are the insurers answerable for this voluntary destruction of the prop- erty ? This question has been presented in a double from, — the one supposing that the mayor acted with, and the other that he acted without authority. 1. Let us first assume that the mayor acted illegally. If the fire had been kindled by an incendiary, it is not denied that the insurers would be answerable. Why are they not then answerable, if the mayor acted without autliority ? The act, though not done for a wicked purpose, was as illegal as though it had been the work of a felon. The answer attempted is, that although the mayor had no authority, yet as he acted colore officii, this is a case of loss happening by means of usurped power, which is expressly excepted by the policy. It is impossible to maintain that a mere excess of jurisdiction by a lawful magistrate is the exercise of an usurped power within the meaning of this contract. That is not what the insurers had in mind when they made the exception. It was an usurpation of the power of the government against wliich they intended to protect themselves. Sucli was the interpretation given to the same words in a policy as early as the year 1167. Drinkwater v. The London Assur. Co., 2 Wils. 363; ante,V?j. The property insured, was destroyed by a mob, which arose on account of the liigli price of provisions; and the insurers were held liable, notwithstanding a proviso in. the policy that they would not answer for a destruction by ' usurped power.' Bathukst, J., said those words, according to the true import thereof and the meaning of the parties, could only mean an invasion of the kingdom by foreign enemies, to give laws and usurp the government, or an internal armed force in rebellion, assuming the power of government, by making laws, and punishing for The Policy. 263 juries to goods by water used in endeavoring to extinguish a fire.^ So it has been held that an injury to a building by the fall upon it not obeying those laws. Wilmot, C.J., said, the words meant invasion from abroad, or an internal rebellion, when armies are employed to support it; when the laws are dormant and silent, and firing of towns is unavoidable. In Lanrj- dale, V. Mason, 2 Marsh. Ins. 791 ; ante, 16, it was said by Lord Mansfield, that these words were ambiguous, but they had been the subject of judicial deter- mination; that they must mean rebellion conducted by authority — determined rebellion, with generals who could give orders. And he added : ' Usurped power takes in rebellion, acting under usurped authority.' Whatever doubt there may have been originally about the meaning of the words ' usurped power,' in a policy, their legal import had been settled long before this contract was made: and we cannot assume that these parties used the words in any other than their legal sense. 2. But the mayor acted under lawful authority; there was no usurpation of any kind. Whether he had the concurrence of two alder- men as the statute provides, or not, there can be no doubt of his common-law power, as the chief magistrate of the city, to destroy buildings, in a case of neces- sity, to prevent the spreading of a fire. Indeed the same thing may be done by any magistrate, or even by a citizen without ofBcial authority. The Mayor of N. Y. v. Lord 17 Wend. 28.). If the mayor acted by lawful authority, it is then said that the property was destroyed for the benefit of the city, and that the corporation (not the insurers) must bear the loss. This case does not fall within the statute charging certain losses on the city, because it does not appear that the mayor had ' the consent and concurrence of any two aldermen,' 2 K. L. 367, § 81; and for the further reason, that the property would have been consumed by fire, if its destruction had not been ordered by the magistrate. The Mayor of N. Y. v. Lord, 17 Wend. 285. It is said that the corporation is liable at the common law for the acts of the mayor; but no authority was cited in support of the position, and I am not prepared to say that, in a case like this, the doctrine can be main- tained. The inclination of my mind is strongly the other way. But suppose the city is liable, I do not see how that fact can affect this contract. If the insurers pay the loss, they may, perhaps, have an action against the corporation of the city, in the name of the assured, to recover back the money. Mason, v. Sainabury, 3 Doug. 61 ante, 19. But however that may be, the fact that the assured may have a remedy against the city, cannot change or qualify the undertaking of the insurers." Gordon v. Reminr/ton, 1 Camp. 1.S.S ; Waters v. Merch., etc., Ins. Co., 11 ret. (U. S.) 225. In Greenwald v. The Ins. Co., 3 Phila. (Penn.) 323, the property insured, a stock of merchandise in a frame store building, was situated in the town of Xmericus, Georgia, in which there are no means of extinguishing a fire by the use of water. It appears that the fire in question did not originate on the premises insured, b.it it had reached them and they were burning when the citizens assem- bled, with the view to extinguish the fire and prevent its spreading further, applied gunpowder to them and blew them up. ' Had this measure,' said Shabswood, J., 'been resorted to before the fire had actually begun its work of destruction on the property insured, it might be a question whether the underwriters would be liable. Hilliers v. Alleghany Mutual Insurance Company, 3 Barr, 470, might be an authority in this case. But here, altogether apart from the fire caused from the explosion, the prox male loss was a fire not caused by an explosion. The case is like the de- struction of goods by water applied to extinguish the flames which had caught them or the l)uilding in which they are stored. If left to themselves they would have been Inevitably destroyed by the fire ; it would last as long as it had fuel to feed on. It is certainly very much against the true interests of insurers to raise objections foimded on the honest efforts of the insured or others, to prevent the spread of fires, much more to frame clauses meant to make the right of recovery depend upon what is or is not done by strangers or others present at the fire. Life indeed as well as property is often in peril, but where it is not, men might be disposed under such cir- cumstances, out of regard to the insured, to stand still and let property perish, ' Witherell v. Maine Ins. Co. 49 Me. 200 ; Geisick v. Crescent, etc., Ins. Co., 19 La. An. 297; Hilliers v. Alleghany Ins. Co., 3 Penn St. 470; Thompson v. Mon- treal Ins. Co., 6 U. C. Q. B. .319 ; Independent, etc., Ins. Co. v. Arjnew, 34 Penn, St. 96 ; Whitehurst v. Fayetteville, etc., Ins. Co., 6 Jones L. (M. C.) 352. 264 The Risk and its Incidents. of the wall of a building destroyed by fire, although not occurring until three days after the fire, is covered by a policy insuring against a loss by fire.^ Loss by theft — proximate cause. Sec. 106. So where goods are stolen from a burning building, or while they are being removed therefrom, the loss is within the policy if they were stolen on account of the fire,^ upon the prin- ciple that when goods are damaged ex necessitate to preserve them the insurer is liable for the damage.^ It is immaterial whether the goods were burned or stolen, while being removed, or after they are removed, so far as the liability of the insurers is concerned ; if the existing circumstances are such that their continuance in the building would create a total loss, it remains a total loss until the property is beneficially restored to the assured, and, if the goods would have been destroyed by the fire, if they had not been removed, the loss by theft or water is a natural consequence of the peril insured against.* rather than imperil by interfering with his claim for indemnity against the insurers. It would be a novel clause to introduce into a policy that in case of fire, the insur- ance should be void, if any water were applied to extinguish it. Quite as novel would it be were it provided that if there were no water nothing else should be done. Yet the defendants in this case have told us, that the clause, that the in- surers should not be liable for an explosion by gunpowder, was meant to guard against the very thing which had been done. Had the citizens of Americus, instead of resorting to gunpowder, have succeeded in any other way in separating the build- ing in question from those contiguous to it, we would probably have been told that it was destruction by a mob, against which there is a provision in most policies, if not in this. We construe tliis clause differently, and more for the interests of the un- derwriters when we say, that fire originating from an explosion of gunpowder was what was meant to be guarded against, and not an honest effort, even if it was in- judicious, on the part of those present to stop the flames." Greenwald v. Ins. Co., 3 Fhila. (Penn.) 323. 1 Johnson V. West Scotland Ins. Co., 7 C. C. (Sc.) 52. 2 Newmarky. Liverpool, etc., Ins. Co., 30 Mo. 160 ; American Ins. Co. v. Bryan, 26 Wend (?f. Y.) 563 ; White v. Republic Ins. Co., 57 Me. 91 ; 2 Am. Eep. 22 ; Witherell v. Maine Ins. Co., 49 Me. 200 ; Hillierv. Alleghany Ins. Co., 3 Penn. St. 470 ; Whitehurst v. Fayetteville, etc., Ins. Co., 6 Jones (K C.) 352 ; Tallman v. Home Ins. Co., 16 La. An. 426 ; Lewis v. Springfield F. &. M. Ins. Co., 10 Gray (Mass.) 159 ; Thompson v. Ins. Co., 6 TJ. C. (Q. B.) 319. 3 Case V. Hartford F. Ins. Co., 13 111. 676 ; Witherell v. Maine Ins. Co., 49 Me. 200 ; Leiber v. Liverpool, London & Globe Ins. Co., 6 Bush (Tenn.) 639 ; American J/is. Co. V. Bryan, 26 Wend. (N. Y.) 563 ; Tilton v. Hamilton Ins Co., 1 Bos. (X. Y. ) .367 ; Independent Ins. Co. v. Agnew, ante. The rule in such cases was well illustrated in Gordon v. Remington, 1 Camp. 123, where, upon the ship being chased by a privateer, to prevent her capture, her guns were discharged down her hatchways which set her on fire, and the court held it a loss within the policy. So, in City Ins. Co. v. Corliss , and Greenwald v. Ins. Co., ante, where the blowing up of buildings, to prevent the spread of a conflagration, was held a loss within the policy. < Tilton -v. Hamilton Ins. Co., ante ; Bondrett v. Hentigg, Holt (N. P.) 149 ; The Policy. 265 The insurer is liable for a loss happening to the property insured, from the peril insured against, when the peril covered by the policy is the proximate cause of the loss. He is only relieved from liability "when the peril insured against is the remote cause of the loss, or the loss results from the fault of the insured, or when from his laches ov fraud the contract is avoided.^ When the insurance is against loss by fire, the insurer is liable for any damage done to the property by reason of a fire, even though the property itself was not burned, or in anywise injured by fire, if the fire was the jproximate cause of such damage, and the damage arose in consequence of efforts reasonably made by the assured or others, in view of the imminence of the peril, to preserve the property from conflagration, which must be judged of from the peculiar circumstances of each ■case.^ But, as it is competent for the insurer to impose such con- Hahn v. Corbett, 2 Bing. 205. In Independence Ins. Co. v. Agnew, 34 Penn. St. 96, the premises were discovered to be on fire, and tlie goods were considerably in- jured by water, and many of tliem were stolen. It was held that the insurers were liable for the goods stolen. 1 White V. Republic F. Ins. Co., 57 Me. 91 ; 2 Am. Rep. 22. 2 In White V. Republic F. Ins. Co., ante, it appeared tliaton the night of the con- :flagration of July 4, 1866, at Portland, the plaintiff, apprehensive that the build- ing known as Ware's block, on the northerly side of Federal street, the third story of which was occupied by him for the manufacture of brushes, would be destroyed by fire, removed his stock, consisting of bristles and manufactured hrushes, and his tools for the building. The block was not destroyed or injured hy the fire ; and the plaintiff brought an action to recover the damages thus done to his stock and tools, and for the expense incurred in removing them. ' ' The important and interesting question," said Dickenson, J., "is raised, whether the plaintiff's loss is covered by the policy. In general, the assured is entitled to in- demnity, unless the loss happens from the qualities or defects of the subject in- sured, his own fault, or some peril for which he is answerable. 1 Philips on Ins. ■<)39. It is argued by the learned counsel for the defendants, that this is not a loss lay fire ; that fire was not the proximate cause of the damage ; and that therefore the loss is not covered by the policy. Wliile it has been held that a loss by light- ning without combustion is not a loss by fire, it has also been held that the loss of a building by being blown up by gunpowder, and demolished to stop a conflagra- tion, is within the terms of a fire policy. Babcock v. Montyomery Co., Mat. Ins. Co., 6 Barb. 637 ; Keniston v. Merrimack Co., Mut. Ins. Co., 14 N. H. 341 ; City Ins. Co., V. Corlies, 21 Wend. .367. Damage done to goods by having water thrown "upon them in extinguishing a fire, and a loss of goods by theft after they have been removed from a fire, and covered by the policy. IlilUer v. Alleghany Ins. Co., 3 Penn. 470 ; Witherell v. Maine Ins. Co., 49 Me. 200. A bolt may be loosened, or a timber ■started, in a storm, without causing any loss until the subsequent action of the water or climate, or the greater strain of a different cargo has so augumented the Injury, as to cause the loss of the vessel ; and yet such a loss is a loss by the storm. Stephenson v. Piscataquis Ins. Co., 54 Me. 76. So if, after a storm has subsided, the boat is lost by reason of the disabled condition of the ship, in consequence of damage done during the storm, it is a loss by the storm. Potter v. Ocean Ins. Co., 3 Sum. 27. In these and like cases the direct proximate cause of the damage or loss is not to be found in the fire, or the storm but in the water, the removal of the goods, the action of the climate, or strain of the cargo, or the disabled state of tlie ship. If courts were, required to hold that no loss is caused by a policy of insur- ance unless the peril insured against is directly operating upon the subject insured 266 The Risk and its Incidents. ditions as he pleases, he may, of course, stipulate against liability- for theft either during or after a fire, in such case, no liablility at- at the time of the ultimate catastrophe, they would deny the rigVit to recover in. many cases where it has long been recognized by courts of the highest authority. The legal maxim, causa proxima spectatur, is by no means of unusual application in its strict technical sense. If a loss from demolishing a building with gunpowder to stay the progress of a conflagration comes within the terras of a fire policy, ought not the damage and expense of removing such building too be recoverable, if the object in view could be as speedily and successfully accoinplished ? In such cases is not the fire, the impending conflagration, the existing operating cause alike of the destruction of the building or of its removal from danger ? Is the assured en- titled to recover damages for one of the effects of the same procuring cause, and not for the other ? If by reason of the immobility of real estate and the necessity of speedy action on such occasions, it becomes necessary to demolish a building, at the cost of the underwiters, to prevent it and other property from being de- stroyed by fire, does not the analogy of the law requiie that they should also be chargeable for the damage and expense of saving personal property from destruc- tion by removing it to a place of safety ? Is not the producing cause of both re- sults the same ? So if the underwriters are liable for damage done to goods by having water thrown upon the building in which they are stored, to extinguish the fire, ought they not, also, to be liable for damage done to goods, in time of immi- nent peril, by throwing water upon the building containing them to prevent it and them from destruction, though actual ignition has not taken place ? In both cases, technically speaking, the water and not the fire is the direct proximate cause- of the damage. It is neither the policy of the law nor public policy to make it for the interest of the assured, in case of fire, to postpone the use of the means for ex- tinguishing the fire, and the removal of the goods, until the building containing them is actually on fire. In many, if not most, cases, such delay would be tanta- mount to consigning both goods and building to destruction. Would the interest of insurance companies or the public morals be subserved by the establishment of such a policy ? " The question presented is one of considerable diflSculty, and one upon which the authorities are at variance. While the supreme court of Illinois, in a case like the one at bar, have held that the underwriters are liable for the damage to the goods and the expense of removing them, the court in Pennsylvania have denied them liability. Case v. Hartford Ins. Co., 1.3 111. 676 ; Hillier v. Alleghamj Ins. Co., S Penn. 470. We think th'e liabihty of the underwriters, in these and similar cases, depends very much upon the imminence of the peril, and the rea^ sonableness of the means used to effect the removal. The necessity for removal is analogous to the necessity that justifies the sale of a disabled vessel, by the-, water. It is not to be determined by the result alone, but by all the circumstances, existing at the time of the fire. The necessity for removal need not be actual, that is, the building may not have been actually burned, since this may have been pre- vented by a change in the direction or force of the wind, the more skilful or efli- cient management of the fire-engines, or the sudden happening of a shower, or a. like unforeseen event. But the imminence of the peril must be apparent, and such, as would prompt a prudent uninsured person to remove the goods ; it must be such as to inspire a conviction that to refrain from removing the goods would be the vio- lation of a manifest moral duty ; the damage and expense of removal, too, must be such as might reasonably be incurred under the circumstances of the occasion. Angell on Fire Ins. § 117. When such a case exists, we think it the better opinion to hold that the underwriters are chargeable for the damage and expense of remov- ing the goods, as this result seems most in accordance with reason, the analogies of the law, and public policy. Such, also, is the conclusion of Mr. Phillips, the learned commentator on the law of insurance. " It seems," he says, "to be the better doctrine, and the one most closely analogous to the jurisprudence on the subject of insurance generally, that the underwriters are liable for such damage and expense, reasonably and expediently incurred, as being directly occasioned by the peril in- sured against." 1 Phillips' Ins. 64.5, 646. The doctrine we maintain on this subject is applicable to a large class of cases, recognized by the law of insurance, and is found in that well-established principle of the law of insurance, that insurance against, or an exception of a peril, besides the consequences immediately following Thb Policy. 267 taches for goods stolen.^ The general rule embraces all losses by an injury to the goods by water, while endeavoring to extinguish a fire ;2 by theft during the progress of the fire while the goods are being, or even after they are removed ; ^ by the blowing up of it, may include, also, a loss or expense arising on account of it, althougli what is in- sured against, or excepted, does not actually occur, provided the peril insured against, or excepted, does not actually occur, provided the peril insured against, or excepted, is the efficient acting or imminent cause or occasion of the loss or expense. 1 Phillips' Ins. § 1131. The proximity of the fire to the building occupied by the plaintiff, its rapid progress, terrible intensity and fearful ravages, leave no reason to doubt but the goods were removed, through a reasonable apprehension tliat they would be destroyed by fire if suffered to remain. Their situation, too, in the third story, requiring earlier attention, rendered their condition more hazardous than if they had been on the first floor. A prudent iminsured person could scarcely have omitted the precaution taken by the plaintiff. In removing the goods, the plaintiff was bound to exercise that reasonable degree of care which was suited to the cir- cumstances of the occasion : and, when we consider the situation of the goods, the imminence of the peril, and the terror and consternation naturally excited by the progress and fury of the conflagration, we are not prepared to say that he did not exercise such care." Brady v. N. W. Ins. Co., 11 Mich. 425 ; Case v. Hartford Ins. 1.S 111. 676. In Hillier Co., v. Alleghany Ins. Co., ante, it was held that the company was not liable for damage resulting from a removal where there was reasonable ground of danger, and the fire was then raging in the same block with that from which the goods were removed. But the doctrine of this ease, it is believed, does not express the true rule in such cases, and the question is made to depend upon the circum- stance whether the goods were removed ex necessitate to prevent them from being destroyed, and there was reasonable ground to apprehend such danger. A loss by theft, breakage, or other cause, is recoverable. Witherell v. Maine Ins. Co., ante ; Case V. Hartford, etc., Ins. Co., ante. In Tilton v. Hamilton F. Ins. Co., ante, it appeared that the value of the goods saved amounted to -19,488.66. When the store was closed the evening previous, the value of the stock amounted to $ 12,948.01. The fire was discovered about midnight, and before it reached the stock in question it was removed across the street, piled up on the sidewalk by persons acting in be- half of insurance companies generally, who were stationed in charge of them ; was subsequently removed to another building one hundred feet distant, locked up, and the key retained by one of the insurance agents until it was delivered the following day to the insured. Several hundred persons assisted in removing the goods, and there was a great deal of confusion, and much opportunity for some of the goods to have been stolen. It was held, it was immaterial whether the goods were iDurned, or abstracted, or stolen while they were being removed out of the reach of the fire, for where existing circumstances, by their continuance, would create a total loss, the loss continues total, although those circumstances may have wholly changed, if the property is not beneficially restored to the insured ; that if the goods were re- moved from a building actually on fire, and they would have been destroyed by that fire had they remained in it, the loss was a natural consequence of the peril insured against. Case v. Hartford Ins. Co., 13 111. 676 ; Angell on Fire Insurance, sec. 17. 1 Webb V. Protection Ins. Co., 14 Mo. 3; Fernandez v. Merchants', etc., Ins. Co., 17 La. An. 131 ; Liverpool, Lon. & Globe Ins. Co. v. Creighton, 51 Ga. 95 ; Leiber V. L.,L.& G. Ins. Co., 6 Bush. (Ky.) 639. 2 Witherell v. Maine Ins. Co., 49 Me. 200 ; Hillier v. Alleghany Ins. Co., 3 Penn. St. 470. Lewis v. Springfield Ins. Co., 10 Gray (Mass.) 159 White v. Bepublic Ins. Co., 57 Me. 91 ; City Ins. Co. v. Corlies 21 Wend. (N. Y.)367 ; Witherell v. Maine Ins. Co., 49 Me. 200 ; Ca.se v. Hartford Ins. C, 13 111. 379. ^Hillier v. Alleghany Ins. Co., ante; Witherell v. Maine Ins. Co., ante; White v. Republic Ins. Co., ante. An insurance company insured against fire a stock of frangible goods in A.'s house. There was a furious fire in the neighborhood which damaged A.'s house to some extent. A.'s neighbors, in good faith, removed the insured goods, and in the hurry and excitement they were considerably damaged 268 The Risk and its Incidents. the building, to stay the progress of a conflagration,^ or from any cause which is traceable directly to an accidental fire, as injuries from smoke or einders,^ the fall of burning buildings, or of the walls of buildings destroyed by fire.^ In a Massachusetts' case * by a policy in the defendant company, the plaintiffs' goods were insured " against all such immediate loss or damage as may occur by fire to the property." A steam-boat, having on board the goods, was injured by a collision with another vessel. A fire immediately broke out. The vessel was provided with pumps and apparatus for putting out the fire and for pumping out the hold, and these were at once put in operation and had extinguished the fire, when it broke out in another place and prevented their fur- ther use. There would have been no loss of the goods except for the fire, which rendered it impossible to run the engine, extin- guish the fire, or pump out the water flowing in through the breach caused by the collision ; that for the same reason it was impossible to take any measures to stop the leak, or to conduct or guide the vessel to shoal water, which was near at hand ; or to enable other vessels in immediate neighborhood to render assist- ance, either by keeping the vessel afloat or removing her cargo. The crew were obliged to abandon her. She remained floating and burning in substantially the same place for half an hour after the collision, and sank in four or five fathoms of water, carrying down the plaintiffs' goods, which were not burned. It was held that defendant was liable on the policy for the loss of the goods. In order to entitle a party to recover on a policy in- suring his goods against loss by fire, it is not necessary that the goods themselves should be injured or consumed by the fire. The insurer is liable for all losses which result from the fire and can be fairly attributed to it, said Endicott, J. : " If the property is in- jured by water used to put out the fire, it is within the protection of the policy." ^ So if it is submerged in water by the sinking of and broken. Had they been left in the house they would neither have been burned nor injured. It was held that the company was liable for the loss. Balestracci v. Mremens' Ins. Co., Hi La. An. 844. ^ Greenwald v. 7ns. Co. ante; City Fire Ins. Co. v. Corlles, ante. ^Geisick-v. Crescent Mut. Ins. Co., 19 La. An. 297; Thompson v. Montreal Ina. Co., 6 U. C. (Q. B.) 319. 'Johnson v. West of Scotland Lis. Co., 7 Ct. of Sessions Cases (Sc.) 52. * N. Y. & Boston Despatch Ex. Co. v. Traders &c. Ins. Co., 132 Mass. 377. ^ Lewis V. Springfield Ins. Co., 10 Gray (Mass.) ir>9; City Iiis. Co. v. Corlles. 21 The Policy. 269 a ship, and this is caused by the fire, it is equally covered although not burned. Undoubtedly the injury occasioned by the collision would have caused the vessel to sink and thereby have injured the plaintiffs' property ; and if that had been the only cause operating, the plaintiffs cannot recover, for the insurance is not against col- lision, but only against fire. But if means and appliances were at Land by which that result could have been avoided, and the inter- vention of a new agency, namely that of fire, prevented their use, then the fire was the proximate and immediate cause of the loss.. It added a new element of destruction, which rendered it impos- sible to control or prevent the consequences which would naturally follow from the collision.^ So far as the question what constitutes proximate cause is concerned, the same considerations apply equally in actions of contract as in actions of tort.^ In every case, of course the liability of the insurer is to be determined by the contract itself, and the circumstances of the case, and it is a ques- tion of fact for the jury, whether the damage is the proximate result of the peril insured against.^ The proximate cause of the loss determines the liability of the insurer, in cases where exceptions to its liability are made. Thus, where a canal boat was insured by policy exempting the insurers fi-om liability if the boat should be " prevented or detained by ice " from finishing her trip. In a storm the boat was broken away from the tug which was towing her, and stranded. Ice formed round her during the night, and she remained frozen in for some days, until a thaw came, when she was cast against another boat, and lost. It Wend. (N. T.) 367; Case v. Hartford Ins. Co., 13 111. 676; Weiherellv. Maine Ins. Co., 49; Me. 200; WTiite v. Republic Ins. Co., 57 id. 91. 1 Metallic Co. v. Fitchburg B. Co., 109 Mass. 277; Atkinson v. Waterworks Co. L. H.. 6 Ex. 404. ^lonides v. Universal Ins. Co., 14 C. B. (N. S.) 259; Madrden v. Assurance Co., L. K., 1 C. P. 232; Howard Ins. Co. v. Transportation Co., 12 Wall (U. S.) 194; St. John V. American Ins. Co., 516; Peters v. Warren Ins. Co., 14 Pet 99 (U. S.). 8 Webb V. Rome, etc., R. R. Co., 49 N. Y. 420; Kellogg v. Chicago, etc., R. R. Co., 26 Wis. 224; 94 U. S. 469. ; Penn'a R. R. Co., v. Hope, 80 Penn. St. 393; Lent V. R. R. Co., 49 111. 349; Iliggins v. Dewey, 107 Mass. 494. In Ryan v. N. Y. C. R. R. Co., 35 N. Y. 210, and in Kerr v. Penn'a li. R. Co., 62 Penn. St. 353, a con- trary doctrine was held, but the doctrine of those cases has been repudiated by the courts of those States in later cases. " The question always is," said Mr. Justice Stkong in Milwaxikee, etc. R. R. Co. v. Kellogg, 94 U. S. 415, "was there an un- broken connection between the wrongful act and the injury, a continuous operation ? Did the facts constitute a continuous succession of events, so linked together as to make a natural whole; or was there some new and independent cause intervening between the wrong and the injury ? " 270 The Risk akd its Incidents. was held, that the storm, and not the ice, was the proximate cause of the loss, and, therefore, that the insurers were liable.^ So where a policy was insured exempting the liability from loss by fire caused, by invasion, riot, etc., or for a loss caused, by explosion, it was held that this did not exempt the company from liability for a fire caused by explosion.^ Where the terms of a policy declare that the company shall not be liable for any loss or damage " by fire, which shall arise by any explosion," an exception is created to the general language of the policy, and the company is not liable for a loss caused by a fire arising from an explosion of a steam-en- gine, or from any other article which was included among the things covered by the policy .^ The proximate cause of the fire controls in such cases, and, even though an explosion results, it is not necessarily the case that no recovery can be had. The ques- tion is, whether the explosion was the proximate cause of the fire. This principle was well illustrated in an English case.* In that case, by an insurance policy, plate-glass in the plaintiffs shop-front was insured against damage " originating from any cause whatso- ever, except fire, breakage during removal, alteration, or repair of the premises," none of the glass being horizontally placed or movable." A fire broke out on premises adjoining the plaintiff's and slightly damaged the rear of his shop, but did not approach the part where the glass was. While the plaintiff was removing his ^ Brown v. St. Mcholas Ins. Co., 61 N. T. 332. ^ Commercial Ins. Co. v. Bobinson, 6i lU. 265. ^ St. John ■v. American, etc., Ins. Co., UN. Y. 516; Haywardv. London, etc.. In,-!. Co., 7 Bos. (N.T.) 385; 1 Duer (N. Y.) .371; Harper \. N. Y. City Ins. Co., 1 Bos. (N. T.) 520, affirmed 22 N. T. 441. But a contrary doctrine was held In Boat- man's F. <£ M. Ins. Co. v. Parker, 23 Ohio St. 85, in which property was insured against fire hya policy exempting the insurers from liability " for damages occasioned by the explosion of a steam-boiler, or for damages by fire resulting from such explo- sions caused by gunpowder, gas, or other explosive substances," and it was held that the insurers were liable for damage by fire resulting from an explosion of gas. In Insurance Co. v. Tweed, 7 Wall. (U.S.) 44, cotton in building A. was insured against fire; fire happening " by means of any invasion, riot, explosion, or hurri- cane," being excepted. An explosion occurred in building B., across the street, which, threw down the walls of building A. , and produced an extensive fire in which building A. was destroyed. The fire was not communicated directly from building B. to building A., but it was communicated first to a third building, Co., and from thence to building A. The wind was blowing in a direction to favor the fire spread- ing from building C. to building A. Held, that the explosion was the proximate cause of fire which destroyed the cotton, and that the insurers were not liable. Evans v. Columbia Ins. Co., H K T. 146; McAllister Y. Ins. Co., 17 Mo. .306; Stanley v. Western Ins. Co., L R. 3 Ex. 71; Strang v. Sun Mut. Ins. Co., 31 N. Y. 103. *Marsden v. City, etc., Ins. Co., L. K. 1 C. P. 2.3a The Policy. 271 stock to a place of safety, a mob, attracted by tbe fire, broke the "window for the purposes of plunder. It was held that the proxi- mate cause of the damage was the lawless act of the mob, and that "the damage was not within the exception. In an English case,^ goods were insured by a policy which con- tained a warranty as follows : " Warranted free from capture, •seizure and detention, and all the consequences of hostilities, riots or commotions." The ship and cargo were lost by stranding, oc- casioned by the removal by the Confederate troops, during the war of the Rebellion, of a light on the coast of North Carolina, for the purpose of misleading United States ships. And it was held that the proximate cause of the loss being a peril of the sea, and not the hostile act of the Confederate troops in extinguishing the light, the insurer was liable as for a partial loss of that part of the cargo which remained on board incapable of being saved ; but as to that portion actually saved, or which would have been saved but for the seizure by the Confederate troops, this was a loss by ■" the consequence of hostilities " within the warranty, and for this the insurer was not liable. In a case in the United States Supreme Court,^ the vessel of the •defendant in error was injured by a collision, in consequence of "which she filled rapidly with water, and a fire broke out. The jury found that the damage done by the sinking of the vessel was the natural result of the fire only. It was also found that the water would not have caused the vessel to sink below her promenade deck, had not some other cause of sinking supervened. Strong, J., in answer to the claim of the plaintiff in error, that the sinking of the vessel was the result of two concurrent causes, one the fire, and the other the the water let in by the breach made by the collision, said : "As the influx of the water was the direct and necessary con- sequence of the collision, it is argued that the collision was the predominating, and therefore the proximate cause of the loss. The argument overlooks the fact, distinctly found, that the damage re- sulting from the sinking of the vessel was the natural and necessary result of the fire only. If it be said that this was but an inference from facts previously found, it was not for that reason necessarily a mere legal conclusion. But we need not rely upon this. Apart 1 lonides v. Universal Ins. Co., 14. C. B. (U. S.) 259. ^Howard Ins. Co. v. Transportation Co., 12. Wall. (U. S.) 194. 272 The Risk and its Incidents. from that finding, the other findings, unquestionably of facts, show that neither the collision nor the presence of the water in the steamer's hold was the predominating efficient cause of her going to the bottom. That result required the agency of the fire. It is found that the water would not have caused the vessel to sink be- low her promenade deck, had not some other cause of sinking supervened. It would have expended its force at that point. The effects of the fire were necessary to give it additional efficiency. The fire wan therefore the efficient predominating cause, as well as nearest in time to the catastrophe, which not only directly/ contributed to all the damage done, after the steamer had sunk to her promenade deck, but enlarged the destructive power of the water and rendered certain the submergence of the vessel." ^ The question of proximate cause has been before the courts in various forms connected with losses by fire. Thus, in a Massa- chusetts' case,^ the defendants' servants ran a train over a hose through which water was being conveyed to extinguish a fire in the plaintiff's buildings, and in consequence of the stoppage of the water by the severance of the hose, the buildings were consumed. The contention of the defendant was that no immediate injury was done to the plaintiff by his act, but that the direct cause of the injury was the fire, and that his act only indirectly contributed thereto. The court held, however, that the severing of the hose was the proximate cause of the destruction of the building. In an English case,^ a similar- question arose. In that case, by the negli- gence of the defendants, the plaintiff was unable to obtain a supply of water to extinguish a fire on his premises, and in an action to recover the damages, the defendant, as in the Massachusetts case, contended that not the lack of water, but the fire, was the proximate cause of the plaintiff's loss. Bramwell, B., in commenting upon this point, said : " It has been suggested that this was not the proximate cause of damage : but to my mind, clearly that is not so. The plaintiff's right is to have the pipes charged for the purpose of extinguishing fire ; and he has alleged that in consequence of these pipes not being so charged, he could not extinguish the fire, and ^ St. JohnY. American Ins. Co., 11 N. T., 516; Peters v. Warren Ins. Co., 14 Pet. (U. S.) 99. ^Metallic Compression Co., v. Mtchbury B. B. Co. 109 Mass. 277; 12 Am. Kep. 689. "Atkinson v. Newcastle etc. Waterworks Co., L. B. 6. Lxchq. 404. The Policy. 273 his house was burned down. It appears to me that we have here the immediate consequence of a proximate cause." Total loss. What is. Sec. 107. A loss is total, within the meaning of the term, when the identity and specific character of the thing insured is destroyed, although there is not an absolute extinction of all its parts.^ Thus, in the case of an insurance upon a carriage, ^ which was destroyed, except the wheels, which were saved, the court held that the loss was total, because it was the carriage which was insured, and its identity as a carriage, was destroyed by the fire. In a California case ^ a policy was insured upon a brick building which was so far injured by fire as to lose its identity as a building, and, although a large part of the walls and some of the iron attached thereto was left standing, it was held that the loss was total. In the court below, the question, at the request of the defendant, " was the build- ing totally destroyed ? " was submitted to the jury. The judge in- structed the jury upon the point, as follows : " A total loss does not mean an absolute extinction. The question is, whether all the parts and material composing the buUding are absolutely or physi- cally destroyed, but whether, after the fire, the thing insured still exists as a building ? Although you may find the fact that after the fire a large portion of the four walls was left standing, and some of the iron work still attached thereto, still if you find that the fact is that the building has lost its identity and specific charac- ter as a building, you may find that the property was totally de- stroyed within the meaning of the policy." This ruling was sustained on appeal, Ross, J., saying, " We think there was no error in the instruction. In a Missouri case * it was held that a policy of insurance upon a building is an insurance upon the building as such, and not upon the material of which it is composed.^ In a case in the Supreme Court of the United States ^ ^Insurance Co.,v. Focjarty 19. Wall (U. S.) 644. Hoggy. Augusta Ins. Co., 7 Raw. (U. S.) 595. Morcadier v. Chesapeake Ins. Co., 8. Cranch. (U. S. C. C.) 47 Hani- man V. Queen Ins. Co., 49. Wis. 71. 2 Judah V. Randall 2. Cal. (N. Y.) 324. 3 Williams v. Hartford F. Ins. Co., 54. Cal. 442., 34. Am. Kep 77. *Nave V. HomeMut. Ins. Co., 37. Mo. 430. ^Huets V. Globe Ins. Co., 127. Mass. 373. '^Ins. Co., V. Fogarty 19. Wall. (U. S.) 644. 18 274 The Risk and its Incidents. which was an action on a policy of marine insurance, the court held that the doctrine of an absolute extinction of the thing in- sured is not the true doctrine, even in the class of cases where the rule is stricter. In the course of the opinion, in speak- ing of an earlier case in that court ^ where there was an insur- ance of jerked beef of 400 tons, part of which was thrown into the sea, and part of the remainder so seriously damaged that the au- thorities of the city of Nassau refused to allow more than 150 tons of it to be landed, the court say: "It will be observed that in this case, as in an earlier one ^ the destruction spoken of is destruc- tion as to species, and not mere physical extinction. Indeed, philosophically speaking, there can be no such thing as absolute extinction. That of which the thing insured was composed must remain in its parts, though destroyed as to its specific identity. In the case of the jerked beef, for instance, it might remain as a viscid mass of putrid flesh, but it would no longer be either beef or jerked beef. Negligence of assured producing loss, effect of. Sec 108. Mere negligence on the part of the . assured or of his servants or agents, will not defeat a recovery for a loss happening as a consequence thereof. In order to have that effect, his negli- gence must amount to recklessness or wilful misconduct,^ or, as it ^Hogg V. Augusta Ins. Co., 7 How. (XJ. S.) 395. ^Morcadier v. Chesapeake Ins. Co., 8. Craneh. (U. S.) 47. ^ Johnson \. Berkshire M. F. Ins. 4 Allen (Mass.), 388; Chandlery. Worcester, etc., F. Ins. Co., 3 Cush. (Mass.) 328; Williams v. N. E. Mut. F. Ins. Co., 31 Me. 219 ; Huckains v. Ins. Co., 31 N. H. 238 ; Waters v. Merchants', etc., Ins. Co., 11 Pet. (U. S.) 213 ; Sherwood v. General Mut. Ins. Co., 14 How. (U. S.) 351 ; Busk y. Royal Exchange Ins. Co., 2 B. & Aid. 73 ; Shaw v. Robberds. 6 Ad. & El. 75 ; Dixon V.Sadler, 5 M. & W; 405: Gove v. Farmers' Ins. Co., 48 N. H. 41; 2 Am. Rep 168; Young v. Washington, etc., Ins. Co., 14 Barb (N. Y.) 545 ; Gates v. Madi- son, etc., Ins. Co., ante; Daniels v. Hud. R. Ins. Co., 12 Cush. (Mass.) 416 ; Waters V. Merchants', etc., Ins. Co., 11 Pet. (U.S.) 213; Campbell \. Monmouth Ins. Co., 59 Me. 430; St. Louis Ins. Co., v. Glasgow, 8 Mo. 713 ; Kane v. Hiber- nia Ins. Co., 38 N. J. 441 ; 20 Am. Eep. 409 : Catlin v. Sprimfleld F. &M. Ins. Co., ISiim. (U. S) 434; Columbian Ins. Co. v. Lawrence, 10 Pet. (U. S.) 507 ; Sandford v. Ins. Co., 12 Cush. (Mass,) 541; Maryland F. Ins. Co. v. Whiiford, 31 Md. 210 ; Mickey v. Burllwiton Ins. Co., 35 Iowa. 174. In Troy F. Ins. Co. v. Carpenter, 4 Wis. 20. the policy stipulated that, " whenever any alteration shall be made that increases the hazard, so as to increase the premium, the policy shall be void, unless an additional premium shall be given according to the rate of exposure, and insurers are not liable for any loss in consequence of repairing, finishing or building additions." A stove was put in the building for the purpose of drying plastering that had lately been put on, and the insurers claimed that the fire resulted from the negligence of the assured's servants. The court held, however, that, unless the use of the stove was a breach of the conditions of the The Policy. 276 is sometimes expressed. " such as evinces a corrupt design.^ There must be mala fides, and while gross negligence may be evidence thereof it does not necessarily of itself amount to fraud or bad faith. " Gross negligence," says Lord Kenyon, C. J.,^ " may be evidence ' of mala fides, but it is not the same thing. We have shaken off the last remnant of the contrary doctrine." It must be such conduct as evinces fraud, or design.* But in Pennsylvania it has been held that where the act of the assured is reckless, although not wilful, it is such as excuses the insurers. Thus, vphen the owner of a steamboat, who was also master, while racing with another boat, took a barrel of turpen- tine, put it in front of the furnace and used it on the wood and 'Coal to increase the steam, and as a conseq[uence the boat was de- stroyed ; although the jury specially found that the conduct of the master was not wilful, yet the court held his misconduct was such as excused the insurers.* In a New York case ^ a fire was communicated to the building covered by the policy, by the burn- ing of a building being erected by the assured on an adjoining lot. The policy did not prohibit rebuilding. The court held that the negligence or misconduct was not such as to debar him from a re- covery for the loss ; but seems to have put the case upon the ground that there was no evidence but that the assured exercised reasonable care to prevent che accident.^ policy against increase of risk, the negligence of his servants, however great in ■degree, was no defense. See also Busk v. Royal Ex- Ass. Co., 2 B. & A. 73. Walk- er V. Maitland, 5 id. 171. Proof of mere negligence is not admissible. Henderson V. Western M. & F. Ins. Co., 10 Eob. (La.) 164. And the same rule prevails in reference to marine risks. Unless the negligence of the assured, or of the master .and, crew, Is so wilful as to amount to batratry, the insurer is liable. Dixon v. Sadler, 5 M. ifc W. 405; Carruthers v. Gfray, 3 Camp. 142 ; Busk v. Boyal Ex. As. Co., 2. B. & A. 73; Redman v. Wilson, 14 M. & W. 416. 1 Hyndes v. Schenectady, ect., Ins. Co., 16 Barb. (N. T.) 119. 2 Goodman v. Harvey, 4 Ad. & El. 876. If the negligence of the assured was not wilful or so gross as to amount to fraud, the insurer is liable for. Lycoming Ins. Co. V. Barringer, 73 111. 230. 2 Columbian Ins. Co. v. Lawrence, 10 Peters (U. S. ) 507. * Citizen'.s Ins Co. v. Marsh, 41 Penn. St. 386 ; The " term gross negligence" says the ■court In Lycoming Ins. Co. v. Barringer 73 111. 230 " as used in a condition of a policy of insurance exempting from loss on that account, is the want of that diligence, which even careless men are accustomed to exercise." See also, Himley V. Stewart, 1 Brev. (S. C.) 209 ; Morel v. Mississippi, etc., Ins. Co. 4 Bush (Ky.) 585. s Toungv. Washington Co. Mut, Ins. Co., 14 Barb. (N. T.) 545. 6 Young y. Ins. Co., 14 Barb. (N. T.) 545; Stebbinsv. Globe Ins. Co., 2 Hall of incorporating all the survey, as much as any part of it, into the policy, and that all the answers, applicable to the subject-matter, were obligatory on the insured. It was also held, that the policy and the survey constituted the entire contract between the parties, and that, as there was no imperfection or ambiguity in its language, evidence of parol representations, made prior to the issuing of the policy, could not be received, to explain and qualify the contract. But when one of the interroga- tories was: "Is there a watchman in the mill during the night?" to which the answer was: " There is a watchman nights," the court were inclined to consider the answer not as a warranty, but as a representation material to the risk, to be sub- stantially kept and performed. See also, relating to the last proposition, Sayles v. N. W. Ins. Co., 2 Curtis (U. S. C. C.) 610; Bulkle;/ v. Protection Ins. Co., 2 Paine (V. S.) 82; Gloucester M/'g Co. v. Howard F. Ins. Co., 5 Gray (Mass.) 497. ^Murdoch v. Chenango County Mut. Ins. Co., 2 N. Y. 210. ^Duncan v. Sun F. Ins. Co., 6 "Wend. (N. Y.) 488. In such cases the juxtaposi- tion of the papers is a sufficient indication of the intent of the parties to incorporate them into the contract, at least prima facie, even though no words are used to that effect. Emerson v. Murray, 4 N. H. 171 ; Stocking v. FaircMld, 5 Pick. (Mass.) 181. In Roberts v. Chenango Co., etc., Ins. Co., 3 Hill (N. Y.) 501, the policy was printed on one side of the sheet, and on the other side was a printed statement, headed " Conditions of Insurance," but no express reference was made thereto in the body of the policy. The court held that the " conditions " were a part of the policy ; Cowen, J., saying : " There can be no doubt of the intent, that both should be taken together. The assured accepts the policy with what purports to be condi- tions on the same sheet, or any sheet physically attached. There is in such case, no need of an express reference by the policy, to the conditions in order to fix the meaning. The juxtaposition of the papers in a sufficient expression, at least prima facie. That may be rebutted by parol evidence, as by showing that the two were thus connected by mistake, but no attempt was made to disannex them at the trial, and for aught I see, the legal effect was conceded." ^Le Royv. Market Fire Ins. Co., 36 N. Y. 90. The proposal for insurance if adopted by the policy as a part thereof, is to be regarded as though incorporated into the policy itself. Duncan v. Sun Mut. Ins. Co., 6 Wend. (N. Y.) 488. And all the statements therein are warranties that must be strictly or literally true. * Brown v. Cattaraugus, etc., Ins. Co., 18 N. Y. 385. Waeeanties. 351 So too, where there is a -writteii application for a policy, and it is referred to therein as the basis of the insurance, the application is as much a part of the contract as the policy, and loth together, and neither alone, forms the actual contract between the parties. ^ But where the application is not made a part of it, and the policy varies from the application, or a written order for insurance, in proceeding for its reformation, the application or order will be con- sidered as containing the actual contract between the parties. But in all respects where there is no material variance between the ap- plication and the policy, the policy will be regarded as alone the proper evidence of the contract, and the application or order can ■only be resorted to so far as a variance between them exists.^ In Massachusetts, by statute, all conditions of insurance are re- •quired to be stated in the body of the policy,^ but it is held, that this requirement is met, by an express reference to a schedule or ■details of regulations printed upon another sheet or page of the policy, but that the fact that regulations and conditions are printed upon the policy, does not make them a part thereof unless referred to in the hody of the policy and the substance thereof is printed in the Chasev. Hamilton Ins. Co., 20 N. Y. 52. Thus, where the policy stated "reference ^eing had to the application, for a more particular description, and the conditions annexed, as forming a part of this policy," makes the conditions and application as much a part of it as though they were written in its body ; and statements in the application as to the situation and uses of the premises are to be regarded as express "warranties, and parol evidence cannot be admitted to modify such application ; and the policy is void if a warranty is untrue, though the loss happens in a mode not affected by the falsity. Jennings v. Chenango Co. Mut. Ins. Co., 2 Den. 75 ; Gates V. Madison Co. Mut. Ins. Co., 5 N". Y. 469 ; Burritt v. Saratoga Co. Mut. Fire Ins., Co., 5 Hill, 188; Duncan v. Sim Fire Ins. Co., 6 Wend. 488. An application signed by issued, and referred to in the policy, " as forming a part thereof," is thereby in- ■corporated into the policy. Smith v. Empire Ins. Co., 25 Barb. (N. Y .) 497 ; Chaff ee -V. Cattaraugus Ins. Co., 18 N. Y. 376; Murdoch v. Chenango, etc., Ins. Co., 2 id. 21o ; Snyder v. Farmers' Loan Ins. Co., 13 Wend. (N. T.) 92 ; Burritt v. Saratoga Ins. Co., 5 Hill (N. Y.) 188. It was held in Magan v. Ins. Co., 2 Den. (N. Y.) 326, that the mere words " ioT a more particular description and forming apart of this policy," made the application a part of the contract. But if the policy merely refers to the application "for a more particular description," only that portion describing the risk, becomesa part thereof. Owens v. Holland P. Ins. Co., 56 N. Y. 565; Wall V. Howard, 14 Barb. (N". Y.) 383 ; aff'd Ct of Appeals, 17 N. Y. 197; Delonguemere -V. Tradesman's Ins. Co., 2 Hall (N. Y.) 589 ; Stebbins v. Globe Ins. Co., 2 id. 632. So all papers annexed to and delivered with the policy, are prima facie a part thereof. Jube V. Brooklin F. Ins. Co., 28 Barb. (K. Y. ) 412; Murdoch v. Chenango, etc., Ins. Co., ante ; N. Y. Central Ins. Co. v. National Protection Ins. Co., 20 id. 468 ; Roberts v. Chenango, etc., Ins. Co., 3 Hill (N. Y.) 501; Sexton v. Montgomery, etc.. Ins Co., 9 Barb. (N. Y.) 191; Allen v. Hudson R. Ins. Co., 19 id. 442. But in de- termining whether they are so or not, must depend upon the manner of their annex- ation and the evident intention of the parties. Murdoch v. Chenango Ins. Co., ante. 1 Philbrooh v. N. E. Mutual F. Ins. Co., .37 Me. 137. ^Delaware Ins. Co. v. Hogan, 2 Wash. (U. S.) 4. a Statutes of 1864, Chap. 196. 352 Application. body of the policy} But this doctrine is predicated upon the ground of statute requirement, and is not expressive of the common law rule. In New Hampshire, by statute it is provided that no policy of in- surance shall be avoided by reason of any mistake or misrepresenta^ tion, unless fraudulent ; ^ and in Georgia, the whole contract is re- quired to be in writing. Where, in an application for insurance whereby the assured agrees that the application is a just, full 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 are known to him, and are material to the risk, it is immaterial whether the statements- are regarded as warranty, or merely as representations of the truth of the statement, because the applicant only assumes responsibility for their truth so far as the facts are known to him and material to his risk.^ The application and the policies are to be read together, and it is a familiar rule ia the interpretation of conditions vrhich. work a forfeiture that they are not to be extended by construction^ and being inserted for the benefit of the insurer, they are to be liberally construed in favor of the assured. No effect can be given to the covenant on the part of the applicant at the end of the ap- plication, unless it is construed as restricting his undertaking and holding him accountable for the accuracy of his statements so far only as the facts stated are material to the risk. If every state- ment and the truth of every answer were to be treated as material, there would be nothing upon which the restriction could operate. Therefore where in answer to a question whether there was a planing machine upon the premises, the insured answered. No ; but there was a planing machine on the premises, but not upon those insured, it was held that the premises to which the question and answer refer are the insured premises, not the adjuncts or adjoin- ing premises,* and consequently that there was no misrepresenta- tion.^ When a question is not answered it is not to be inferred that there was nothing which required an answer, and in such case, if the answer is not responsive or satisfactory the insurer waives a full answer.^ Conditions that work a forfeiture are not to be ex- * Mulloney v. National Ins. Co.,, 118 Mass. 393. 2 Gen. Statute, eh. 157, sec. 2. ' Houghton v. Manufacturer' s Ins. Co., 8 Met. 114. * Northwestern Ins. Co. v. Germania Ins. Co., 40 Wis. 446 ; Carlin v. Western Assurance Co., 57 Md. 515. ^ Mulville V. Adams 19 Fed. Eep. ^ Higgins v. Phoenix Ins. Co., 741^. Y. 6 ; Carson v. Jersey City Ins, Co., 43 N. Waeeantibs. 353 tended by construction. Being put into tlie policy for tlie benefit of the insurer, they will be construed most liberally for the assured.^ The materiality of the representation is a question of fact. The test is the probable effect of the representation upon the judgment of the insurer. Stipulation in application does not make it part of policy. Owens v. Hol- land Purchase Ins. Co. Sec. 151. The policy must adopt the application as a part of the contract, and, failing to do so, it does not become so, although the application in terms so provides. Indeed, it has been held that, although it is expressly stipulated in the application " that the foregoing valuation, description and survey are true and correct," and that the assured " submits them as his warranty," yet, the application is not thereby made a part of the policy, nor are the statements therein warranties, except so far as they are expressly referred to in the policy. Thus, in a quite recent case before the Court of Appeals in New York,^ an action was brought upon a policy issued by the defendant company, upon the plaintiff's dwel- ling-house, farm buildings, stock, furniture, etc. In the applica- tion, the value of the dwelling-house and wood-shed attached, was stated to be $1,000, and the value of the land and buildings $14- 000, and that the premises were unincumbered to the extent of $8,000. The application contained a clause as follows : " And the applicant hereby covenants and agrees that the foregoing valua- tion, description and survey, are true and correct, and they are submitted as his warranty and a basis for the desired insurance." The only reference to the application in the policy, was a state- ment that the company insured the plaintiff " against loss or dam- age by fire or lightning, to the amount of $4,500, upon the follow- ing property as described in application and survey bearing even date herewith." The defendants claimed that the value of the property had been overstated in the application, and, consequently, that there was a breach of warranty on the part of the assured J. L. 300 ; Com v. Hide & Leather Ins. Co., 112 Mass. 136. Liberty Hall Assn. v. Housatonics Ins. Co. 7 Gray (Mass.) 261, Dohn v. Farmer's Ins. Co. 5 Lous. (N. Y.) 275 Hall V. Peoples, Ins. Co. 6 Gray (Mass. ) 185. ' Palmer v. Warren Ins. Co. 1 Stony (tJ. S.) 360, State Ins. Co. v. Markens 38 N. Y. S. 564 ; Stone v U. S. Casualty Co. 34 N. Y. S. 375 ; Hartford v. Ins. Co. v. Walsh. 2 Owens V. Holland Purchase Ins, Co., 56 N. Y. 565 ; Weed v. Schenectady Ins. Co., 7 Lans. N. Y. 452. 23 354 Application. which discharged their liability. The referee found that the value of the land and buildings was not less than $10,000, nor more tliau $12,000. The court held that the statements in the application did not amount to warranties although so declared therein, and that, the policy not having made the application a part of it, it could only be regarded as having so much of it as it specially re- ferred to, and that only embraced the description and not then valu- ation of the premises. The doctrine of this case is in consonance with the doctrine of the English courts. Thus, where the policy without adopting the application or proposal, singles out particu- lar statements therein to constitute their warranties, and the gen- erally provides that " if anything so warranted shall not be true, or if anything material in the statement shall not have been truly stated, or has been misrepresented or concealed, and has not been been fully or fairly disclosed and communicated to the company, or if any fraud has been practiced upon the com- pany, or any false statement made to it in or about the ob- taining or effecting the insurance, the policy shall be void," it is held that the statements in the proposal are not to be treated as warranties, but as mere representations.^ Nor, indeed, is every statement in a proposal for insurance to be treated as a warranty, although incorporated into the policy. In order to con- stitute a warranty, it must amount to more than mere words of description, and must he an affirmative statement of certain facts, or a state of facts, and not mere descriptive matter not understood or intended by the parties as a warranty.^ An application for in- surance made to one company cannot afterwards be made a part of the contract of insurance in another company without a specific de- scription of the application be something more than a mere refer- ence to its number. Thus on the expiration of a fire policy issued to V. by the W. company, he wrote to the agents to insure the property in a good company ; whereupon without other application, they procured for him a policy from the N. company, declaring the applicant's description, etc., to be part of the policy, and add- ing, after a statement of the different buildings, the words "as per application No. 1234," which was the number of V.'s appli- cation to the W. Meld, that this was not a sufficient reference to 1 Budd V. Fairwaner, 8 Bing. 48 ; Anderson v. Fitzgerald. 4 H. L. Cas. 484 ; Stokes V. Cox, 1 H. & N. 533. ^ Budd V, Fainoaner, ante ; Stokes v. Cox, ante. Waeeanties. 355 make that application part of the N.'s policy, and that the only ■application binding, on V. was his letter to the agents. Accord ingly, V. was not bound by a diagram on the back of the appli- cation to the W. presumably drawn by some agent thereof.^ l}escription of risk a 'vrarranty, except lArhen insurer knows it is erroneous. Sec. 152. The description of the risk amounts to a warranty that the risk is as described, but not necessarily that it shall re- main so. Thus, where the property is described as a frame house filled in with brick, the policy is void, unless the house is in fact filled in with brick,^ and it has been held that in such cases where the falsity of the application was known to the agent who drew it, the company were not estopped from relying upon its falsity in- ■defense. ^ The tendency of the later cases, is, that, when the in- 1 Vilas Y. N. T. Central Ins. Co., 72 N. T. 59 2 Fowler v. ^tna Ins. Co., 6 Cow. (N. T.) 673. But it seems that it is competent to show by builders that a house in part constructed of brick, and in part of wood, is regarded as a brick building. Mead v. N. W. Ins. Co., 7 N. Y. 530. A warranty, if broken, whether material or not, defeats the policy ; it is never to be created by construction, but must necessarily result from the nature of the contract, or must appear on the face of the policy, or in its body ; and the printed proposals annexed to the policy are not exceptions to the rule, for they are incorporated in it by refer- ence. Jefferson Ins. Co. v. Cotheal, 7 Wend. (N. Y.) 73. ^ Kennedy v. St. Lawrence etc., Ins. Co., 10 Barb. (IST. Y.)285 ; Chase v. Hamil- ton Ins. Co., ante; Brown v. Cattaraugus, etc., Ins. Co., 18 N". Y. 385, being the condition ou which the policy is made, it must be strictly true, even though imma- terial to the risk ; and though knowledge on the part of the insurers of the falsity of a mere representation will be ground for relief, such knowledge in the case of a war- ranty will not. State Mut. Fire Ins. Co. v. Arthur, 30 Penn. St. 315. In Franklin F. Ins. Co. V. Martin 40 N. J. L. 568 ; 29 Am. Rep. 271, the policy described the premises as " occupied as a dwelling and boarding house known as the Mansion House. It was in fact a country tavern with a billiard-room in it. The agent tak- ing the risk knew that the building was used as a tavern, and had a billiard-room in it, which the plaintiff offered to show, but the court held that the evidence was uot admissible to show that under the description the company intended to insure the premises as in fact occupied and used. See also Dewees v. Manhattan Ins. Co., 35 N. J. L. 366 Sheldon v. Hartford F. Ins. Co., 22 Conn. 235 Barrett v. Union Ins. Co., 7 Cush (Mass.) 172, Jenkins v. Qaincy etc. Ins. Co., 7 G-ray (Mass.) 370, Columbian Ins. Co. v. Cooper, 50 Penn. St. 331 ; Rohrbach v. Germania F. Ins. Co., 62 X. Y. 47. " There is a distinction says Depue, J., in Franklin Ins. Co., v. Martin ante. , between a representation which is merely collateral to the contract of insur- ance, and a warranty or condition which is part of the contract itself. A represen- tation collateral to the contract will not avoid the policy though it be untrue, un- less it was fraudulently made ; but the validity of the entire contract depends upon the truth or fulfilment of the warranties and conditions. Deuiees v. Manhattan Ins. Co., 34 ]Sr. J. L. 247. Where the defense is that a representation collateral t,i the contract was false, and was fraudulently made, the gist of the defense is the fraud of the plaintiff by which the insurer was misled, and induced to make the contract of insurance. To such a defense, proof that the agent of the insurer had knowledge of the true state and condition of the premises is a complete answer ; for with such knowledge no deception is practiced. Marshall v. Columbian Mu. F. Ins. bell v. Farmers', etc., Ins. Co., .37 N. H. 35 ; People' sins. Co., v. Spencer 53 Penn. St. 353 ; Franklin V. Atlantic Ins. Co., 42 Mo. 456 ; Hartford Protection Ins. Co. v. Ilarmer, 2 Ohio St. 452; Atlantic Ins. Co. v Wright, 22 111. 462 ; Ayres v. Hartford Ins. Co., 17 Iowa, 176 ; Aurora F. his. Co. v. Eddy, 55 111. 213 ; Ayres v. Hartford Ins. Co., 21 Iowa, 185 ; Howard, etc., Ins. Co. v. Cormick, 24 111. 455 ; Andes Ins. Co., v. Shipman, 77 111. 189; Rockford v. Nelson, 65 id. 415 ; or recognizes the validity of the contract after knowledge of its breach, Frost v. Saratoga Mut. Ins. Co., 5 Den. {N. Y.) 154 ; Mershon v. National Ins. Co., 34 Iowa, 87; Keenan v. Missouri, etc., Co., 12 Iowa, 126 ; Viall v. Genesee, etc., Ins. Co., 19 Barb. (N. Y.) 440; Lycoming Ins. Co. V. Stockbower, 26 Penn. St. 199. The description is a warranty that the property is as described ; and if untrue in. substance, the policy is void, although there is no fraud. Foioler v. ^tna Fire Insurance Co., 6 Cow, 673. Trench v. Chenango Co., Mut. Ins. Co., 7 Hill. (N". Y.) 122. Jennings V. Chenango Co., Mut. Iras. Co. , 2 Den. (K. Y. ) 7-5. But the application, describing a building, is not a warranty, unless inserted or referred to in the policy. Jefferson Ins. Co., v. Cotheal,! Wend. (N. Y.) 72. But if the policy referred to the application for a more particular description, and as " forming part of this policy," it amounts to a warranty. Burrittv. Saratoga Co., Mut. F. Ins. Co., 5 Hill (N. Y.) 188. Jennings v. Chenango Co. Mu. Ins. Co., 2 Den. (N. Y.) 75. Kennedy v. St. Lawrence Co. Mu. Ins. Co., 10 Barb. (N. Y.) 285. Smith v. Empire Ins. Co., 25 id. 497. And such warranty must be strictly true, or the policy will not take effect; and this, whether it is material to the risk or not. But where the assured was re- quired to state the distance of the property insured from other buildings, if less than ten rods, and in his application, he named the nearest buildings on the several sides of the premises, but did not state all the buildings within ten rods ; it was held not to be a warranty that there are no other buildings within that distance. Gates V. Madison Co. Mu. Ins. Co., 2 K. Y. 43 ; 5 Id. 469 ; Masters v. Madison Co. Mu. Ins. Co., 11 Id. 624. Any statement or description in a policy of insurance against fire, which relates to the risk, is a warranty ; therefore, where, in a policy upon the stock of a ropemaker, it was described as contained in a building " occupied as a storehouse," and it appeared that a portion of it was used for hackling and spinning hemp, the policy was de- clared void. But although the description, in the application, may vary from the actual state of the property, at the time of the loss, it will not avoid the policy if it were not fraudulently intended, and does not, in fact, affect the rate of insurance, or change the actual risk. Wall v. East River Mu. Ins. Co., 7 N. Y. .370 ; overruling Wall V. Howard Ins. Co., 14 Barb. (K. Y.) 383. A survey, attached to an appli- cation, though referred to in the policy, is held to be a mere representation, and not a warranty : and if substantially correct, the policy is binding. Snyder v. Farmers' Ins. and Loan Co., 13 Wend (K. Y.) 92 ; 16 id. 482. Delonguetnarev. Tradesmen's /».•!. Co., 2 Hall (N.Y.) 389. Clinton\. Hope Insurance Co., 4o'!!i. Y. 4.54. Ifapolicy erroneously refers to a wrong survey, it is held nevertheless, a warranty, and there can be no recovery by the assured, Le Roy v. Market Fire Insurance Co. , .39 K. Y. 90 ; 45 Id. 80. But where premises are insured according to a survey made by the surveyor of the insurance company, the assured is not responsible for a misdescrip- tion. Benedict v. Ocean Ins. Co., 1 Daly (N. Y. C. P.) 8. And where property in the same city is insured, without any representation, upon a survey made by the insurer's agent, the assured is not bound to give written notice of an increase of the risk, by a change in the use of the neighboring premises ; a verbal communication, at the time of a renewal of the policy is sufficient. Liddle v. Market Fire Insur- ance Co., 29 N. Y. 184 ; 4 Bos. (K. Y.) 179. If the assured, in answer to written interrogatories, untruly states the relative situation of other property, within ten rods, it avoids the policy. Chaffee v. Cattaraugus Co. Mu. Ins. Co., 18 N. Y. 376. Brown v. Cattaraugus Co. Mu. Ins. Co., 18 id. 385. But such an omission does not render the policy absolutely void ; but voidable, at the election of the company. 358 Application. pany or its agent was informed of and knew the real facts at the time when the contract was made or the premium paid.^ In such. Huntley v. Perry, 38 Barb. CN. Y. 569. And such a warranty applies to an in- surance upon .goods deposited in a store and the warranty is broken, thoi^h the facts were known to the insurer. Kennedy v. St. Lcaorence Co. Mu. Ins. Co., 10 Barb. (N. Y.) 28.5. If the premises are described as a dwelling-house, when in fact,, they are used as a saloon, this is such a misdescription as avoids the policy. Lappin V. Charter Oak F. and M. Ins. Co., 58 Barb. N. Y. 325. Sarsfleld v. Metropolitan Ins. Co., 01 Id. 479 ; 42 How. Pr. (N. ^.) 97. The omission to notice a cellar vmder the building, is not a misdescription. Benedict v. Ocean In,nirance Co. , 31 N. Y. 389. An insurance upon a steam saw-mill, covers not only the building, but the machinery and fixtures therein necessary to make it a steam saw-mill in all its parts. Bigler V. New York Central Ins. Co., 22 N. Y. 402. So an insurance upon a building, and a stock of goods, such as is usually kept in country stores, includes articles, generally prohibited, except at special rates. Pindar v. Kings Co. F. Ins. Co. , SS- N. Y. 648. Where goods are insured on the first floor of a certain building, and are subsequently removed to an upper floor in the same building, if the insurers, with full knowledge of the change of location, receives the premium for a renewal, and issues a receipt therefor, referring to the building generally, the goods are covered in tlieir new location. Ludwig v. Jersey City Ins. Co., 48 N. Y. 379. A descrip- tion of the property by the assured, as "his stock," there being no other goods in the store, to which the description could be applied, is sufficient although the in- terest of the assured is only an equitable one as the assured is not generally bound to disclose the nature of his interest, unless material to the risk. Irving Y. Excelsior F. Ins. Co. 1 Bos. (N. Y.) 507. If the subject-matter is correctly described, it is not necessary for the assured to state the nature of his interest. White v. Hudson Biver Insurance Co., 7 How. Pr. 341. In the statement of incumbrances on the in- siu'ed premises, the assured is only bound to note specific liens thereon ; it need not embrace general liens by judgment. Owen v. Farmers' Joint-stock Iiix. Co. 57 Barb. N. Y. 518. But a wrong description of the place in which goods insured are deposited, avoids the policy ; and such misdescription cannot be reformed in equity, except on the ground of mutual mistake, or of mistake on the one side, which is fraudu- lently taken advantage of by the other. The description of the place of deposit, in an application for insurance upon personal property, is a warranty, the truth of which is a condition precedent to any liability thereon, without regard to its being essential to the risk, or an inducement to enter into the contract. Bryce v. Loril- lard F. Ins. Co., 55 N. Y. 240 ; 3 J. & Sp. (N. Y.) 394. Hughes v. Mercantile Mu. Ins. Co., 55 N. Y. 265. The trustees of a railroad company effected a policy upon any property belonging to them " as trustees and lessees as aforesaid, and on any property for which they may be liable, it matters not of what the property may con- sist, nor where it may be, provided the property is on premises owned or occupied by the said trustees, and situate on their railroad premises, in tlie city of Kacine ; " and the policy was held, to cover a dredge-boat, attached to their wharf, at the tei^ mination of the road. Farmers' Loan and Trust Co. v. Harmony F. and M. Ins. Co., 51 Barb. (N. Y.) 33 ; affirmed 41 N. Y. 619. Webb v. National F. Ins. Co., 2 Sand. N. Y. 497. 1 Miller V. Mut. etc., Ins. Co., 31 Iowa, 216 ; Aurora Ins. Co. v. Eddy, 55 111, 213 ; /ns. Co. v. Wilkinson, 13 Wall. (U. S.) 222. In Fames v. Home Ins. Co., 94 TJ. S. 62 1 . the defendant objected that the application did not correctly set forth the title of plaintiff in the property insured, or the nature of the incumbrances therein. The court say : As to the objection that the application in this case does not tnily set forth the title of the complainants, and the amount and nature of the incumbrances- on the property, and the amount of insurance in other companies, it is sufficient to say that the evidence abundantly shows that all the facts were fully and frankly communicated to Beach, the agent of the company, and were indeed known to him before ; and that he wrote down the answers according to his view of their bearing and legal effect, Eames relying entirely on his experience in such matters. There is no reason to suppose that either Eames or Beach did not act in entire good faith in the transaction. And, indeed, it cannot be pretended that the facts were not substantially as represented in the application. The complainants are represented to be the owners of the property which is stated to be subject to a mortgage for Warranties. 359 cases they are held as having waived the condition. And espe- cially is this the case when the agent fills up the application, and hnowing the real facts, misstates them either fraudulently or through mistake,^ and when the agent or the insurer fills up the application, he cannot be treated as the agent of the assured, al- though the policy so provides, because as the application precedes the policy, the assured cannot be presumed to know what its con- ditions or provisions are, and to hold that by such a stipulation unknown to the assured, at the time when the application was made, and when h'e relied upon it that the agent, acting for the insurer, knew how the facts should be stated, what should be stated, and what was material, etc., the insurer could make its agent the agent of the assured, so as to make him re- sponsible for the agent's laches, would not only enable the insurer to perpetrate the most outrageous frauds upon its patrons, but would also enable the insurer to saddle the assured with bur- dens which he never anticipated, and by a species of chicanery that is never tolerated by the law, to deprive him of the benefits of all legal presumptions as to the apparent powers of agents.^ It would certainly require an extraordinary stretch of legal principles to hold that a person dealing with an agent having apparently full authority to act for his principal in the matters to which the con- $6,000. The fact was that they had purchased the property for 812,000, and had paid $6,200 of the purchase-money, the vendor having a lien for the balance of $5,800, but no deed had ever been given. So that, in truth, the complainants did not hold the legal title, although they had an equitable one ; and had not given a mortgage, although the vendor's lieu was equivalent to one. In another answer, however, explaining the mortgagee's interest, it is stated expressly to be a " lien on mill to secure payment of sale." As the exact facts were communicated to the agent, and he took the responsibility of stating them in the way he did, leading the applicant to suppose that it was all right, we think it would be great injustice to turn him out of covui now for this Inexact method of statement. According to the views expressed by this court in the case of Insurance Co. v. Wilkinson, 13 Wall (U. S. ) 222, and other more recent cases, the defendant was concluded by the act of its agent. The reference to collateral insurances in other companies is subject to the same consideration. The insurances were being applied for through this very agent who wrote the answers, and who knew the whole facts, and between whom and the general agent they had been referred to in their correspondence. The defense on this ground is utterly destitute of equitable consideration. 1 Roberts Y. Continental Ins. Co., ante; Ancles Ins. Co., v. Shipman, ante ; Pit- ney V. Glen's Fall Ins. Co., 65 N. Y. 6 ; Planters' Mut. Ins. Co. v. Leford, 38 Md. .382 ; Roth v. City F. Ins. Co., 6 McLean (U. S.) 324 ; Commercial Ins. Co. v. Ives. 56 111. 402 ; Ins. Co. v. Malone, 21 Wall (U. S.) 152 ; Ins. Co. v. Wilkinson, 13 Id. 222 ; Hough v. City F. Ins. Co-, 29 Conn. 10 ; (3ieb v. International Ins. Co., 1 Dil. (U. S. C. C.) 443 ; McBride v. Republic F. Ins. Co., 30 Wis. 562 ; Peck v. New London, etc., Ins. Co., 22 Conn. 484. 2 Insurance Co. v. Wilkinson, 13 Wall. (U. S.) 222 ; Roth v. City Ins. Co., 6 Mc- Lean (U. S.) 324. 360 Application. tract related, could, hy notice given after the contract is made, that the agent was not an agent of the insurer at all, as to the matter, but really the agent of the assured, depriving the assured of the benefits of the contract. In order to be efficacious, such notice must be given be- fore the negotiations are completed.^ It will be presumed, however, that the assured knew of the application and its contents, and he takes the burden of showing the contrary .^ So where an applica. tion is filled out by an agent of the insurer and signed by the as- sured in blank, or without reading the application, it will be pre- sumed that he authorized its making and knew its contents, but he may show the contrary if he can.^ Examination of the risk by the insurer or its agent. Sec. 153. When the insurer examines the premises before in- surance, a misdescription thereof will not avoid the policy.* So, where the insurer knew that there was other insurance, that such in- surance does not operate a breach of the condition of the policy against other insurance, and the same rule applies to each and every condition of the contract, the rule being that a person has no tight to rely upon the truth of a statement, which he knows to be false.^ When kno'wledge of agent is not knowledge of insurer. Sec, 154. It will generally be found that, in cases where a con- trary doctrine has been held, the question turned upon the fact that the agent was possessed of only special powers of which the insured was, or ought to have been, aware. If a general agent knows the real condition of the risk when the contract is entered into by him, no misdescription, or misstatement thereof in the ap- plication, or in the policy, will avoid it.® ^ See Chapter on Agehts. 2 Hartford Life, etc., Ins. Co. v. Gray, 80 Dl, 28, » Hartford Life, etc., Ins. Co. v. Gray, 80 HI. 28. * Benedict v. Ocean Ins. Co., 31 N. T. 389 ; Continental Ins, Co., v. Kasey, 25 Gratt. (Va.) 268, ; 18 Am. Eep. 681: Wood v. Rutland, etc., Ins. Co., ; Emery v. Piiscataqua, etc., Ins. Co., 52 Me. 332; Cumberland Valley, etc., Ins. Co., v. Schell, 29renn. St. 31 ; Clark y. Manufacturers' Ins. Co. 8 How. (U. S.) 235 ;Bea!v. Bark Ins. Co., 16 Wis. 241. ^ Sherman v. Madison, etc., Ins. Co., ante. " Guardian Life Ins. Co. v. Hogan, 80 III. 35; Roberts v. Continental Ins. Co., 41 Waeeanties. 361 In many instances the doctrine is predicated upon the fact that the charter or general laws provided how a condition should be "waived ; and in such cases, of course, a waiver could not be made otherwise than as the law provided.^ "Waiver by agent. Mecbler v. Fboeniz: Ins. Co. Sec. 155. This was well illustrated in a Wisconsin case,^ the plaintiff and his brother entered into a contract for the sale and conveyance of a certain piece of land in the village of Reedsburg, Sauk County, for $1,600, payable in one year from the date of the instrument, with interest at ten per cent. Under this contract they took possession of the land, and erected a brewery building and fixtures, and put in the personal property insured. In Octo- ber, 1872, the plaintiff contracted with Florian Mechler for a sale a,nd conveyance to the latter of all the plaintiff's interest in said real property under the contract, as well as in the personal prop- «rty, for $6,600, Florian covenanting, meanwhile to keep the prop- erty insured. Florian Mechler then took exclusive possession of the property, and was in possession when the policy was issued and when the loss occurred. At the date of the application ior said policy, no part of the principal sum of $1,600 had been paid on the contract ; and it appears that about $6,000 were due from Florian Mechler to the plaintiff on the contract between them. The application of Florian Mechler for said policy con- tained the following questions and answers: — Q. " Ownership and value of the building and machinery ,• title owned in fee simple by the applicant, or are either or both held by lease ? Is there any other person interested in the property, or any part of it ? If so, state fully the nature of such interest." Ans. " Applicant has bond for deed ; his brother owns the legal title." Q. " What is the cash value of the buildings above the founda- tions, aside from the land ? What is the cash value of the mar chinery and fixtures ? What is the cash value of the stock ? " Ans. " Average $4,000 — machinery and stock $4,000. "Wis. 321. In Both v. City F. Ins. Co., 6 McLean (IT. S.) 323, it was held that, -where the agent of the insurer made the survey, and was as well acquainted with the situation of the risk as the assured, the insurer could not avail itself of a mia- description of the risk in defense. ^ Buffum V. Bowditch, etc.,, Ins. Co., 10 Cush. (Mass.) 540. ^ Mechler v. Phoenix Ins. Co., 88 Wis. 665; 5 Ben. F. I. C. 807. 362 Application. Q. "Incumbrance. Is the property incumbered by mortgage or otherwise, and if so, to what amount and to whom ? " Ans. " The whole, together with the real estate, which is worth 13,000, is encumbered about 16,000." Q. " Other insurance, what amount on building ? " A. "12,000 in Hartford Ins. Co." The policy provided that the application should be considered, a part of the contract and a warranty by the assured : that any false representation by him of the condition, situation, or occupan- cy of the property, any omission of facts material to the risk, anj-- over-valuation, and any misrepresentation, in tlie written applica- tion or otherwise, should avoid it ; that if any change should take place in the title or possession, whether by legal process, judicial decree, or voluntary transfer or conveyance, or if the interest of the assured in the property were not truly stated in the policy, it should be void ; and that in a case of a renewal of the policy, it should be considered as continued under the original represen- tations. It also provided that any loss under it should be paya- ble to the plaintiff, as his interest in the premises should ap- pear. In February, 1874, Joseph Mackey, to whom the interest of S. Mackey & Go. in the contract of the latter with the Mechlers had been transferred, commenced an action to foreclose the rights of the latter under that contract ; and on the 19th of March fol- lowing, took a judgment by which the rights of the defendants therein were to be forever barred, unless they should pay . said Mackey fl, 717.47 within ninety days. On the 16th of May following, the plaintiff procured a renewal of the policy, and paid the premium therefor. The land was never redeemed from this foreclosure. On the 12th of June, 1874, a few days before the time for redemption expired, the property insured was wholly de- stroyed by fire. At that time over |6,000 were due to the plaintiff from Florian Mechler, on the contract between them. The answer alleged intentional misrepresentations by Florian Mechler, in his application, first, in respect to the value of the building, which is alleged not to have exceeded $2,400 ; secondly, as to the state of the legal title to the reality ; thirdly, as to the incumbrances, the lien of S. Mackey & Co. being concealed. It also averred that the foreclosure of the Mackey contract was had and suffered at the instigation and in the interest of the plaintiff herein, and that he had made arrangements with Joseph Mackey to purchase the prop- erty of him again, after the equity of redemption should be ex- Waeeaktibs. 363 tinguished, for the sum due him, and thus to cut off the interest of Florian Mechler. It also set up the change which had taken place in the title before the renewal ; averred that such renewal was procured by plaintiff without the privity or consent of Florian ; and insisted that the renewal was not binding on defendant. On the trial, plaintiff testified that the building was worth, when burned and when insured, from $2,400 to $2,500. The person who took the original application for the policy, as defendant's agent, testified that it was in his handwriting ; that he knew at the time the state of the title to the land, and the fact that the Mackey con- tract had not been paid up, but that something over 11,600 was due on it, though he did not know the exact amount ; that he could not account for the statement about the title, unless it was a blun- der of his ; that he also knew of the contract between the Mechlers, but did not know how much was due plaintiff thereon ; that he had no recollection whether the $6,000 named in the application was in- clusive or exclusive of the amount due Mackey ; that he should say that the $6,000 must have been Florian Mechler's statement of the amount due, though he had no recollection about it ; that he also knew the building, and had looked it all over about the time he took the application ; that he thought he didn't know anything about the value of the building, but took tlie applicants' statement for that, though he did not recollect it ; that he was well ac- quainted with the value of property in that neighborhood ; that he never interfered with the valuation of property by the parties, but if he thought they wanted too much insurance, would not give it to them, because he would think that they had over-estimated the value ; that he used his own judgment as to the amount of in- surance ; and that he did not mean to insure this building for over one-half or two-thirds of its value. Florian Mechler testified that he signed the application after the agent made it out ; that he in- formed the agent that he had bought his brother out, and owed him $6,300 ; that the fact of Mr. Mackey having a claim for $1,600 was mentioned ; that nothing was said about the plaintiff having a deed of the property ; that he told the agent that the whole prop, erty — land, building and contents — was worth something over $7,000, but nothing was said about the value of the building sepa- rately. He further testified that he did not get the policy renewed, nor request any one to have it renewed. The person who acted as defendant's agent at the time of the renewal of the policy, testified that he spoke to the plaintiff about the renewal at the 364 Application. time ; and that he then knew that Mackey's claim had been fore- closed. The court refused instructions asked by the defendant, substantially as follows : That the application in evidence was the statement of the assured, and an agreement on his part that the statements therein were true ; that the valuation of the property in the application was material to the risk, and an over-valuation rendered the policy void ; that if the oral evidence in regard to the valuation was equally balanced, then the application itself created a preponderance of evidence in favor of the supposition that the assured gave the value as therein stated ; and that if Florian Mechler did not procure the renewal, the policy was not renewed. The jury were instructed : 1. That if at the time the ap. plication was made defendant's agent knew of his own knowledge, or was credibly informed hy the applicant, in regard to any of the ques. tions stated therein, whether in relation to the title, incumbrances, value, or any other circumstance, and himself filled up the applica- tion, then any mistakes therein were mistakes of the defendant, and not of the assured, and would not avoid the policy. 2. That if at the time of the renewal of the policy the agent knew of 'any change which had taken place in regard to the title to the premises, such renewal was a waiver of the conditions of the policy relative to such changes in the title. 3. That, notwithstanding the judgment of foreclosure, in evidence, Florian Mechler and the plaintiff had an insurable in- terest in the premises, until the time for redemption had expired. 4, That Florian Mechler was bound to keep the premises insured for plaintiff's protection, and, if he failed to do so, plaintiff had a right to renew the policy. 5. That by the terms of the contract between the Mechlers, unless it were terminated by a foreclosure or sur- render thereof, Florian would be entitled to a conveyance of the premises from the plaintiff, upon complying with its conditions, whether plaintiff acquired the legal title before or after the Mackey foreclosure had become absolute, and this would uphold the insiur- able interest of Florian in the premises. 6. That any erroneous representations of the assured would not vitiate the policy, unless re- lied upon in issuing it. 7. That, prima facie, all the statements in the application were to be regarded as having been made by the ap- plicant ; but if the jury should find, from the oral evidence, that he made no statement to the agent about the value, except as to all the property (including the land, building, etc., etc.), and that such value was not intentionally misstated or materially over estimated, and that the agent relying upon his oivn judgment as to the value of the prop- Waeeanties. 365 erty, or as to how much risk he would take upon it, made the inser- tions in relation to the value of the property found in the application, the fact that the value was stated too high by the agent would not defeat the policy. A verdict was rendered for the plaintiff for the amount claimed, which was upheld on appeal.^ Policy must clearly show that statements in application are to be treated as w^arranties. Sec. 156. Nothing stated in the application can be construed as a warranty, unless it is clearly made so by the terms of the policy, or hy some direct reference therein,^ nor unless it is clearly intended as a warranty. Thus, in an application for insurance upon a man- ufacturing establishment, certain questions were asked and an- swered as follows : " Are there casks kept in each loft constantly supplied with water ? " Answer, " There are, in each room, casks kept . constantly full." This answer was not literally true, but there were casks kept in each loft, constantly full, and this was what the assured meant in his answer, and the court held that evidence was admissible to show that in the general use of lan- guage among manufacturers the whole of a loft or story appropri- ated to a particular department, although the same is divided by partitions with doors, aad that the meaning of the word " room," and whether there was any such general use of language, was for the jury, and not for the court. In this case, Shaw, C. J., perti- nently said : " There is undoubtedly some difficulty in determin- ing, by any simple and certain test, what proposition in a contract of insurance constitute warranties, and what, representations. One general rule is, that a warranty must be embraced in the pol- icy itself. If, by any words of reference, the stipulation in another instrument, such as the proposal or application, can be construed a warranty, it must be such as to make it, in legal effect, a part of the policy. In a Massachusetts case, it was said that ' the pro- posal or declaration for insurance, when forming a part of the pol- icy, amounts to a condition or warranty, which must be strictly true, or complied with, and upon the truth of which, whether a 1 May V. 7ns. Co., 25 Wis. 291 ; McBride v. Ins. Co. 30 id. 562 ; Demne v. Ins. Co.. 32 id. 471 ; Parker v. Ins. Co., 34 id. 363. See also, Beal v. Ins. Co., 16 id. 241 ; Kekler v. Ins. Co., id. 523 ; Miner v. Ins. Co., 27 id. 693; Wright v. Ins. Co., 36 id. 223 ; Winans v. Ins. Co., 38 id. 342. '^Daniels v. Hudson R., etc., Ins. Co., 12 Cush. (Mass.) 416. 3 6G Alplication. misstatement be intentional or not, the validity of the whole in- strument depends.^ But no rule is laid down in that case, for de- termining how or in what mode such statements contained in the application, or in answer to interrogatories, should be embraced or incorporated into the policy so as to form a part thereof. The ' Vose V. Eagle Life & Health Ins. Co., 6 Cush, (Mass.) 47. A survey or applica- tion, though referred to in the body of the policy as more particularly describing the buildinr/ containing the goods insured, is not such a constituent part of the policy as to operate as a warranty ;itig a mere representation, and if substantially correct the policy is valid,although one of the conditions attached to the policy be, that if the assured shall make any misrepresentation the insurance shall be void. To give the effect of a warranty to an application referred to in a policy, it should be referred to in such manner as to show that it was intended by the parties that it should have such effect. Farmers' Ins. Co. v. Snyder, 16 Wend. {N. Y. 481 ; Bur- ritt V. The Saratoga Co. Mut. F. Ins. Co,, -5 Hill (N. Y.) 188. A warranty, whether express or implied, is in the nature of a condition precedent, and must be strictly complied with or the policy is void ; but this is not so as to a repre- sentation ; in respect to them, the rule is, that the policy is valid unless the rep- resentation is false or mistaken in a matter material to the risk ; and whether there has been such a misrepresentation as will avoid the policy is a question for the jury. The description of the property insured in a policy is a warranty that the property is as described; and if untrue in substance, the policy is void, though the misdescription arise from mistake, and there be no fraud. Fowler v. jEtna F, Ins. Co., 6 Cow. (X. T.) 673. Stipulations in policies are considered eipress warranties, and it is not requisite that the circumstance or act warranted should be material to the risk. An express warranty in this respect is distinguished from a representation. Duncan v. Sun F. Ins. Co, 6 Wend. (N. T.) 488. 'Such a warranty is a condition or contingency, and, unless performed, there is no contract. This rule prevails as well in the case of a warranty applying to matters subsequent as to matters precedent. Fowler v. ^tna Ins. Co. 6 Cow. (N. Y.) 673. An ap- plication describing a building, is not a warranty unless inserted in the policy ; and a reference in the policy to the application will not be sufficient to give it the effect of a warranty, the relaxation of the rule on this subject not extending be- yond the proposals of underwriters usually attached to policies, in reference to which it is expressly declared that the policies are made and accepted, or when by express words the application is adopted, and thus imported into the policy. Jefferson Ins. Co. v. Cotheal, 7 Wend, (N. Y. ) 72. Although the description of premises in the application may vary very considerably from the actual state of the property at the time of the loss, if the variance was not fraudulently intended, and does not in fact affect the rate of insurance or change the actual risk, the policy ■will not be avoided ; it is only cohere there is fraud, or where the underwriter has been misled, that the policy is affected by a false representation. When required, however, by the conditions of insurance, the insured is bound to make a true and fall representation concerning all matters brought to his notice, and any conceal- ment will avoid the policy ; and it is not necessary to show that any fraud was in- tended. Burritt V. The Saratoga Co., Mut. F. Ins. Co. 5 Hill (N. Y.) 188. A description of buildings to be insured, filed with the insurers, and referred to in the policy in general terms as a report of the situation of the premises, is not to be considered as incorporated into the policv, or as amounting to a warranty that the premises insured shall conform in all respects to the description referred to. Buildings represented as finished, must correspond substantially with such rep- resentation, for a material misrepresentation avoids the policy. Delonr/uemare v. The Tradesmen's Ins. Co., 2 Hill (N. Y.) 5S9. Instructions for an insurance, unless inserted in the instrument or policv, do not amount to a warranty. Snyder v. Farmers' Ins. Co., 13 Wend, (N. Y.) f)2 ; Stebbins v. The Globe Ins. Co.,2 Hall (N. Y.) 632. And as a policy speaks its own language, and is to be construed by its terms plainly expressed in it, it cannot be varied by parol proof as to the repre- sentations made. The New York Gas Light Co. v, The Mech. F. Ins. Co.,2 Hill (JSI. Y.) 108 ; Thompson Y. Ketchum, 8 John. (N. Y.) 189 ; Snyder v. Farmers' Ins. Co. , 13 Wend. 92 ; Delonguemare v. The Tradesmen's Ins. Co.. 2 Hill (N. Y.) 589 ; Dow v. Whetten, 8 Wend. (N.Y) 166. Wakbantibs. 36T distinction is most essential, as indicated in a definition of a war- ranty in the case last cited ; and as stated by the counsel for the defendants in the prayer for instruction, if any statement of fact, however unimportant it may have been regarded by both parties to the contract, is a warranty, and if it happens to be untrue, it avoids the policy ; if it be construed a representation, and is un- true, it does not avoid the contract if not wilful or if not material. To illustrate this, the application, in answer to an interrogatory, is this : ' Ashes are taken up and removed in iron hods ; ' whereas it should turn out in evidence that ashes were taken up and re- moved in copper hods, perhaps a set recently obtained, and un- known to the owner. If this was a warranty, the policy is gone, hut if a representation, it would not, we presume, affect the policy hecause not wilful or designed to deceive ; but more especially because it would be utterly immaterial, and would not have in- iluenced the mind of either party in making the contract, or in tilling its terms. Hence it is, we suppose, that the leaning of all •courts is to hold such a stipulation to be a representation rather than a warranty, in all cases where there is any room for con- struction ; because such construction will, in general, best carry, into effect the real intent and purpose which the parties have in view in making their contract.^ In the present case the only ■ In Pirn V. Reid, 6 Scott, 982, the policy was made subject to the following condi- tion : "In the insurance of goods, wares or merchandise,' the building or place in "Which the same are deposited is to be described, the quality and description of such goods, also whether any hazardous trade is carried on, or any hazardous articles de- posited therein ; and if any person or persons shall insure his or their buildings or .goods, and shall cause the same to be described otherwise than as they really are, to the prejudice of the company, or shall misrepresent or omit to communicate any cir- -cumstance which is material to be made known to the company, in order to enable them to judge of the risli they have undertaken or are required to undertake, such insurance shall be of no force ; " it was held that this condition applied only to mis- representations or omissions to communicate circumstances existing at the time effect- ing the policy, and that the insurance was not avoided by the carrying on a more hazardous trade upon the premises, or the placing hazardous goods thereon, pending the current year of the insurance. So where an application in which the applicant agrees that it is " a correct description of the property, so far as regards the condi- tion, situation, value and risk on the same," and that "the misrepresentation or suppression of material facts shall destroy his claim for damage or loss," is not a warranty of the truth of the answers to interrogatories in it, except so far as they are material to the risk ; although the by-laws, to which the insurance is expressly made subject, provide that the application shall be held to be a part of the policy and " a warranty on the part of the assured," and that " unless the applicant shall make a correct description and statement of all facts inquired for in the application, and also of all other facts material in reference to the insurance, or to the risk, the policy shall be void." And the materiality of any answer is to be determined by •the jury. Elliot v. Hamilton, etc., Ins. Co., 13 Gray (Mass.) 139. In a recent case before the supreme court of Nevada, it was held that an instruction to the jury that the mere failure of the insured to disclose material facts known to the insurer or unknown to the insured would not prevent a recovery, was pertinent and not 368 Application. clause in the policy having any bearing upon the question is this : ' And this policy is made and accepted in reference to the terras and conditions hereto annexed, which are to be used and resorted to in order to explain the rights and obligations of the parties, hereto, in all other cases not herein otherwise specially provided for.' Here is no reference whatever to the application or the answers accompanying it ; the only reference is to the conditions annexed to the policy. In lo(jking at these conditions, second clause of article first, the provision is that ' if any person insuring any building or goods in this office, shall make any misrepresenta- tion or concealment, or,' etc. — mentioning several other cases, all of which would tend to increase th« risk — 'such insurance shall be void, and of no effect.' But further, the clause in this policy has none of the characteristics of a warranty, because it is not, in its own terms, or by reference to the terms or conditions annexed, an absolute stipulation for the truth of any existing fact, or for the adoption of any precise course of conduct for tlie future, mak- ing the truth of such fact or a compliance with such stipulation, a condition precedent to the validity of the contract, or the right of the assured to recover on it. The policy is made in reference to- the terms and conditions annexed ; but these are referred to, not as conditions precedent, but ' to be used and resorted to in order to explain the rights and obligations of the parties hereto, in cases not lierein otherwise specially provided for.' They are not to control or alter any express provision in the contract, or become parts of the policy, but they are statements in a collateral docu- ment which both parties agree to, as an authoritative exposition of what they both understand as to the facts, on the assumption and truth of which they contract, and the relations in which they stand to each other. The court are of opinion, therefore, that the statement in this application were not warranties, and could have erroneous. Gerhauser v. North British & M. Inn. Co., 1 Nev. 174. Where, how- ever, a policy provides that a false description by the assured, or the omitting to make known any fact or feature in the risk which increases the hazard of the same, renders the policy void, and that the statement of the assured shall be a warranty on his part, the omission by the assui-ed in answer to inquiries to mention the exist- ence of a building adjoining the one insured, both in his description of the latter and in his statement as to what buildings were near it, is a breach of warranty that avoids the pohcy. Tlaus, where the building insured was a ' ' wooden four-story paper-mill," and the adjoining building was a bleach-house, connected with it by a shed-roof building, it was held that it made no difference whether the bleach-house was a part of the mill or not, as in either case it should have been mentioned. Day v. Conway' Ins. Co., 5 Me. 60. Waeeanties. 369 no greater effect than that of representation " and that the judge was right in giving sucli instruction to the jury." ^ It may be said that, when the policy, in express terms, incorpo- rates the application or other papers as a part of it,^ or refers thereto for a more particular description of the subject insured and the grounds upon which the policy was issued,^ the application, or other papers referred to, are a part of the policy, and are to be construed in connection with each other,* and the application and survey, or other papers referred to, will, in such cases, control the construction of the policy itself.^ Thus, where a policy stipulated that if the interest of the assured was not absolute, the policy should be void unless the interest of the assured was truly repre- sented therein, and the assured had mortgaged the premises. ' Where specific descriptions of the property are required by the terms of an in- surance office, which are referred to and incorporated as part of the conditions of the policy, the suppression of an immaterial fact will not invalidate the policy. WJiitehurnt v. Fayetteville, etc., Ins. Co., 6 Jones (K. C.) 352. Representations made by their own agent as to the situation and nature of the interest insured, are binding upon the company, and they cannot defend by showing an error in such representa- tions. Atlantic Ins. Co. v. Wright, 22 111. 462. The materiality of the disclosure or concealment by which a policy is to be rendered void, is a question of fact, which must be submitted to the jury ; and a prayer omitting to request this is, for this reason, defective. A condition that it shall be void if the party insuring his build- ings or goods " 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 therein pro- posed," relates to a misdescription of the property, and not to the character of the title or interest in it. Franklin Ins. Co. v. Coates, 12 Md. 285. An express condi- tion in the body of a policy, that the application contains a just, full and true ex- position of all the facts and circumstances in regard to the condition, situation, value and risk of the property, so far as the same are known to the insured and material to the risk, will authorize the company to resist payment of a loss, on the ground that the application contained material misrepresentations in those respects. Barre Boot Co. v. Milford etc.. Ins. Co., 8 Allen (Mass.) 42. An application for insurance on a stock of goods represented that it was ■' all of goods usually kept in a country store." and that there was no " cotton or woolen waste or rags kept in or near the property to be insured." The by-laws, to which the insurance was ex- pressly made subject, provided that no building in which cotton or woolen waste, or oily rags were allowed to remain at night sliould be insured; and that all cotton, woolen, hempen or oily waste, or rags, should be destroyed or removed every evening. Held, that the keeping of clean, white cotton rags, if usually forming part of the stock of " a county store," did not avoid the policy. Elliot v. Hamilton Ins. Co., 13 Gray (Mass.) 139. ^Philbrookv. W. E. Mut. Fire Ins. Co., 37 Me. 137; Fourdenier v. Hartford Fire Ins. Co., 15 Upper Canada (C. P.) 403; Routledge v. Burrell, 1 H. Bl. 254; Sheldon V. Hartford Fire Ins. Co., 22 Conn. 275; Shoemaker v. Glen's Falls Ins. Co., 60 Barb. (N. Y.) 84; Cox v. ^tna Ins. Co., 29 Ind. 586. ^Shoemaker v. Glen's Falls Ins. Co., ante; Mut. Benefit Life Ins. Co. v. Miller, 89 Ind. 475. * Maryland Ins. Co. v. Bossiere, 9 G-. & J. (Md.) 121. ^Norris v. Insurance Co. of N. America, 3 Yates (Penn. ) 84; Fourdenier v. Hartford Fire Ins. Co,, ante. 24 370 Application. which was not stated in the policy, but which was correctly stated in the application, and the application was referred to as a part of the policy, it was held that the application and policy were to be construed together as one instrument, and the interest of the assured being correctly stated in the application, the condition was complied with.^ Application may be in part adopted. Sec. 157. As to whether the whole application, or only a portion thereof specially referred to, forms a part of the policy, will depend upon the intention of the parties, to be gathered from the language used. When the application is only specially referred to, as for purposes of description, use, etc., and nothing more is said, only the portion embraced within the reference, will be treated as a part of the contract.^ In the case of a mutual insurance company, the assured is bound to take notice of the charter, and the by-laws made under it,^ but they are not treated as a part of the contract unless referred to as a part of the policy,* or printed thereon.^ When there is an application in writing, the insurer cannot set up any false statement relative to the risk made by the assured oraUy.^ Application made after policy is executed, not a part thereof. Sec. 158. If a survey or application did not exist at the time when the policy is/iued, it does not form a part thereof, although one was subsequently executed.'' Nor is an application or survey '^ Fourdenier v. Hartford Ins. Co., ante. ^ First National Bank v. Insurance Co of N. America, ante; Trench v. Chenango Co. Mut. Ins. Co., 7 Hill (K. Y.) 122; Com. Ins. Co. v. Monninger, 18 Ind. 352. In Owens V. Holland Purchase Ins. Co., 56 N. Y. 565, the valuation of the property was excessive. The application concluded as follows : " The applicant hereby covenants and agrees that the forgoing valuation, description and survey are true and correct, and they are submitted as his warranty and the basis of the desired in- surance." The only reference to the application contained in the policy was "on the following property, as described in the application ;" and the court held, that this only adopted the application so far as the description of the property was con- cerned, and that there was no warranty as to value. ^Simreal v. Dubuque, etc., Ins. Co., 18 Iowa, 319: Illinois, etc., Ins. Co, V. Marseilles Mfg. Co., 6 lU 236. ^Marshall v. Columbian, etc., Ins. Co., 27 N. H. 157. ^Simreal\. Dubuque, etc., Ins. Co., ante. ^ Dalliner v. St Joseph F. etc., Ins. Co., 131 Mass. 29. ' Le Roy v. Park Ins. Co., 39 N". Y. 36 ; Newman v. Springfield F. & M. Ins. Co., 17 Minn. 122. Waeeantibs. 371 Teferred to in the policy as a part thereof, to be treated as a part ■of the policy ; unless it was made by the insured or by some person authorized by him to make it, or having been made by a third person, he, with full knowledge thereof, ratified it. Thus, where the policy was made " in reference to a survey on file in this •office." It appeared that the insured made no survey, nor was there any evidence that he had knowledge that any had been made in his name, but the insurers produced a survey that was made by the president of another company, who delivered it to the defend- ant company and procured the policy and renewal thereon. The <;ourt held that the application and survey could not be regarded as a part of the contract, as the assured could not be regarded as assenting to the conditions of an instrument, of the existence of ^hich he had no knowledge.^ ^Denny \. Conway, etc., Ins. Co., Gray (Mass.) 492. In this case the facts were that Henry A. Denny, President of the Worcester Manufacturers' Mutual Ins. Co., appUed to the defendant for insurance upon tlie plaintiff's factory, in Barre, Mass. The application was headed, " Manufacturer's Mutual Fire Ins. Co. The applica- tion of , for insurance." Among other written answers to questions in the application were these: " There one is stationary ladder from the ground to the roof, and another soon to be erected." " A watch is kept constantly in the building; " and was signed only thus: " I certify that the above is a correct survey of the mill as Tnade by myself. Henby A. Densty, President Worcester Manufacturers' Mutual Jns. Co." There was also a letter annexed to the defendants' answer, from Henry A. Denny, as follows: " OfBce of the Mechanics' Mut. F. Ins. Co., Worcester, Dec. ■24th, 1885," which was addressed to the defendant's secretary, saying: " Do you wish to renew policy No. 1,262, on the woolen mill of E. Denny, of Barre, at same rate ? I have recently examined the premises. We shall renew our policy at the same rate ; whole amount of insurance, $,^0,000." The policy was renewed. Upon the face of the policy were these words: " $25,000 insured on the same elsewhere." In the body of the policy, it was " agreed and declared that this policy is made and accepted in reference to the survey on file at this office, and the conditions hereto annexed, which are to be used and resorted to, in order to explain the rights and obligations of the parties hereto, in all cases ilot herein otherwise specially pro- vided for." There was another condition in the policy, as follows : " Applications for insurance, must specify the construction and materials of the buildings to be in- sured, or containing the property to be insured ; by whom occupied, whether as a private dwelling, or how otherwise ; its situation, with respect to contiguous build- ings, and their construction and materials ; whether any manufactory is carried on within or about it. * * * And if any survey, plan or description of the property herein insured, is referred to in this policy, such survey, plan or description shall be deemed and taken to be a warranty on the part of the assured." The de- fendants set up in defense to the action, that no watch was kept in the building, tliat there were no ladders, such as was described in the application, nor any other ladder affixed to said building, and that there was no other insurance upon the jiroperty, and claimed that the policy was forfeited by reason of the breach of the warranties in the application in these respects. The defendant offered evidence to prove these several grounds of defense, but as the application, on its face, purported to have been made by a third person, and there was no offer to show that the plain- tiff directed the making of the application, or knew its contents, the offer was re- jected, and a verdict was rendered for the plaintiff, for the amount of the policy, which was sustained upon appeal, BiGLOW, J., saying: " This paper did not, on its face, purport to have been made by the plaintiff, or in his behalf, nor was it signed 372 Application. Application not binding unless made by assured or his authority. Sec. 159. The fact that a survey, application, or other documents are referred to in the policy, and that the policy is made upon the faith thereof, when the insured has not made or authorized by him. It was a description of the property by a third person ; nor was there any evidence that its contents were assented to, or even known by the plaintiff. The de- fendants, however, sought to hold him- responsible for the statements and stipula- lations contained in it, by reason of a clause in the policy, to the effect that the con- tract of insurance was made and accepted in reference to a ' survey ' on file in the office of the defendants, which was to be resorted to in order to explain the rights and obligations of the parties under the contract. The argument was, and it is now again urged, that the plaintiff having accepted a policy which referred to a survey, is shown to have had constructive notice of the existence of such survey ; that he is bound by the stipulations and representations contained in it, and in seeking to en- force the contract, is estopped to deny that they were made by him or by his author- ity. Admitting the soundness and force of this argument, and that the plaintiff is bound by the survey, so far as he has recognized and adopted it, by accepting the policy, the question still remains to be determined to v.hat extent such recognition and adoption go. And the answer of this question depends on the proper and legiti- mate meaning of the word ' survey,' because it was of this, and this only, that the plaintiff had notice by the terms of his policy. Upon this point we think there can be no doubt. In its strict signification, as well as in the broader meaning which it may be supposed to have as applied to the subject matter, it can be taken to import only a plan, and the description of the present existing state, condition and mode of use of the property. It cannot, by any reasonable construction, be held to signify that any statements or rexaresentations of a promissory or executory nature were em- braced within it, relating to any contemplated alteration or improvement in the property, or to the mode in which tlie premises were to be occupied during the con- tinuance of the policy. In this sense, the word appears to be used in the conditions of insurance attached to the policy and forming a part of the contract. The terms ' survey, plan and description' are there used as being nearly synonymous. Such being the true import of the word ' survey,' we can have no difficulty in ascertaining the extent to which the plaintiff is bound by the representations and stipulations contained in the paper which the defendants offered in evidence at the trial. So far as they are of an executory nature, or relate to the use or occupation of the prem- ises, subsequently to the date of the policy, it is clear that the plaintiff is not bound by them. He has neither recognized nor adopted them, nor is he estopped from showing that they are not obligatory upon him. The defendants, therefore, cannot sustain theirs as a groimd of defense by proof that no watchman was constantly kept in the mill, or that ladders were not erected on the buildings. Those were stipula- tions by which he was not boimd. The condition in the certificates of renewal ' that the application upon which said policy was originally predicated shall continue valid and in full force,' cannot enlarge the effect of the original reference in the policy. 2d. As to the second ground of defense, based on the alleged misrepresentation con- cerning the amovmt of insurance on the property -when the policy was issued, it is sufficient to say that thei'e was no evidence, at the trial, that any representation on the subject were ever made or authorized by the plaintiff. It was suggested, at the argument of the case, on the questions raised at the trial, and presented by the re- port of the judge, that the facts in evidence disclosed an additional ground of de- fense. The policy on its face contains the express stipulation or warranty that twenty-five thousand dollars were insured on the property elsewhere, and it ap- peared at the trial that the amount actually insured was much less than this sum. It is qiiite probable that this would have been a sufficient answer to the plaintiff's claim, if it had been seasonably insisted on. But we think it is quite too late for the defendants to avail themselves of it. No such ground of defense was distinctly stated in their answer, nor was it suggested at the trial. They cannot be permitted, in this stage of a cause, to start a new objection to the plaintiff's right to recover, which was within their knowledge at the time of the trial, and of which they did not seek to avail themselves, when the plaintiff had an opportunity to meet it." See, similar in principle and quite similar in its facts, Commercial Ins. Co., v. Ives, 56 111. 402. ' Wakbantiks. 373 any such papers to be made, does not debar him from a recovery, nor estop him from showing that they are not obligatory upon him. But a statement upon the face of the policy, that there is other in- surance upon the property to a certain amount, when, in fact, there is no such insurance, is a statement independent of the papers re- ferred to, and a condition of the policy itself, which is obligatory upon the insured, even though he did not himself represent, or au- thorize any one else to represent to the insurer that there was any such insurance^^ Such words, upon the face of the policy, may be said to constitute a warranty that at the time when the in- surance was effected, such other insurance, to the amount named, €xisted.2 A misrepresentation or concealment by a person who is authorized by the assured to obtain the insurance (unless such person is the agent of the insurer) is as binding upon him as though made by himself, because, by clothing such person with authority to procure the insurance, he is treated as having clothed him with power to do any act necessary to consummate that end.^ "When renewal is, and w^hen not, subject to application. Sec. 160. When a policy is renewed, the renewal remains sub- ject to the conditions expressed in the policy, and the representa- tions or warranties in the survey or application. But if the renewal covers other or different property, or if any change is made in the risk, as to amounts, or the class of property insured, the renewal is not subject to the application or survey, at least so far as such change of risk necessarily changes the effect of the assured's state- ments therein.* If there are no words of reference to the applica- tion or survey in the policy, they form no part thereof, even though the policy provides that " if an application or survey is referred to, it shall be considered a part of the contract and a warranty on the part of the assured." The fact that an application or survey exists does not, under such a policy, become a part thereof. If the in- surer desires to make them so, he must comply with the terms of the policy and refer to them, and failing to do so, cannot claim that, by implication, they are to be treated as a part of the contract. Nothing can be imported into the contract, which is not clearly ^ Denny v. Conway, etc. Ins. Co. , ante. ^ Forbushy. West'n Mass. Ins. Co., 4 Gray (Mass.) 343. 'Carpenter v. American Ins. Co., 1 Story (IT. S. ) 57. *Eddy Street Foundry v. Farmers' Mut. F. Ins. Co., 5 K. I. 426. 374 Application. within the evident intent of the parties to be gathered from the language used.^ Policy cannot be burdened -with nevr restrictions. Sec. 161. Neither can a policy be made subject to any condi- tions except such as are stated in the contract ; therefore, if an in- surance company decides to impose certain new restrictions or con- ditions upon its policy-holders, it cannot, by a mere notice to that effect, make outstanding policies subject thereto. Such restrictions or conditions can only apply to policies in which such restrictions or conditions are contained,^ and this is the rule in mutual compa- nies, and where a provision of the charter and by-laws constitute part of the contract of insurance, their alteration without the con- sent of the assured cannot affect the contract with him.^ Indorsements on policy, part thereof. When language of policy prevails, over application. Sec. 162. 'Every indorsement upon a policy, in any wise relating to the risk, forms a part of the contract, and is to be construed in connection therewith, if its purpose and intent clearly appear.* But where there is a discrepancy between the condition in a policy, and that contained in papers referred to and made a part of it, the condition expressed in the policy will prevail, and the conditions stated in the papers referred to will be treated as surplusage, com- pletely overcome by the terms of the policy itself.® Thus, in the case referred to in the last note, the policy contained the words : " And due notice thereof as aforesaid," referring to notice of the 1 Weed V. Schenectady Ins. Co., 7 Lans. (N". T.) 452. ^Ins. Co. V. Connor, 17 Penn St. 136. 2 Morrison v. Odd Fellows Mu. Life Ins. Co., 59 Wis. 162. * In McLaughlin v. At. Mut. Ins. Co., 57 Me. 170, the body of a policy on a cargo of molasses provided that the company were "not liable for leakage on molasses, im- less occasioned by stranding or collision." The margin contained the following memoranda : " On molasses ... if by shifting of cargo owing to stress of weather, any casks become stove or broken, and the staves started by each other, so as to lose their entire contents, and the same amount to fifteen per cent, on the quantity laden (being five per cent, over ordinary leakage), the said excess of five per cent, or over on the quantity shipped to be paid for by the company ; but this company not liable for leakage arising from causes other than as above mentioned." Held, 1. That the company were not liable for any loss by leakage unless occasioned by stranding; nor, 2. For any loss by shifting of the cargo unless it amounts to fifteen per cent, of the whole quantity laden. Such memoranda upon the margin of a policy are a part of the contract of insurance. ^Kingsley v. N. E. Mut. F. Ins. Co., 8 Gush. (Mass.) 393. "Waeeanties. 375 loss. No previous mention in tlie policy had been made in refer- ence to notice, but the act of incorporation provided that notice should be " given at the office in vsrriting virithin thirty days," and one of the by-laws printed upon the policy provided that the in- sured should " forthwith give notice thereof as required by the act of incorporation," etc. The court held that the word " aforesaid," as used in the policy, in connection with the requirements as to notice, could not be treated as referring to the act of incorporation or the by-laws, and that all the plaintiff was required to do, was to give " due notice " as required in the body of the policy, the condi- tions in that respect contained in the papers referred to being overridden by the conditions expressly stated in the policy itself. What is embraced in mutual policy. Misstatements as to title or incum- brances — ^what are. Sec. 163. In the case of mutual insurance companies generally, the application, premium note and policy together, constitute the contract,^ and the contract is strictly construed.^ But, while the contract, as expressed in the policy, is construed strictly, yet the courts are inclined to be more liberal as regards omissions or mis- representations, and hold that they are not fatal to a recovery, unless material.* The fact that the by-laws of a mutual insurance company are re- ferred to and made a part of the policy, does not necessarily make the statements in the application, warranties, even ^ough the by- laws provide that it shall be so held. If the application is to be made a part of the policy, it must be so declared in the body of the policy itself.* Thus, in the case last referred to, the application contained a clause to the effect that the applicant agreed that it contained a correct description of the property so far as regards the condition, situation, value and risk on the same, and that the misrepresentation or suppression of material facts should destroy his claim for damage or loss, and the by-laws to which the insurance was expressly made subject, provided that the application should be held to be a part of the policy and " a warranty on the part of ' Schultz v. Hawkey e Ins. Co., 42 Iowa, 239 ; Murdoch v. Chenango Co. Ins. Co., 2 N". T. 221. ^ Burrett v. Saratoga County, etc., Ins. Co., 5 Hill N. Y., 188. ^ Hardy v. Union, etc., Fire Ins. Co., 4 Allen (Mass.) 217. * JElliot V. Hamilton Mut. F. Ins. Co., 13 Gray (Mass.) 136. 876 Application. the assured ; " yet the court held that the answers of the assured, in the application were not warranties, except so far as they were material to the risk, and that the question of materiality is for the jury. The by-laws of the company required the applicant to state incumbrances, if any, on the property. He stated them to be about 13,000. They, in fact, amounted to 14,000, and it was held that the policy was avoided.^ And this is the case even though the policy covers other property that is not incumbered, if the con- tract is entire.^ Where the policy provides that the interest of the assured shall be truly stated, a statement that it belongs to the assured, when, in fact, it was partly owned by another, invalidates the policy ,3 or 1 Hay ward v. N. E. Ins. Co , 10 Cush. (Mass.) 444. 2 Friesmuth v. Agawam, etc., Ins Co., 10 id. 588. Wien the mortgage was stated at $ 1000, when it was in fact $ 1200, it was held that the policy was void. Sentell v. Oswego. Co. Farmers' Ins. Co., 16 Hun. (N. Y.) 516. See also Gould v. Ilolland Purchase Ins. Co., 16 Hun. (N. T.) 538, when giving a mortgage without consent, was held to avoid the policy containing a condition against incumbrances. Holding that where a policy covers two or more houses jointly mortgaged; the in- cumbrances may be apportioned, and that the knowledge of the facts by the agent is knowledge by the company. Holmes v. Drew. 16 Hun. (N. Y.) 491. In an appli- cation for a policy voidable for false representation of any fact material to the risk, was a question, " Is the property incumbered ? If so, state to what amount, and the value of the premises." Ans. " Yes ; mortgage, $2,000— $10,000." The mort- gage was by the insured himself, and was $3,200 principal and $240 accrued in- terest. Held, that this was a false representation material to the risk, which avoided the policy. Byers v. Farmers' Ins. Co., 35 Ohio St. 606. By an v. Spring- field etc. Ins. Co., 46 Wis. 671. In Holmes v. Ih-ew. 16 Hun. (N. Y.) 491 in an action upon a policy of insurance for S2,.300, $500 being on a bam, and the balance on farm produce and other personal property therein, it appeared that the insured owned two farms, 'upon one of which the bam was situated, both farms being in- cluded in and covered by a mortgage for $4,800. The defendant's agent filed in the answers to the application for the insurance, and was fully informed as to the facts ; he apportioned the mortgage between the two farms, and stated that the one on which the barn was situated was incumbered to the amount of $2,600, stating to the insured that the amount of incumbrances on farm buildings was not considered important. The action was defended on the ground that there had been a mis- statement as to the amount of the incumbrance and a breach of warranty. It was held, that even if there were any breach of warranty it only invalidated the policy as to the barn, and not as to the personal property therein, and that the knowledge of the agent was to be imputed to the company, and that by issuing the policy it over-looked any inaccuracy in the statement of the incimibrances on the property. Also that in such a case an apportionment in good faith of the amount of the in- cumbrance between the two parcels would not be a breach of warranty. Where a policy is issued to a person and the loss is made payable " as his interest may ap- pear," these words obviate any breach of condition as to title. De Wolfe v. Capital City Ins. Co., 16 Hun. (K. Y.) 116. In an action by B. on a fire policy, there was parol evidence that B., on applying, stated to C, the soliciting agent, that there was an incumbrance on the property. The agent's authority extended only to filing and forwarding applications and premiums to the company. The policy stated that C. was the agent of B., but was not advised of such fact. The policy also provided for its being terminated at the opinion of the company. It was held that the evi- dence was admissible, and that the company could take no advantage of the fraudu- lent clause ; that C. was B.'s agent ; and it was liable for the loss, under the other provisions of the policy. BcBtcher v. Hawkey e Ins. Co., 47 Iowa, 253. ^ Wilbur y. Bowditch, etc., Ins. Co., 10 Cush. (Mass.) 446. Waehantibs. 377 that it is unincumbered, when, in fact, it has been sold for taxes,^ and this is so, even though the assured did not intend to deceive the insurer, and was not aware of the falsity of his answers.^ When the assured stated that the property was his, but that it ^was incumbered, and, in fact, two mortgages were outstanding thereon, executed by the former owner, and the former owner's ■equity of redemption had been sold thereon, it was held no misde- scription of the title of the assured, as he still had a legal right to redeem the premises, and thus an insurable interest therein.^ An answer to a question. What is your title ? Ans. " Deed," if literally true will not render the policy void because the land is charged with a parol trust, because the answer was responsive and true, and if the insurer had desired further information he should have called for it.* In a New York case,^ the conditions annexed to a policy of in- surance, and forming a part thereof, required that applications for insurance should specify the nature of the applicant's title, if less than a fee simple ; and that any misstatement or concealment should render the insurance void. B., in an application for in- surance, represented that he owned the property by virtue of an article of agreement with C. The agreement, as proved, was for the sale of a village lot by C. to B., without any exception or re- servation, for a specified sum to be paid by B. The dwelling-house was on the lot, at the date of the agreement, and when the in- surance was applied for. There was no proof that B. represented, in his application, that he owned the dwelling-house as a chattel not affixed to the soil. The court very properly held that the •contract of insurance related solely to the interest which B. had in the building, as the vendee in possession of the soil on which it stood ; and that the judge on the trial, properly overruled B.'s offer to prove that the building was a chattel not affixed to the free-hold, and that, at the time of the insurance, he was the owner of it, and continued to be the owner up to the time of the fire. It was also, held, that the statement in the application, respecting 1 Wilbur V. Ins. Co., 10 Cush. (Mass.) 444. ^ Wilbur V. Ins Co., ante. " Buffum V. Bowditch, etc., Ins. Co., 10 Cush. (Mass.) 540, * Pavey V. American Ins. Co., 56 Wis. 221. ' Birmingham v. The Empire Ins. Co., 42 Barb. (K. Y.) 262. 378 AppLicATioif. the nature of BJ's title, was a warranty ; and it being untrue, the policy did not take effect. That the insurers did not insure the building as a chattel, and the agreement of the parties precluded all inquiry as to whether B. had any other insurable interest than that warranted ; or as to whether the thing warranted was material to the risk. Where a party states, in his application for insurance, that he is the owner of the property, by virtue of an article of agreement with another, he cannot be allowed to show, in an action on the policy, that at the time'of making the application he told the agent of the insurer that he owned the building, having pur- chased it before he took the contract for the land ; it being an. offer to contradict the written^ application by parol. Where- articles of the agreement for the sale and purchase of land provide that, in case the purchaser shall be in default in making his pay- ments, the vendor shall have the right to declare the contract void, and may take possession of the premises ; and the purchaser being in default, the vendor notified him to surrender the possession, and he complied with the demand and removed from the premises,, these proceedings terminated B.'s insurable interest in the build- ing, under the contract, and the contract became void. Interest need not be stated unless required. WTien required, must be truly stated. Sec. 164. Unless the policy requires that the interest of the assured shall be disclosed, a failure to disclose the nature of his in- terest, or of the existence of a lien or incumbrance thereon, is not a fraudulent concealment, and the policy is operative if the as- sured in fact has an insurable interest therein.^ But if there is a warranty, or a representation amounting to a warranty, that there are no liens or incumbrances upon the property, the statements- in reference thereto must be literally true, whether such represent- ations were given in answer to an inquiry or not.^ Where the 1 West Rockingham, etc. Ins. Co. v. Sheets, 26 Gratt. (Va.) 854. ^ W. Rockingham, etc., Ins. Co. v. Sheets, ante. The insiirer is not chargeable with notice of the state of the assured' s title as it appears of record, Mutual Ins. Co. Y. Deale, 18 Md. 26, but may rely on the correctness of the assured' s statement. Fales V. Conway, etc., Ins. Co., 7 Allen (Mass.) 46 ; Phillips v. Knox Co. Mut. Ins. Co., 20 Ohio, 174 ; Leathers v. Ins. Co., 24 N. H. 2.59. But if the insurer does not call for an accurate statement of title, an incorrect statement thereof, not material to the risk, will not avoid the policy, Wyman v. People's Ins. Co., 1 Allen (Mass.) 301, nor will the policy be avoided if the statement as to title is, in any sense, true. As where a person who has entered upon premises under a contract of purchase, erects a house, pays the purchase-money, and, before a conveyance has been made. Wakkanties. 37& policy provides that, unless the interest of the assured if less than absolute, is truly stated in the policy, the policy shall be void, if there is anything in the policy itself that shows that there are liens or incumbrances upon the property, although only by infer- ence, the policy is valid. As, where the title is stated to be in fee simple, and yet the loss, if any, is made payable to a third person, this is held a statement of a lien or incumbrance upon the prop- erty that qualifies the title, and up'holds the policy .^ When a written application for insurance is made, and any of the ques- tions are left unanswered, the issue of a policy thereon is treated as a waiver of the information called for by the inquiry, and the insurer is afterwards estopped from setting up such neglect to an- swer, as a concealment of material facts, and a ground of defense against a loss under the policy. Thus, in an Ohio case,^ the plain- tiff being in possession of premises, under a contract of pur- chase, having paid only part of the purchase-money, the rest not being due, obtained a policy of fire insurance on the premises, and in his written application, which was made a part of the policy, answered the questions propounded as follows : Question. " Is the property owned and operated by the appli- cant ? " Answer. " Yes." Question. " Is any other person in- terested in the property — if so, state the interest ? " Answer. " No." Question. " Incumbrance — is there any on the property ? " Answer. " Held by contract." The policy contained a provision that the insured thereby covenanted that the application con- tained " a just, full and true exposition of all the facts and cir- cumstances in regard to the condition, situation and value of the property to be insured, as far as the same are known to the ap- plicant, and material to the risk," and that the same is made a condition of the insurance, and a warranty on the part of the in- sured. The court held that, as the plaintiff had an insurable in- terest in the policy, and as his answers to the inquiries, so far as represents the title to be in liim. Chase v. Hamilton, etc., Ins. Co., 22 Barb. (N. Y.) .527. 1 In Home Mut. Ins. Co. v. Garfield, 60 111. 124 ; 14 Am. Rep. 27, the policy pro- vided that if the title of the assured was less than absolute, it should be so stated, in the policy, otherwise it should be void. The insured stated that his title was in fee simple. The policy was payable to one Reynolds, who had a mortgage thereon. The existence of the mortgage was known to the agent and to the vice-president of the company, and the court held that there was no concealment of the true title to the property, and that the policy was valid. See Sec. 86, page 168. 2 Lorrillard Ins. Co. v. McCulloch, 26 Ohio St. 52 ; 8 Am. Eep, 52. 380 Application. made, were substantially true, the fact that he did not answer the inquiries fully, could not be set up to defeat his rights under the policy, because the defendant, by issuing the policy without call- ing for fuller answers, thereby waived further information. " It seems to us," said Welch, J., " sufficient to say that the receipt of the application and the issuance of the policy thereupon, was a waiver of the questions in so far as they remained unanswered, and that the policy cannot, therefore, be avoided by the company on the ground that the answers are not full. The objection should have been made at the time of the receipt of the premium, and the issuance of the policy, or not at all. Had further answers been insisted upon at that time, the applicant would doubtless have given them. To receive this premium, and issue the policy upon the answers as given, and afterward avoid the policy, on the ground that the answers were not full, would be to practice a virtual fraud upon the insured. But are the answers false ? We think not. Taken together, and construed as a whole, they are substantially true.' To the question whether he owned the property, the assured answers, "yes ; " to the question whether any person has an interest in it, he answers, " no ; " and to the question whether there are any incumbrances upon it, he answers that it is " held by contract." It is contended that, even admitting the interest of the defend- and to be an insurable interest, and that the title of a purchase by mere contract is sufficient to justify a warranty of ownership, yet these answers are false, because they do not disclose the fact that there was a lien for unpaid purchase-money, but, on the contrary, allege that no other person has an interest in the property. The three answers, it is said, can only be reconciled and sustained as true, upon the theory that the purchase-money had been all paid, and that the equitable title of the defendant was thus made com- plete. We do not so understand the answers. The answer which sets forth that the property was, " held by contract," is made in response to the question whether there was any " incumbrances " upon the property. We think it was fairly to be inferred from this answer, made in this connection, that there was such an in- cumbrance as usually exists in such cases, namely, a lien in favor of the vendor for purchase-money. Substantiatly, the answers amount to this : " The jiroperty is held by contract of purchase merely, and is subject to no incumbrance except what that descrip- tion of ownership implies ; I am the owner of that title ; I am the Waeranties. 381 sole owner." Understood in this sense, the answers are substan- tially in accordance with the facts of the case."^ Where a policy provided that if the interest of the assured was less than the absolute title, " it must be so represented to the in- surer and expressed in the written part of the policy," it was held that it was the duty of the applicant for insurance, who held only a lien upon the property in the nature of a mortgage, to disclose the nature of his interest without being questioned, especially in a case where he appeared of record as the sole owner.^ A policy of insurance will not be avoided because of a lien upon the property insured, nor because of a conditional sale, the prop- erty remaining in the possession of the insured, although there is a provision avoiding it " if the interest of the insured in the prop- erty should be other than its entire, unconditional, and sole own- ership," and the fact should not be represented to the company.^ A. bought certain premises, giving a mortgage back, and, his grantor agreeing to pay an existing mortgage for a less amount, A. insured the premises, only disclosing the larger mortgage. It was held, that as he could deduct the amount of the lesser mort- ^ A condition in a policy that the appUcation contains a full exposition of all the facts in regard to the condition, situation, value and risk of the property, is not "violated by a failure to disclose the fact that an agreement had been made by the applicant to convey it, and that the greater part of the consideration money had been paid therefor. Davis v. Quincy, etc., Ins. Co., 10 Allen (Mass.) 113. But if an application is expressly made a part of the policy, and the policy is also made subject to the conditions and limitations expressed in the by-laws annexed, and these by-laws provide that the policy shall be void if the application shall not express . the true title of the assured to the property and his interest therein, an answer that the applicant owns the property to be insured, in reply to a direct inquiry in the appli- cation upon that subject, when, in fact, he only holds a bond for that deed, will avoid the policy. So an answer in such application, that the property is encumbered " for $ 1,000 with other property," in reply to the question, " Is it incumbered by mort- gage or otherwise; if so, for what sum?" will avoid the policy, if in fact there is a mortgage for $ 1,400 upon the property insured and other property. Fales v. Con- way, etc., Ins. Co., 7 Allen (Mass.) 46. But it seems that, if the assured really has such an interest or property in the subject-matter of the risk, that calling it "his own," or "his," or "my," etc., can in any sense be construed as consistent with the truth, the policy will be upheld, although the absolute title did not vest in the assured. See pp. and cases cited. The test is, whether the assured had an insurable interest and stood in such a relation to the property that it could in any light be regarded as his. But this rule does not apply when the application calls for a statement of the true title of the assured to the premises; as where a person holding a bond for a deed, in reply to a direct inquiry, he replies, "the applicant owns the property." Fales v. Conway Ins. Co., 1 Allen (Mass.) 46. So where a tenant by courtesy represents the property as his. Leathers v. Ins. Co., 24 N. H. 2.59. In all cases, the language of the contract must be looked to, and the statement of title must be such as, in view of the language used, it is false, or the policy will be upheld. Chase v. Hamilton Ins. Co., 22 Barb. (jST. Y.) 527; Lawrence v. St. Marks Ins. Co., 48 id. 479. 2 Waller v. Northern Assurance Co. 2 McCrary (U. S. C. Ct.( 637. ^ Carrujan v. Lycoming Fire Ins. Co., 53 Vt. 418 ; s. c. 38 Am. Eep, 687. 382 Applicatiok. gage from that due under the larger one, there was no such con- cealment of an incumbrance as to avoid the policy.^ On an action to recover upon a policy, containing a condition that if the insured should not be the sole, absolute, and uncondir tional owner in fee-simple of the land on which the building in- sured stood, and the fact not expressed in the policy, it should be void, it appeared that the legal title to the land when the policy issued was in the uncle of the plaintiff, and that a verbal gift to the latter had been made and a promise of a deed in fee upon his lequest, and that the plaintiff had for several years treated the land in aR respects as his own, and had waived a conveyance in fee before suit brought, but after the loss. It was held that the plaintiff could not recover.^ A policy contained a condition " that if the interest of the as- sured in the property be any other than the entire, unconditional, and sole ownership of the property, for the use and benefit of the assured, it must be so represented to the company, and so ex- pressed in the written part of the policy, otherwise the policy shah be void." It was held, that the condition was not avoided by the fact that the assured executed, either prior or subsequent to the date of the policy, a bill of sale to a third party, on personal prop- erty insured, to secure an advance of money, it being agreed that the assured should retain possession of the property.^ But where A. obtained insurance upon his house, the policy containing a clause against incumbrances created without the consent of the home office, but agents had the power to consent to an assignment of the interest of the insured, and, accordingly, an agent conferred upon A. the right so to assign his interest, which he did, taking from the purchaser a mortgage to secure a part of the purchase- money. It was held, that the policy was thereby rendered void.* Void in part, void in toto. Ezceptions. Sec. 165. When application is made for insurance at the same time and in the same application, upon two separate and distinct pieces of property, as upon a store and the goods therein, and the ^Bing v. Windsor Co. Mid. F. Ins. Co., 54 Vt. 434. ^ Wineland v. Security Ins. Co., 53 Md. 216. ' Kronk v. Birmingham Fire Ins. Co., 91 Penn. St. 300. * German-American Bank v. Agricultural Ins. Co., 8 Mo. App. 401, Waeeantibs. 383 statements of the insured in reference to the ownership of the building is false, the contract is regarded as entire, and the policy- is wholly void.,^ but, if the transaction is severable, as if two policies are issued, one upon the building and the other upon the goods, and separate premiums are paid therefor, the policy upon the goods will stand, unless it is found that the defendants' false statement was material to the risk upon the goods.^ When the warranty, as to the title or interest of the assured in the real estate, fails, and the policy covers in part personal property, the Avhole policy is void,^ unless the contract is severable, and a separate Taluation is placed upon each.* But it seems that where the con- tract is entire, and a gross premium is agreed upon, the fact that a, separate valuation is made and specified in the policy will not prevent the failure of the entire policy on account of fraud as to either.® But, when the fraud is not original, that is, does not ' Lovejoy v. Augusta Ins. Co., 45 Me. 472. In JEtna Ins. Co. v. Resh, 44 Mich. 55; 38 Am. Kep. 228 the question of severabiUty is made to depend upon the cir- cumstances whether or not U clearlyappears that the insurer wotdd have taken both risks separately. cCVn.^:j;;^^ /O^^l^-^'^'l^ ^ bO A clause forbidding other insurance without consent of the company, on penalty of forfeiture, does not warrant forfeiting the whole policy because a part of it was ■elsewhere insured. Quarrier v. Peabody Ins. Co., 10 W. Va. 507. '^ Lovejoy v. Augusta, etc., Ins Co. ante. 3 Gottsman v. Penn. Ins. Co., 56 Penn. St. 419; Smith v. Empire Ins. Co., 25 Barb. (N. Y.) 84; Gould v. York Ins. Co., 47 Me. 402; Draper v. Charter Oak Ins. Co.. 2 Allen (Mass.) 569; Treadway v. Hamilton Ins. Co., 29 Conn. 68. ^Koontz V. Hamilton Ins. Co., 42 Mo. 126; Trench v. Chenango Co. Ins. Co., 7 Hill (K. T.) 49; Clark v. N. E. Mut. F. Ins. Co., 6 Cush. (Mass.) 342. Loehner v. Home Mu. Ins. Co., 17 Mo. 247; Hartford F. Ins. Co. v. Walsh, 54 111. 164; Wood- ward V. Republic F. Ins. Co., 32 Hun. (N. Y.) 365. ^ Brown Y. People's Mut. Ins. Co., 11 Cush. (Mass.) 280; Gottmanv. Penn. Im. Co., ante. In Trustees Fire Assn. v. Williamson, 26 Penn. St., 196, three build- ings were insured by one policy. They were valued separately, but a gross premium was paid. A prohibited use of one of the buildings, was held to invalidate the policy as to all. See also Friesmuth v. Agawam etc., Ins. Co., 10 Cush. Mass. 587. In Barnes v. Union etc. Ins. Co. , 51 Me. 110 the policy covered a dwelling and the furniture. The property was separately valued, but a gross premium was paid. The policy being void as to one was held void as to both. See also Plath v. Minnesota etc. Ins. Co., 23 Minn. 479; 23 Am. Rep 697: Moore v. Virginia, etc. Ins. Co., 28 Gratt (Va.) 508; 26 Am. Rep. 373; Quarrier v. Penbody Ins. Co. 10 W. Va. 507; 27 Am. Rep. 582. In Boieman v. Franklin Ins. Co., 40 Mo. 620, a policy which covered a building and machinery being a void as to the building as a l)reach of a condition, was held also avoided as to the machinei-y. See also Asso- ciated F. Ins. Co. V. Assum, 5 Mo. 165; Schumitsch v. Am. Ins. Co., 48 Wis. 26. Hinman v. Hartford Int. Co., 36 Wis. 159; Ross v. Mu. F. Ins. Co., 29 U. C. Q. B. 73. In McGowan v. People's Mu. F. Ins. Co., 54 Vt. 211 ; 41 Am. Rep 843, a policy was issued upon real and personal property, for a gross premium, althoiigh the amounts for which the insurance was paid were separate. That is, a certain sum upon personal property, and a certain sum on the building. The policy was avoided by the execution of a mortgage upon the real estate without giving the notice required by the policy. It was held that the policy was not severable, and ■was totally avoided. See also Schumitsch v. American Ins. Co., 48 Wis. 26. 384 Application. leaven the whole contract at its inception, when there is a separate valuation, fraud as to one, resulting from the act of the party sub- sequent to the issue of the policy, will only render it void as to that portion to which the fraud, or breach of the conditions of the policy applies. As where two pieces of real estate are covered by the same policy, but separately valued, and the policy provides that alienation of the property without consent, shall avoid the policy, and one piece is conveyed without consent, the policy will still remain good as to the other piece not conveyed.^ In the language of Fletcher, J., in the case last referred to, "the policy shall be void as to the property thus alienated, but not as to other property separately insured, not alienated." There is a marked distinction between fraud in the inception of such con- tracts, and fraud that arises subsequent to the making of the contract, and does not affect the consideration upon which it rests. In the one instance the fraud leavens the whole contract, while in the other, it only affects it in reference to that to which the frau- dulent acts relate, made the subject of a warranty in the contract itself. It is difficult to understand how it can be held that these con- tracts are several when a gross premium is paid for the entire insurance. The court cannot say, as a matter of law, neither can the fact be shown, that the insurer would have been satisfied to take the risk separately at the same premium. By consenting to pay a gross premium for the insurance the assured has signified his willingness to let the policy stand as an entire contract, subject in all its parts to the conditions imposed by the insurer, and there is neither reason or equity in preventing the assured, after he has violated one of the conditions of the policy as to a part of the risk, to turn around and say that this condition only affected that portion of the risk to which the breach related. The Michigan Court ^ puts its denial of the right of reserving the con- tract in the case last cited upon the ground that it did not clearly ap- pear that the insurer would have taken both risks separately. MAit,- STON, J., said: " There is a conflict in authorities as to the right to re- cover in cases like the present. That there may be cases where the con- tract would be divisible, and where the fact that the policy might 1 Clark y.,N. E. Mut. F. Ins. Co., 6 Cush. (Mass.) 342. " In ^tna Ins. Co. v. Resh, 44 Mich. 55; 38 Am. Rep. 228. Waeeanties. 385 be rendered void as to a part, would not affect the whole, we do not question, and what may here be said must not be understood as going beyond the facts of this case as presented us. Here the false statements which avoided the policy as to the buildings were made before the policy was issued. The personal property was in the same building. If it was for the interest of the insured to cause or suffer a loss of the building, because he had not the interest therein he had represented, it would, we think, be idle to say that such fact would not increase the risk upon the personal property in such building. It would be very unsafe, there- fore, to assume that the company would have taken a risk upon the personal property, separate from the building, and, therefore, because the rate and the amount insured upon the personal can be separated from that on the building, to hold that the contract is divisible. That the company would have taken a risk upon the personal property alone, to a like amount and at the same rate, we may assume, even with full knowledge that the insured had no title to the building ; but it would be hazardous to assume that with such knowledge the company would have written upon both the personal property and the building, so that upon the whole policy the insured would be more interested in a loss of both than in their protection. It was declared in this policy that the omis- sion to make known a material fact should render it void, and we cannot say that the false representation was not material as to both the real and personal property. The case should be clear, and free from all reasonable doubt, to warrant a court in carving out separate and distinct contracts from one common whole."^ » See Moore v. Virginia F. & M. Ins. Co., 28 Gratt. 508; 26 Am. Kep. 373; Plath V. Minnesota Farmers' Mut. F. Ins. As., 23 Minn. 479; 23 Am. Rep. 697; agree- ing with the principal case; Merrill v. Agricultural Ins. Co., 73 N. Y. 452; 29 Am. Rep. 184, holding the contrary in case of mere breach of warranty as to one subject of the insurance; and Quarrier v. Peabody Ins. Co., 10 W. Va. 507; 27 Am. Rep. 582, holding the contrary in case of sale of a portion of the property separately ap- praised and insured in the same policy. In Lovejoy v. Augusta Mat. F. Ins. Co., 45 Me. 472, there was separate insurance on a store and on goods therein the premiums being entire. The false represen- tation that the insured owned the store was held to avoid the entire insurance. See also Gould v._ York Co. Mut. F. Ins. Co., 47 Me. 403, a case of insurance of store and of goods in it, where the store was inadvertently but incorrectly represented as unincumbered. Also Barnes v. Union Mut. F. Ins. Co., 51 Me. 110; which was a case of insurance on a dwelling and the furniture in it, where the insurance as to the dwelling was avoided by a subsequent alienation. Day v. Charter Oak F. & M. Ins. Co., id. 91, is to the same effect. In Clarke v. N. E. Mat. F. Ins. Co., 6 Cush. (Mass.) 342, it was held, that ths alienation of one of several estates, separately insured by the same policy, in which it is provided that when any property insured shall be alienated the policy shall be void, only avoids the policy as to the estate so alienated. But in Friesmuth v, 25 / 386 Application. In New Hampshire ^ the question is made to depend upon the circumstance whether the alienation of a part of the property or lapse of the policy as to it, increases the risk or not. Clark, J., says : " In the construction of contract, the intention of the parties must govern, the subject-matter of the agreement is to be considered and that interpretation adopted which will give effect to such intention. The object of the stipulation in a policy of insurance against a sale of ^the property insured is apparent. It is obviously based upon the idea that the risk and hazard of Agawam Mut. F. Ins. Co., 10 Cush. (Mass.) 587, it was held that a policy, insuring several specific kinds of property, with a separate valuation to each, being made for an entire consideration, and creating a lien on the whole property to secure the pre- mium note, is wholly void if the property is represented to be unincumbered and part is under mortgage. See also Kimball v. Howard, 8 Gray (Mass.) 33; Lee v. Howard Ins. Co., 3 Gray (Mass.) 583. In Fire Association v Williamson, 26 Penn. St. 196, three adjoining houses were insured in one policy for a specified amount on each, and gunpowder was stored in one of them, and caused a loss of all. Held, that the policy was avoided as to all. The court said: " Although three buildings were insured, the contract was an en- tirety." The same was held in GotUman v. Penn. Ins. Co., 56 id. 210, where a bam and personal property in another building were insured in the same policy, and there was a breach of warranty as to incumbrances on the building, and the personality alone was burned. The court said: "It is not quite agreeable to our ideas of abstract justice, to be obliged to admit that an untrue answer in regard to incumbrances on the real estate, which was not in the least affected or deteriorated by the fire, should have the effect to deprive the insured of compensation for that about which there was no untruth, as the jury have found, and which was entirely destroyed. In the absence of this contract this would look unreasonable. But we must not forget the contract. * * * They have chosen to agree, that for any untrue representation * * * the insurance shall be void and of no effect. * * * The con- sideration is entire and indivisible. In Bowman v. Franklin F. Ins. Co., 40 Md. 620, the court said: " The third and last question presented is, whether as part of the insurance was on the building, and part on the machinery therein, it was competent.to the plaintiff to recover on the policy such amount as was apportioned to the machinery, notwithstanding the policy is void as to the building ? In regard to this question, the difficulty in the plaintiff's way is, that the contract is entire. The consideration for it was entire; and in such case the contract is held to be entire, although its subjects may consist of several distinct and wholly independent items. Moreover, the stipulation in re- gard to the forfeiture applies to the policy as an entirety." Associated Fireman's Ins. Co. V. As.'ium. 5 id. 165. In Schumitsch v. Am. Ins. Co. ,48 Wis. 26, it was held that where a policy covers personal property in a building, and other property is subsequently added to which the risk would attach under the general language used, and such addition is subse- quently mortgaged without consent, in violation of the policy provision, a claim for damage to such mortgaged portion will work a forfeiture to the whole insurance. In Hinman v. Harford F. Ins. Co., 30 Wis. 159, where a building and personal property in it were insured in one policy, the same doctrine was held. See also Russ v. Mut. F. Ins. Co., qf Clinton, 29 U. C. (Q. B.) 73. But Contra see Hartford F. Ins. Co. v. Walsh, 54 111. 164; 5 Am. Eep. 115. two houses were insured in one policy for different sums, and one became vacant. Held, that this did not invalidate the policy as to the other. The court only said, " we are at a loss to perceive how permitting the two-story house to become vacant without notice to and consent of the company, could Invalidate the policy on the small frame building." Loehner v. Home Mut. Ins. Co., 17 Mo. 247; Koontz v. Hannibal Savings and Ins. Co , 42 Mo. 126; Phcenix Ins. Co. v. Lawnmice, 4 Met. (Ky.) 1 Baldwin v. Hartford Ins. Co., 60 N. H. 422, 49 Am. Eep. 824. Warranties. 387 loss may be increased by a change of ownership. All men are not equally prudent and cautious in the care of their prop- erty. The insurers may be willing to insure the property of A at a certain rate, when they would not insure the same property for B at any rate, nor insure it for A if B was owner of other j)roperty so situated as to affect the hazard of A's property. The stipulation being a reasonable one, which the insurers have a right to make, and its object being to protect the property insured from increased risk, should be so construed as to give effect to the inten- tion of the parties. If the court can say, as matter of law, that the alienation of one piece of property does not increase the risk of other property covered by the same policy, then the reason of the condition ceasing, the condition itself may be disregarded. But "unless the court can say, as matter of law, that the risk is not increased, a reasonable interpretation of the contract requires that the stipulation shall be so construed as to give effect to the inten- tion of the parties, and afford that protection against increased hazard which it was designed to secure. Another general and elementary rule in the construction of contracts is, that words are to be understood in their ordinary and popular sense, except in those cases in which the words used have acquired by usage a peculiar sense different from the ordinary and popular one. In this case no words are used which have acquired by usage a differ- ent signification from the ordinary and popular one ; and if the language is to be understood in its ordinary and popular sense, the conclusion is irresistible that the sale, transfer, or conveyance of the property insured renders the policy void, not merely as to the property alienated, but void as to the whole property insured. Another rule of interpretation is, that the terms of a contract are to be understood so as to have an actual and legal operation, and the construction is to be such that the whole instrument or con- tract, and every part of it, may take effect, if it be possible, consist- ently with the rules of law and the intention of the parties. The application of this rule of construction leads to the same result. If the stipulation in the policy relating to the alienation of the property insured is to be limited and made applicable only to the property alienated, it is meaningless and superfluous. The con- tract of insurance is a contract of indemnity to the person and not to the thing insured. It does not run with ths subject-matter of insurance, and pass as an incident by any assignment or conveyance ■of it ; and therefore a sale, transfer, or conveyance of any part of ./'W u^ 388 Application. the property insured renders the policy void as to the property sold or conveyed without any stipulation in the policy prohibiting^ alienation. To give any legal effect to the conditions in the policy before us relating to the sale, transfer, or conveyance of the property, ib must be construed and understood to mean what the language imports, that a sale, transfer, or conveyance of the property renders the policy void. And substantially the same doctrine is held in Vermont ^ unless, according to the weight of authority, there is, in the contract or the subject-matter to which it relates, something from which it can be gathered that the parties intended that the property insured should be treated as separate risks, the contract is entire, and if the policy is avoided as to part it is avoided as to all. In New York these contracts are held to be severable where there are separate valuations upon different classes of property, although a gross sum is paid as premium. Thus in a case decided since this work was written,^ a policy covered fourteen distinct 1 McGowan v. People's Mu. F. Ins. Go., 54 Vt. 211. 2 Merrill v. Agricultural Irui. Co., 10 Hun (N. T.) 428. Aflarraed by the Court of Appeals 73 N. Y. 452 ; 29 Am. Rep. 184. In the Court of appeals Folger, J., said: ' Whether it (the poUcy) is severable in law depends upon the rules which have ^ been laid down, and tlieir application to the facts ot the case. If the part to be performed by one party consists of several distinct and separate items, and the price to be paid by the other is apportioned to each item to be performed, such a contract would generally be held to be severable. Thus, where one had bought and paid for two distinct pieces of land, a fixed and separate sum for each, and was evicted from oiis while he remained in possession of the other undis- turbed, it was held that he might recover for the loss of the one, on the ground that the bargain for the land consisted of two distinct contracts. Johnson v. Johnson, .3 B. & P. 162. See also May field v. Wadsley^ 3 B, & C. 357. The idea that there is a distinct price to be paid for each item seems, when it is present, to be a con- trolling element in the contract, to malie it severable Robinson v. Green, 3 Met. (Mass. ) 159. It was there said that if there was an express promise to pay a fixed sum as a compensation for the entire sale, a different question would have been presented ; and that where an entire promise is made on one entire consideration, and part of that consideration is illegal, it may avoid the entire contract. See also Carleton v. Woods, 28 N. H. 290. In Miner v. Bradley _ 22 Pick (Mass.) 457, the distinction is presented, between a contract for several articles for a gross sum anil a contract for several articles for a different price for each, the first being au entire and indivisible contract, and the latter a severable contract. The reason of tlie rule is this : That in the contracts thus held to be entire no means are afforded by their terms by which the value at which any portion was estimated by either party can be ascertained ; and also that their terms do not Indicate that either party ever contemplated taking any portion without taking the whole. The entirety, therefore, may be, and in fact legally is, the only express consideration, Story on Sales,§ 240. When these rules have come to be applied to a contract for insurance on differ- ent pieces of property, there has been a contrariety of opinion. It seems to be conceded in general terms that where the contract is entire, a breach of condition affects all the property at risk, but as to what makes an entire contract there is not uniformity of ideas. Thus it has been held that a policy of insurance on a house and the furniture therein, though they were separately valued, was an entire con- Waeeanties. 389 classes of property, real and personal, separately valued, at a gross sum. Both the real and some of the personal estate were burned. tract. Barnes Y. Union etc. , Ins. Co., 51 Me. 110, and cases there cited. SoinJVies- muth V. Agawam etc. Ins. Co. , 10 Gush (Mass. ) 587, a policy upon different properties, separately valued, but for a gross premium, was held an entire contract, though «ome stress was laid upon the fact that there was a premiun note which was alien ■upon all the kinds of property. In Trustees' Fire Ass'n v. Williamson, 26 Penn. St. 196, three buildings insured in one policy were separately valued, yet a breach of a condition by a prohibited use of one was held to avoid the policy as to all, be- ■cause the contract was entire. On the other hand, in Loekner v. Home Mut. Ins. Co., 17 Mo. 247, and 19 id. 628, it was held that a misrepresentation as to the title or character of a house, where it and furniture were insured by one policy, did not avoid the policy as to the furniture. To the same effect are Phoenix Ins. Co., y. Lawrence, 4 Met. (Ky.) 9, and Clark v. New Eng. Ins. Co., 6 Gush (Mass,.) 342 . and Hartford Ins. Co., v. Walsh, 54 111. 164 ; s. c. , 5 Am. Kep. 115 ; Koontz v. Hannibal Savings and Ins. Co., 42 Mo. 126 ; Date v. 7ns. Co., 14 Up. Can. (C. P.) 548. In such case we must learn whether there are adjudications in our own State authoritative upon us, or to what conclusion the reascm of the case will lead us. The earliest case in this State to which our attention has been called is Deidericks T. Com. Ins. Co., 10 Johns. 233. which arose on a marine policy on different kinds of cargo separately valued, but insured for a premium paid in gross. It was held that there might be an abandonment of one of the kinds of cargo without an abandonment of tlie others. There is no distinct enunciation of the principle upon which tiie decision was put, though the idea seems to be that the contract of insur- ance was rendered severable by the fact of a separate valuation on eacli kind of goods. The earlier text-writers were relied upon, and the result not reached with- out hesitation. The opinion is by Kent, G. J., who afterward in his Commen- taries, vol. 3, p. *330, has stated the rule in a cautious manner, thus: '' Unless the different sorts of cargo be so distinctly separated and considered in the policy as to make it analogous to distinct insurances on distinct parcels, there cannot be a separate abandonment of a part of the cargo insured." And it is to be observed that in the case cited (10 Johns., supra), he puts his conclusion thus carefully, saying : " Tliere is nothing very unreasonable in this doctrine, and upon tiie sanction of such authority, and in the absence of authority to tlie contrary, the court do not feel themselves at liberty to reject it." Yet it is an adjudication, at least tending to the result tliat a separate valuation of different subjects of insur- ance makes tlie contract of insurance severable. Trench v. Chen. Mat. Ins. Co., 7 Hill, ^N. Y. 122, was a case of an insurance by one policy, on buildings and on machinery and stock therein, each kind of property being separately valued, but the premium being, so far as appears, a gross sum. There was a condition that tlie application should state the relative situation of the property to other buildings, and distance from each, if less then ten rods. This condition was not com- plied with. It was held that the condition was applicable only to the building insured, and not to the machinery and stock therein, and plaintiffs were allowed to recover for the property insured other than the buildings. There was no discus- sion whether the contract was entire or severable. The ground of decision was solely that the condition did not contemplate or apply to property other than buildings. Wilson v. Herkimer Co. Mu. Ins. Co., 6 N. Y. 53, was a policy with the ■same condition as in the case last cited, and there was the same breach of it. It was on chattel property alone in a building. It was distinctly held that there is no difference between personal and real property in the application of sucli a con- dition, and that by the breach of the condition the policy was avoided This case must be considered as practically overruling that in 7 Hill, supra. But it does not proceed upon the ground of the entirety of the contract so much as upon the consideration that the exposure, and hence the risk, by the nearness of other buildings, was as great to chattels in a building as to the building itself. In Chaffee V. Cattaraugus Co. Mu. Ins. Co. 18 N. Y. 376, the opportunity was presented of making the distinction taken in 7 Hill, supra, between real and personal property. Both that case and that from 6 IST. Y., supra, are cited, but the distinction is no- where mentioned or suggested. Another case, unreported, of more importance to the matter in hand, is brought to our attention. It is Heacock v. Saratoga Mu. F. 390 Application. Because of a breach of warranty as to incumbrances — ^the insured having mortgaged the real estate without the consent of the in- Ins. Co., decided in this court September 27, 1856. There was a policy on afactory and machinery therein, valued separately at $750 each. The insured did not have the legal title to the real estate. He was permitted at the circuit to recover for the macliinery, though it was objected that as he had no title to the real estate the policy was void as to that, by reason of a general clause in it, which it was conceded had that effect ; and that being void in part, it was void in whole. But this court upheld the recovery, saying, that tlie defendants had neitlier the letter of the law nor its spirit in their favor; that a policy of merchandise is quite different from a policy on a house ; that if two houses are insured, whether in one or two instruments, there is a policy of insurance on each house (which is tantamount to declaring- that a contract of insurance covering two houses is a severable contract) ; that if there is an insurance of but one thing, then the avoiding of the insurance as ta that one thing avoids the whole instrument ; but this is not the case where more than one subject is insured, wlietlier in the same or in different instruments. Though there were distinct rates and amounts of premium forthe insurance on the different liinds of property, that fact, though noted by the court, does not seem to have controlled its judgment ; while stress is put upon the other fact that the insurance was, for separate sums, " thus showing that the application was for two distinct insurances, one on the factory for a separate sum and one on the machin- ery for another and a separate." Indeed, the whole reasoning of the opinion, upon several clauses of the policy, is, that it was the intention of the parties to it to treat it as a severable contract as to the separate properties named in it. These are all of the authorities in this State, binding upon us, which have come to our notice. In the Supreme Court, since 1847, there have been several decisions tliat a policy upon different properties, rendered void as to one of them, becomes void as to all ; but they do not notice the cases above cited (that from 10 Johns., and that unreported in this court) ; nor is there in any of them extended discussion given to the question, and the adjudications in other States seem to have led to the results reached. We will follow the case in 10 Johns ., and that in this court, not only on the ground that they are authoritative, but that they are reasonable. It is plain from tlie fact of a separate valuation having been put by the parties, upon the different subjects of tlie insurance, that they looked upon them as dis- tinct matters of contract. The effect of the separate valuation was to maJje them so. No matter how much value there might have been in any one of those sub- jects, even to the whole amount of the policy ; had it been totally destroyed, the defendants could not have been made liable to an amomit greater than that named in the policy as the valuation of it. Thus it was, at the inception of the contract, distinguished from the other subjects of insurance, and the contract so made as; to be capable of application to it alone. So tod, if but one of the subjects of insur- ance had been burned, the defendants (ceteris paribus) could not have avoided liability to pay for that, up to the value put upon it ; and if not wholly destroyed, but so far damaged as to reach in deterioration the value put upon it in the policy,, the defendants would have to pay that damage ; and that subject would no longer form a part of the general matter insured, and hence not a part of the con- tinuing contract. Thus, there would of necessity be a severance of the contract, worked out by the operation of its own terms. Again : the principle, in the case of a contract about several things, but with a single consideration in gross, is this, that we are not able to say that the party would have agreed for one, or for more than one yet less than all of them, unless he could at the same time acquire a right to have them all. But our daily experience and observation shows that an insurance company is as ready to insure buildings without insuring the contents, and the contents without insuring the Ijuildings, as to insure them together ; so' that that principle does not press so hard in considering such a contract as that before us. Besides, it is a rule that an agreement embracing several particulars, though made at one time and about one affair, may yet have the nature and opera- tion of several different contracts-, as when they admit of being separately executed and closed, as we have instanced just above, when the contract may be taken dis- tributively, each subject being considered as forming the matter of a* separate agreement after it is so closed ; per Washington, J., Perkins v. JSart, 11 Wheat U. S.) 237-251; Roderer v. Hazelhurst, 9 Gill. (Md.) 294. In our judgment this Waebanties. 391 surer — it was claimed that no recovery could be had for any part of the loss. But if the judge at Circuit instructed the jury that rule applies fitly to the contract in hand. It admits of being separately executeil and closed as to each of the separate subjects of insurance. When one species of the property insured is burned, the contract to insure as to that may be performed as to that alone. The insured has paid the premium. A fire doing damage to that subject, that damage may be paid for by the insurer: and that subject be thus put out of the contract, while it remains in fieri as to all the other subjects named in it. When there are several subjects of insurance (as there are fourteen here) separately valued, on which a gross sum is insured not exceedijig the aggregate of that valuation, for the insurance of which a premium in gross is paid, it is easy to see what is the rate of premium on the whole valuation, and what is the amount of premium on each subject insured. This being so, it seems fanciful to say, that if the facts thus easily reached were stated in detail in the contract it would be severable, wliile not being specifically spread out it is entire, If there were any thing in the terms or nature of the particular contract, or in the circumstances of the case, or in the nature of the different subjects of the insurance, from which it was to be inferred that the insurer would not have been likely to have assumed the risk on one or several of them unless induced by the advantage and profit of having a risk on all, that would be a rational cause for deeming the contract entire. But when for aught that appears, when indeed it is as likely that the insurer would have taken a risk upon any one or any few of the subjects insured, at the same rate of premium as upon the whole, and has in the policy so separated the sub- jects and so singled them out by a specific valuation as that there is do difiioulty in distinguishing one of the subjects from the rest, and closing the contract as to that separately, and carrying forward the contract as to therest, it does result that the contract is severable in practical operation aiid hence in law. And so, also, that tliough there may have been some conduct of the insured as to some of the property, not evil in itelf , but working a breach of a condition in its letter, the eifect of that breach may be confined to the insurance upon that property, the contract as to that be held avoided, and as to the other subjects held valid. There is another rule, that in construing the consideration as entire or distri- buted, the law will be guided by a respect to general convenience and equity, and by the good sense and reasonableness of the particular case, for it must be supposed that it was the intention of the parties that such construction should take place, in the occurence of contingencies not contemplated and provided for at the making of the ^contract. Brown v. Vinal Z Met. (Mass.) 533. Without stating this rule in terras, the argument of the opinion in Heacock v. Saratoga Ins. Co., Supra, is the expanded expression of the logic of it. That opinion is much occupied with a consideration of different conditions in the policy there, and a demonstration of the inapplicability of them to the case of the machinery, though applicable to the case of the building. Now let us lay this rule by the side of the facts in the case in hand. It is claimed that the plaintiff has not kept the conditions of the contract. The breach alleged is that slie has put or suffered incumbrances upon the property insured. She has as to the buildings insured ; she has not as to the chattels insured. Perliaps the condition is literally broken by an incumbrance upon the buildings. But as was said in Heacock^s case, supra, as to similar conditions, the intention of both parties is effected by construing the phrase in the contract, " then this policy shall be null and void," as attaching to the property so severally situated as to come withiu the force of the condition, and thus treating the insurances as separate on each property. This mode of reading various phrases in the policy must be adopted to do justice to the insurers in contingencies that might arise. Thus, there is the general statement in it that the defendants insure the plaintiff to the amount of $6,000 on the property named in it and described in the application and survey ; and the defendants agree to make good to the plaintiff all damages, not exceeding in amount the sum insured, as shall happen to the property specified. It would not be correct construction to hold the defendants to pay up to the sum of $6,000, if a subjects of the insurance worth that amount, but separately valued at a less sum, was damaged, for the reason that the fact of a separate valuation being ex- pressed in writing in the contract explains the general language of theprinted, part of the policy, and shows the intention of the parties to have been otherwise 392 Application. the contract was severable and that while the policy, by the sub- sequent incumbrance upon the land, became void as to the build- ings, it still remained in force as to the personal property. The plaintiff had a verdict for the value of the personal property, and the ruling of the court was sustained by the General Term, and this judgment was affirmed by the Court of Appeals,^ and FoLGEE, J., very ably sustains the judgment of the court, and presents very strong grounds in its support. So the same expression in writing explains the general printed conditions, and limits the effect of them to tlie species of property insured, which has in fact, by the act of the insured, been brought within the scope of any condition. Similar to this is the application of a statute declaring void certain transaction. If it ex- pressly declares an entire conveyance void which has in it one element by the terms of the statute inoperative, then all is void, for the legislature has chosen to make it so, but it is not on any other pi'inciple of law. Per Comstock, J., Curtis v. Leavitt, 15 N. Y. 123. If a deed is made with some evil intent, whether such intent is denounced by the common law, or by a statute, then it is true that the whole is void, for it is pervaded by a single vice. Id. But a particular provision may be simply void or inoperative by the common law or by statute, and all the others good. Id. Now, what is there in the circumstances of this case which should lead us to the conclusion that the parties intended that an af ter-incumbrance put upon the buildings should avoid the contract in toto ? There is nothing to show that an incumbrance upon the buildings would have been as objection to a risk on the chattel property; or that the opportunity of insuring on the buildings was the inducement to taking a risk also on the chattels. There is nothing in the nature or terms of the contract which makes it so much an entirety, at that it is at all difficult to tell the amount insured on the buildings, as distinguished from that at risk upon the chattels. There is nothing to show that had the chattels been in- sured, without insuring the buildings, the premium would have been greater or different. The risks are not necessarily indivisible, they may be dealt with In separate clauses, and are made up of distinct and independent sums on different and distinct properties. There may be reasons which, existing as to one class of the property insured, might deter an insurance company from taking a risk on any of the classes. .Some such general cause, as fraud in the insui'ed iis to one class, would, in its nature, extend to the whole subject matter of the contract, and vitiate and avoid the whole contract in all its parts. But it is dlfiScult to conceive how an act, in itself not evil, though it may affect one of the classes of property insured, and so affect it as to increase the hazard, if it does not also increase the hazard on another class, should operate so as to impair the contract as to that latter class. The principle of human nature, upon which the insurance company acts when it makes a condition, that it shall be no longer bound to a risk upon buildings, after the insured has incumbered them, is, that the insured has not then so strong a selfish interest to keep fire from them. But if the chattels of the insured kept in those buildings are not also incumbered, that principle does not work as to them. So the reason for the imposition of the condition is not then present. Why then should it be held that such a condition in a policy of insur- ance, susceptible of being severed and separately appropriated to a class of the whole subject-matter of insurance, should, notwithstanding, arbitrarily applied to other classes of this subject-matter not within its provision and purpose ? These considerations lead us to the conclusion that the contract of insurance before us is not entire : that it is divisible ; and that the breach of the condition made by the plaintiff applied only to the class of property insured, which was the immediate subject of the act of incumbrance which constituted that breach. In Daceyv. Agricultural Ins. Co. 21 Hun (N. T.) 83. A policy covering buildings and the property therein was not to be severable and while avoided as to four cows upon which a chattel mortgage had been given without consent, it was valid as the balance of the risk. See also Date v. Ins. Co., 14 U. C. C. P. 502 Phenixins. Co., V. Lawrence 4 Met (K. Y.) 9. 1 Merril v. Agricultural Ins. Co., 73 K Y. 452 ; 29 Am. Rep. 184. Wakeanties. 393 Concealment or misrepresentation as to matters known to the insurer. Sec. 166. Where the matter in relation to which the conceal- ment is alleged, is a matter of common report or knowledge, and is known to the insurer at the time ivhen the contract is entered into, he cannot complain that the assured did not disclose the infor- mation. If he had the knowledge from any source, or if he ought to have possessed it, the parties were pari passu, and the contract is obligatory.^ Where an application stated that the stock upon which insurance "was sought, was " all of goods usually kept in a country store," and that there was no " cotton or woolen waste or rags kept in or near the property," and the by-laws provided that no building in which <3otton or woolen waste or oily rags were allowed to remain at night should be insured, and that all cotton, woolen, hempen or oily waste or rags should be destroyed or removed every evening ; it was held, that the keeping of clean white rags, if usually form- ing a -part of the stock of a country store did not avoid that policy.^ When the insurers know the situation of the building before in- surance, they are estopped from setting up a misstatement in ref- erence thereto in the application.^ So if, after knowledge of a breach of a condition in a policy,* either as to a sale or transfer of the premises,^ or as to the keeping of hazardous goods,^ or the character or the risk.' or of fraud in obtaining the policy,* the inr surer recognizes the policy as a valid instrument by any mode that tends to throw the assured off his guard as to its validity, he is bound thereby and the policy is thereby rendered valid and opera- tive, although it contains a provision that for the causes named, it shall be void. ' In Gerhauser v. North British F. & Ins. Co., 7 Nev. 78, it was held that the failure to disclose facts known to the insurer, or unknown to the insured, would not invalidate the policy. 2 Elliot V. Hamilton Ins. Co., 13 Gray (Mass.) 139. ^ Frost V. Saratoga, etc., his. Co., ante ; Phoenix Ins. Co., v. Lawrence, 4 Met. Mass. 4.57. A policy of fire insurance, issued to plaintiffs, stated that the property insured was contained in their frame storehouse, with slate roof, situate "detached at least one himdred feet" on the east side of Lake Champlain. In an action upon the policy, these words were held not a mere description of the building, hut related to the character of the risk, and amounted to a warrranty to the effect that no other buildings of such size and character as to constitute an exposure and increase the risk stood within the distance specified. Burleigh v. Gebhard Fire Ins. Co., 90 N. Y. 220. In Pottsville Mu. F. Ins. Co., v. Fromm, 100 Penn. St. 347, when an applicant for insurance on a building described it as a dwelling house occupied by himself, when in fact it was an unfinished building which had never been occupied, it was held that the policy was void. A warranty however that a building is occupied as a boarding house is not broken by the occupancy of a part of it as a bar room and billiard room. Martin v. State Ins. Co., 44 Mass. 485; 43 Am. Rep. 397. A. obtained insurance upon a dwelling house, of which he claimed to be "the sole and unconditional owner." He had in fact purchased the title in fee to the land, and held a bond for a conveyance, but his vendor's title was defective as to one seventh of the remainder after his life estate, and a suit to perfect the title was pending. There was also an outstanding purchase-money note, which however, A. owned. In his suit upon the policy. It was held that the ex- istence of these facts did not make his claim of ownership false representation, and that the case should have been submitted to the jury on the question of whether A.'s failure to disclose the defect of title was material to the risk. Williams v. Buffalo German Ins. Co., 11 Fed. Rep. 63. A policy of fire insurance declared that it should be void if the interest of the insured in the property should be other than the entire, "unconditional, and sole ownership ; or if the buildings should stand on leased ground. The deed of the insured conveyed to him " a certain mill-site and all the buildings thereunto belonging." It was held that the insiu'ed could not be permitted to show that the grantor of the insured was only entitled to an easement in the property. Miller v. Alliance Ins. Co., 19 Blatchf. (U. S. C. C.) .308. In another case property was insured in the name of A., and described as " his." The property had been bought by B. for a company at a sale under mechanic's lien proceedings, and was put in the name of A. It turned out that the proceedings were void. B. afterwards acquired title under an execution sale. Held, that A. had not an absolute interest in the property, and as the policy required that, if his interest was not absolute, it should be so expressed in the policy, the policy was avoided. Porter v. jSStna Ins. Co., 2 Flip. (U. S. C. C.) 100. Waebanties. 397 insurer cannot complain, as tlie object of the inquiry is to ascer- tain the value of the insurable interest of the assured, and no injury- is done if its value is underrated, but only when it is set at a larger value than in fact exists. Thus, if there is a mortgage upon the premises for $4,000, and it is stated at about $3,000, the mis- statement is material and the policy is void ^ under the facts detailed in the text. Bigelow, J., said : " It seems to us too clear to admit of a doubt, that the answer given by the plaintiff, in his application to the inquiry respecting incumbrances, was materially false, making all due allowances for the loose manner in which such documents are often prepared, and giving the plaintiff the full benefit of the word ' about ' as if nullifying and limiting his answer, it cannot in any view be deemed to be substantially true To hold so wide a deviation from the fact to be immaterial, would be to defeat the very purpose which the questions and answers in the application were intended to accomplish, and render them but a vain and idle ceremony. We are, therefore, of the opinion, that the representation as to the amount of the incumbrance upon the property was a material one, which the plaintiff was bound to make substantially true, and that having failed to do so, he cannot recover upon his policy." Where a policy provides that if the in- terest of the assured is other than that of " sole owner " the policy ^In Hayward v. Mut F. Ins. Co., 10 Cush. (Mass.) 444, a, policy payable to a mortgagee, and voidable in case of any encumbrance " not so expressed," etc., was held to be void, there being another mortgage on the premises and not stated in the policy ; and evidence that the policy was accepted in lieu of another, on the assurance of the agent that the holder would be equally safe, to be inadmissible. Fitchiurgh Savings Bank v. Amazon Ins. Co., 12.5 Mass. 431. In an action on a policy insuring certain buildings and chattels, and forfeitable " if, without written consent hereon, the property shall become encumbered in any way," the answer set up as such encmnbrance the recovery of a judgment against the plaintiff by one "Ansel A. Harris." The judgment was in fact recovered by "Sally A. Harris." It was held that the answer was insufficient, even had the averred encumbrance been properly described ; the warranty referring to an encumbrance of the whole property. Bailey V. Homestead Fire Ins. Co. , 16 Hun (N". Y. ) .503. In an action on a policy, proof that after its issuance the plaintiff had, without the knowledge of the company, given a mortgage on the premises for $850, was held sufficiently to establish a breach of the condition against such encumbrance ; the $8.50 must be presumed to be still due. Gould V. Holland Purcliase Ins. Co., 16 Hun (N. Y. ) 538. Where in the body of a policy it is stipulated that payment is to be made after notice, proof, and adjust- Tnent of the loss " in conformity to the annexed conditions," the conditions printed on the back of the policy, although unsigned, form a part of the contract of insur- ance, and if the insured confesses a judgment, an encumbrance will "fall" on the property within the meaning of a policy stipulation as to encumbrances. Kensington Bank v. Yerkes, 86 Penn. St. 227. A mortgage on a homestead, being void if not signed by the wife, constitutes no encumbrance, whatever the parties may have in- tended ; and does not therefore avoid the condition in an insurance policy against subsequent encumbrances. Watertown Fire Ins. Co. v. Grover & Baker Sewing- Machine Co., 41 Mich. 131. 398 Application. shall be Yoid, the condition is not broken because a mortgage exists upon the premises, as, in law, the mortgagor is sole owner ^ nor is a condition against incumbrance broken by the existence of a mortgage which has been paid, but not discharged, or by one which the insured can have set aside in equity, or to which he has a com- plete equitable defence. Thus, in a Vermont case ^ the plaintiffs purchased the premises insured and executed a mortgage back to their grantor. The grantor injais conveyance to them covenanted a perfect title, and agreed to pay an old mortgage of 1200, resting on the same. The plaintiffs represented to the defendant at the time of the insurance that theirs was the only mortgage on the premises. It was held, that in equity, though not in form, there was a disclosure of the true title, as the plaintiffs could extinguish theirs in chancery by the amount that they were compelled to pay on the other mortgage ; and that the court will not permit the insurer to avoid a policy for mere technical and formal defects. It was also held that if the defendant, after it knew of the other mortgage, continued to treat the plaintiffs as holding a subsisting policy, and bound by its terms, it would be a waiver of the defence of misrepresentation of title. It is a question of title, and not of fraud." If there is doubt as to whether statements are intended as warranties, will be treated as representations merely. Sec. 169. When it is doubtful from the words used whether certain statements made by the insured, relative to the subject- matter insured, are to be regarded as warranties or representations, the benefit of the doubt will be given to the assured, and they will be treated as representations merely,^ and while in construing the language used, the ordinary meaning of the words is to be first re- sorted to, yet, if from the connection in which they are used, the subject matter to which they are applicable, or the general tenor of the instrument it is evident that they were used in a different sense, which is readily ascertainable, the sense in which they were used, will prevail.* 1 Mng Y, Windsor Co. Mu. F. Ins. Co., 34 Vt. 434. 2 Woodward v. Bepublic F. Ins. Co., 31 Hun (N. T.) 365. ' Wilson V. Conway Fire Ins. Co., 4 K. I. 141. * Wilson V. Hampden Ins. Co., 4 R. I. 157. Waeeanties. 399 Sefect in plan of insured premises. Sec. 170. If an application is expressly made a part of the policjs and a warranty on the part of the insured, and contains a clause inserted after the printed questions by which the applicant " cov- ■enants and agrees with said company that the foregoing is a cor- Tect statement and description of all the facts inquired for or mar terial in reference to this insurance," and the by-laws, which are a,lso expressly made a part of the policy, provide that " unless the applicant for insurance shall make a correct description and state- ment of all facts required, or inquired for in the application, and also all other facts material in reference to the insurance, or to the risk, the policy issued thereon shall be void," the applicant must be held to warrant that all facts inquired for are correctly given, ■whether material or not ; and the omission to mention several build- ings within one hundred feet of the property insured, in reply to a question, " What is the distance of said building from other buildings ■within one hundred feet, and how are such other buildings constructed ■and occupied ? Annex a ground plan to the application," will avoid the policy.^ 1 Tebbetts v. Hamilton etc., Ins. Co., 1 Allen (Mass.) 305. In an application Tef erred to in the policy, the inquiry in relation to the premises was : " How bounded, and distance from other buildings, if less than ten rods, and for what purpose occu- pied, and by whom ?" The answer stated the nearest buildings in every direction, "but did not state all the buildings within ten rods. It was held that such answer was not a warranty that there were no other buildings within that distance than those mentioned ; and that as the applicant answered the inquiry as he understood it, and the insurers accepted the application and issued a policy, they could not, after a loss, defend on the ground that the answer was a warranty which was "broken. Gates v. Madison County Mut. Ins. Co., 2 N. Y. 43 ; Masters v. Madison County Mut. F. Ins. Co., 11 Barb. (N. Y.) 624. But, where the inquiry called for the distance from each other building, if less than ten rods, and the answer enumer- ated only a part of those within that distance, it was held that the policy was avoided by such omission. Burritt v. Saratoga County Mut. Ins, Co., 5 Hill (N. Y.) 188. So, where, in answer to a similar inquiry, and to one as to what the premises were occupied for, the application simply stated that the building was a grist-mill, and bounded by space on all sides, whereas mechanical operations were carried on in the mill, and there was another building within ten rods. It was held that either of these omissions, though the facts were known to the company's agent at the time •of issuing the pohcy, vitiated it. Jennings v. Chenango County Mut. his. Co., 2 Den. (N. Y.) 75 ; Gates v. Madison County Ins. Mut, Co., 2 N. Y. 43 ; S. C, 5 N. Y. 469 ; Wilson v. Herkimer County Mut. Ins. Co., 6 N. Y. 53. So where the ap- plication was in the form of answers to printed interrogatories furnished by the in- surers. One of them asked the " relative situation of the property to be insured as to other buildings ; distance to. each within ten rods ; " and the printed form con- cluded with the statement : "All of the exposures within ten rods are mentioned." It was held that the application constituted a warranty that no other building than those named existed within ten rods, and that, whether it increased the risk, or was material thereto or not, was not open to inquiry. It was for the insurers to deter- mine ■whether a building within that distance constituted an exposure. Chaffee v. Cattaraugus County Mut. Ins. Co., 18 N. Y. 376 ; Brown v. Cattaraugus County Mut. Ins. Co., id. 385. 400 Application. Wlien assured attempts to answer inquiries, must do so -writh substantial accuracy, although he does not pretend to state accurately. Sec. 171. While the use of an expression in the application that indicates that the answer is not intended to express the exact amount of the incumbrances, will excuse a misstatement as to im- material sums ; that is, when the variance is so small as not to be material to the risk, yet it does not excuse the insured from stating- the amount of the incumbrances with substantial accuracy} It i& not enough that the statement is correct as to the amount appear- ing due upon the face of the mortgage ; the amount due, including accrued interest, must be stated with substantial correctness. Thus^ Tjhere, in an application for insurance, the insured stated that there were two mortgages amounting to " $2,700, in all. First of 11,150, and 2nd mortgage 11,550," and it appeared that in addition to the amount appearing to be due upon the first mortgage, there was also due, the sum of $300, accrued interest, making the whole amount due thereon $1,450, and the actual amount of incum- brances upon the property $3,000, instead of $2,700, as stated, the variance was held material and the policy void. Dkwey, J., re- marking : " We do not suppose entire precision is requisite in such a statement, or that the omission to state a small amount of accu- mulated interest would avoid the policy. But this was not such a case. The interest having accumulated to the amount of f300> became a substantial part of the incumbrance, and it is difficult to see why, to that extent this statement, as to existing incumbrances on the property, was not false." ^ Insurer may rely on statements of insured. Not bound to make inquiries of others. Sec. 172. The insurer has a right to rely upon the statements, of the assured, and is not bound to make any inquiry beyond that made of the assured himself. He need not inquire whether the interest upon the mortgage debt is payable yearly or otherwise, or whether it has been paid at all. The assured must at Ms peril state with substantial accuracy the amount due upon the mortgage. iln Brown v. People, 11 Cush., there were two mortgages, amounting to $4,700. The applicant stated the incumbrances to be " about $4,000." The court held that this was a material misstatement and not excused by the qualifying word. Hay- ward y. Ins. Co., ante. * Jacobs V. Eagle, etc., Ins. Co., 11 Cush. (Mass.) 132. Waeeanties. 401 including interest.^ If the insurance is in favor of a mortgagee, and he holds prior mortgages upon the property and omits to state the fact in answer to an inquiry in reference to incumbrances in the application, the policy is void. Indeed it would seem that under any circumstances, a mortgagee who should procure insurance upon premises to secure his interest therein under a particular mortgage, without disclosing the fact that he held other mortgages upon the same premises, whether prior or subsequent, would be a fraudulent concealment.^ The insurer cannot show in excuse of his statement, that it occurred by mistake,^ was unintentional * or even that he did not know the contents of the apphcation or the provisions of the policy, as he could neither read or write,^ nor, if the policy provides that the company will not be bound by a state- ment made to an agent, can he show that he stated the amount of the incumbrance to the agent, who omitted to state it in the application.® But, in the absence of such notice of a limitation of the agent's authority notice to, or the knowledge of the agent of an incumbrance will be notice to, or the knowledge of the com- pany." In such cases it is the duty of the agent to report the fact to the company, and his neglect to do so, will not defeat the right of the insured to recover upon the policy.® So where the company's agent fills up the application, and with- out making any inquiry of the insured, or reading or explaining to him the requirements of the company in that respect, it has been held, very properly, that the company must be treated as having waived any right to have a correct disclosure of the amount of in- cumbrance upon the property.^ 1 Murphy v. People's, etc., Ins. Co., 1 Allen (Mass.) 239. " Smith V. Columbia Ins. Co., Vj Penn, St. 253. " Cooper V. Farmer's Ins. Co., 50 Penn. St. 299. * Lochner v. flojue Mut. Ins. Co.. 17 Mo. 247. ^ Fuller V. Madison Ins. Co., 36 Wis. 599. '^ Lochner Y. Home Mut. F. Ins. Co., ante; Rohrback v. Germania Ins, Co., 62 N. Y. 613. ' Masters v. Madison Ins. Co., 11 Barb. (N. Y,) 624 ; Owen v. Farmer's Ins. Co., 57 Barb. (N. Y.) 518. 8 Ins. Co. of iV. America v. McDowell, 50 111. 120. ' Geib V. International Ins. Co., ante. 26 402 Application. By incumbrance is meant any valid lien upon tJie property, created hy the act of the insured, or of others preceding him in title, or by op- eration of law, which substantially lessens the value of the interest of the assured therein, and this applies to mortgages,^ mechanics' liens,^ judgments in States where they operate as a lien,^ attach- ment upon writs or levies under execution, or any contract or legal proceeding that operates as a valid lien upon the property, and lesi sens the value of the interest of^the assured therein,* provided, how- ever, that in all cases the lien must be legal and valid, and there must, in fact, be something due thereon. The mere fact that a Tnort- gage appears of record, is not enough; it must also appear that it represents some indebtedness, either on the part of the assured or the person who executed the same? If it was given to secure a surety upon a note or other obligation, in order to make it an incum- brance, it is not enough to show that the note or obligation is still outstanding ; it must be shown that the mortgagee has paid the debt or perfected his right to enforce tlie mortgage,^ and so in the case of a mechanic's lien, an attachment or other process, it must appear as a fact that an indebtedness exists, and that it exists as a valid claim upon the property, whereby the value of the interest of the assured therein is materially lessened.'' An unrecorded mortgage is an incumbrance, because it can be enforced as against the as- sured whether recorded or not.* So a mortgage executed before the assured acquired title to the property, is an incumbrance, be- cause, upon the vesting of the title in the assured, the mortgage attaches.^ ^Van Buren v. St. Joseph, etc., Ins. Co., 28 Mich. 398 ; Hutchins v. Cleaveland, etc., Ins. Co., 11 Ohio St. 477. 2 Cumberland, etc., Ins. Co. v. Mitchell, 48 Penn. St. 374. ' Bowman v. Franklin F. Ins. Co., 40 Md. 620. ' Bowman Y. Franklin Ins. Co., ante; Brown y. Com. Mut. Ins. Co., 41 Penn. St. 187. ^Hawkes v. Dodge Co. Ins. Co., 11 Wis. 188. " Viall V. Genesee Mut. Ins. Co. , 19 Barb. (N. Y.) 440. ' Uawkes V. Dodge Co. Ins. Co., 11 Wis. 188 ; Brown v. Com. Ins, Co*. 41 Penn. St. 187- ' Hutchins v. Cleaveland, etc,, Ins. Co., ante. ^ Packard v. Agawam F. Ins. Co., 2 Gray (Mass.) 334. Wakkanties. 403 Statements made in application not called for by questions, not -vsrar- ranties. Sec. 173. Although the policy refers to and makes the applica- tion a part thereof, yet only statements made strictly in answer to the inquiries contained therein can be regarded as warranties. All other matters stated therein, not called for hy the questions, or ■the policy, are merely representations, and need only he substantially true ;^ and this is the case also, where the policy only refers to the application for special purposes, as in reference to the descrip- tion or value of the premises. In such case only the answers re- lating to those matters are adopted as a part of the contract, and all other matters in the application are merely representations.^ 1 Hartford Protection Ins. Co. v. Banner, 2 Ohio St. 452 ; 3 Bennett's F. I. C. 643. 2 In Hartford Protection Ins. Co. v. Harmer, ante, it appeared that one of thepoli- •ces was issued upon a written application, drawn up by the agent of the company and signed by the defendant in error, by his agent, Wilson James. We make no ■question that it was the paper of the defendant, and that he is legally responsible for its contents. This paper is headed " Survey." (" To be signed by the appli- cant.") The balance of it consists of questions and answers, thirteen in number, most of them having relation to the character of the structures, materials of which they are composed, distance from other buildings, etc. The 8th and 13th are as follows : " Ashes. How are they disposed of ? " Answer : " Thrown out." "What incumbrance, if any, is now on said property?" Answer : None; attachment on goods released by bond." In relation to the ashes, the evidence tended to prove, that for some time before the policy was underwritten some of the ashes had been taken by the family of the defendant's clerk, who occupied the store building, and placed in a box in the kitchen, for the purpose of breaking water to wash with ; and what was not wanted for this purpose was thrown out. That the uniform practice had been, to wet them thoroughly when they were placed Into the box for this purpose, until the evening before the fire, to which allusion has been made, when some were put In it by his wife, who forgot to wet them; and in the night the box was found to be on fire, and some part of the woodwork of the room adjacent to it. As to Incumbrances, It was proved that the goods, and lots upon which the buildings were situated, had been taken by a writ of attachment, at the suit of a creditor, the agent of the company acting as one of the attorneys, which was pend- ing at the time the policy was underwritten; the goods having been previously released by bond, but the lien still remaining upon the lots. The agent testified ' ' that he knew of the existence of the said proceeding In attachment, at the time said survey was made out, and made the entry, attachment on goods released by bond, from his own knowledge ; that, at the time, he did not think of the fact that the attachment on the lots was still existing, and not released, or he would have entered it or have communicated the fact to James, and with his consent have entered it." Following a general reference to the property Insured, on the face of the policy the following language is used : " For a more particular description of said premises, see survey No. "74, furnished by the Insured, which is hereby made a part of this policy." It is also declared " that this policy is made and accepted in reference to the condi- tions hereto annexed, which are to be used and resorted to In order to explain the rights and obligations of the parties hereto, in all cases not herein specially provided for." The 1st, 4th, and 17th conditions are as follows : 1st Condition. " Applica- tions for insurance should be in writing, and specify the construction and materials -of the building to he insured, or containing the property to be Insured; by whom ■occupied; whether as a private dwelling, or how otherwise; its situation with re- ;8pect to contiguous dwellings, and their construction and materials ; and whether any 404 Application. Omitting to ansiwer questions. Sec. 174. Where the insured omits to answer the inquiry in refer ence to incumbrances, and a policy is issued without objection, the company is treated as waiving any information upon the sub- ject and cannot afterwards set up the omission of the insured as a fraudulent concealment of a material fact.^ Thus, where the in- sured, in answer to an inquiry in the application, wrote : " Incum- bered to the amount of $ ,"' it was held that the insurer, by issuing a policy without requiring a specific answer to the inquiry, waived the benefit of any condition in the policy avoiding it for any concealment or misrepresentation in that respect, and were thereby estopped from setting up such omission in avoidance of its liability, under the policy.^ manufactory is carried on within or about it ; and in relation to the insurance on goods," etc. 4th Condition. " A false description, by the assured, of a building, or of its contents * * shall render absolutely void a policy issued upon such descrip- tion. But the office will be responsible for sui-veys and valuations made by its agents." nth Condition. " Wlien a policy is made and issued upon a suiTey and description of certain property, such survey and description shall be taken and deemed to be a part and portion of such policy, and warranty on the party of the assured." Upon this state of the facts, counsel for the plaintiff in error contended that the 8th and 1.3th questions and answers constituted a part of the contract between the parties, and warranty on the part of the assured. That the answers were not true, and therefore the policy had never attached, and was void. But the court instructed the jury, in substance, that only so much of the written ap- plication as related to the situation and description of 'the property insured, was,, by the policy, made a warranty; and that the answers to the questions referred to were to be treated as representations which the parties had made material, and therefore their materiality was not a question for the jury. That if the representa- tion as to the ashes was substantially untrue ; if the habit was to deposit the ashes in the building insured, the policy was void, whether the representation was made intentionally or by mistake, and whether the applicant knew what was done with the ashes or not ; but if the ashes were generally and usually thrown out, and only deposited in the building occasionally, or for special or extraordinary purposes, or accidentally, it would not avoid the policy. That the attachment proceeding showed an incumbrance on the building insured; but that, if the agent of the company knew, at the time he issued the policy, of the existence of this incumbrance, the policy was not void on that account, because he was not misled by it ; and this ruling was freely sustained upon appeal. In Owens v. Holland Purchcute Ins. Co., 50 ?f. Y. 565, an action was brought upon a policy. The application contained a valuation of the lands and buildings, which was excessive, and concluded as follow s r " The applicant hereby covenants and agrees that the foregoing valuation de- scription and survey are true and correct, and they are submitted as his warranty and the basis of the desired insurance." The only reference in the policy to the application was a statement that the insurance was " on the following property, as described in application. " It was held that this only adopted that portion of the application describing the property, and that there was no warranty as to value. In an application for insurance, no part can be regarded as a warranty, unless made so by the contract of insurance. The parts not adopted and made the basis of the contract, so as to constitute warranties, are to be treated as rep- resentations not prejudicing the rights of the insured, unless they are material to the risk, are untrue, and were not made in good faith. ^ Geib V. International Ins. Co., 1 Dill (U. S. C. C.) 44.3. ' Burseke v. St. Louis, etc., Ins. Co., 31 Mo. 555. Waeeanties. 405 Said Shaw, C. J.,i " The fact that one question is left unan- swered is immaterial ; in fact many questions were not answered. The company by consenting to make the policy upon the application ■as it was, waived all claim to further answers." ^ ^ In Hall V. Insurance. Co., 6 Gray (Mass.) 185. '^ Liberty Hall Assn. v. Housatonic Ins. Co.. 7 Gray (Mass.) 261; Armenia Ins. Co. V. Paul, 91 Penn. St. 520; Wilson v. Hampden Ins. Co.. 4 E. S. 159; Camp- bell V. Ins. Co., 87 N. H. 35 ; In Carson v. Jersey City F. Ins. Co., 4-3 K J. L. 300; 39 Am. Rep. 584; the defense was made exclusively on the ground of non- compliance with the condition of insurance. When the testimony for the defense was In, the plaintiff offered evidence competent to meet a defense founded on a fraudulent concealment or suppression of the truth in regard to incumbrances on the property, and thereupon the defendant's counsel stated that they did not rely on fraudulent misrepresentation, or fraudulent concealment, and disclaimed any imputation of actual fraud in the application, and put themselves upon a breach of warranty and non-compliance with the conditions of insurance. The conditions of insurance were contained in the body of the policy. By the first of them, it was stipulated that if an application, survey, plan or description is referred to in the policy, it shall be considered a part of the contract and war- ranty by the assured. The policy was issued upon an application signed by the applicant, which is referred to in the policy, in these words, viz. : " For a more particular description reference is had to the application and survey No. 118,031, filed with this company, which is a warranty on the part of the assured, and is here- by made a part of this policy. Depue, J., said: " Where the policy in express terms refers to tlie application or other papers connected with the risk, and adopts them as part of the contract of insurance, they become part of the policy; and the statements therein relative to the situation, use or character of the property are warranties on the part of the assured, and the validity of the contract of insurance depends upon the truth and fulfilment of the warranties and conditions therein expressed." Jennings v. Che- nango Co. Ins. Co., 2 Denio, 75; Sheldon v. Hartford Fire Ins. Co., 22 Conn. 235; First Nat. Bk. v. Ins. Co., 50 N, Y. 45; Dewees v. Manhattan In-f. Co., 34 N. Y. S. 244. I consider the incorporation of tlie application for insurance into this policy, so as to make it part of the contract of insurance, too clear to require discussion. First. The only portion of the defense which is rested on matters contained in the application for insurance is that which relates to the ownership of, and in- cumbrances upon, the premises, embraced in the ISth and 19th subdivisions of the application, which are as follows: " (18.) Ownership. Is the mill owned and operated by the applicant ? Ans. : Yes, by the applicant and his son. Is any other person interested in the property; if so, state the interest? Ans.: None. (19.) Incumbrance. Is there any incumbrance on the property ? Ans. : Expects to borrow $2,500, and use the policy as a collateral. If mortgaged, state the amount ?" To this question there is no answer. It is iiianifest from the classifi- cation in these two subdivisions, and the inquiries specially propounded under each head, that in the former, ownership and interest had reference to the state of the legal title, and that the subject of incumbrances was dealt with exclusively in the latter subdivision. A warranty in a policy of insurance excludes all argument in regard to its rea- sonableness or the probable intent of the parties. If the policy contains a condi- tion which in law amounts to a warranty on the part of the assured, he can derive no benefit from the policy unless the condition has been literally performed. And it is immaterial to what cause non-compliance is attributable; for if it be not in fact complied with, the assured will forfeit all his rights under the policy unless the forfeiture has been waived by the insurer. Marshall on Ins. 251; Wood v. Hartford Ins. Co., 13 Conn. 544; Dewees v. Manhattan Ins. Co., 34 N. J. L. 244. Hence, it has become a settled rule in the construction of contracts of insui-ance, that policies of insurance will be liberally construed to uphold the contract, and conditions contained in them which create forfeitures will be construed most Strongly against the insurer, and will never be extended beyond the strict words 406 Application. Equivocal or doubtful ans'wers. Sec. 175. While the assured is bound to disclose all material matters relating to the risk, whether usual or extraordinary, if in- of the policy. Palmer v. Warren Ins. Co., 1 Story, 360; Stone v. U. S. Casualty- Ins. Co., 34 N. J. L. 375; State Ins. Co. v. Maackens, 9 id. 564; Wood on Ins., § 57. " In enforcing forfeitures, tlie court should never search for that construc- tion of language which must produce a forfeiture, when it will bear another rea^ sonable construction wliich will no* produce such results." Walkek, J., in Hartford Ins. Co. v. Walsh, 54 111. 164; 5 Am. Rep. 115. If the assured has an insurable interest in the property, insurance of it as his property, or by liim as owner, will be valid though his title he a qualified or a mere equitable title, Franklin F. Ins. Co. v. Martin, 40 N. J. L. 568; 29 Am. Kep. 271; Ins. Co. V. Woodruff, 26 N. J. L. 541 ; and he is not bound to state the nature or particulars of his title unless expressly required to do so by the provisions of the policy. The production of the plaintiff's title showed that lie was the owner of the entire legal estate in fee simple. A mortgagor is deemed seized of the lands against all the world except the mortgagee, Thompson v. Boyd, 21 N. J. L. 58. In this State the title of the mortgage is only a title sub modo; and in law as well as in common parlance, the mortgage is considered as a mere security for the debt — an incumbrance on tlie legal title of the mortgagor. Kircher v. Schalk, 39 N. J. L. 335, 337. A mortgage upon property insured is not a violation of a conditioii against a sale, conveyance, alienation or change of title. Commercial Ins. Co. v. Spankneble, 52 111. 53; 4 Am. Rep. 582. INor is it within a prohibition against any change in the title or possession of the property, whether by sale, transfer or con- veyance. Hartford Ins. Co., v. fVaMi, 54 111. 164; 5 Am. Rep. 115. A mortgage is not such an alienation of real or personal property as will avoid the policy. Jackson v. Mass. Ins. Co. 23 Pick. (Mass.) 418; Bice v. Tower, 1 Gray (Mass.) 426; Conover X. Mutual Ins. Co., 3 Den. 'N. Y.) 254. Tliecasesof .4Hen v. C7iarie.s- town Ins. Co., 5 Gray (Mass.) 384, and Franklin Ins. Co. v. Vaughan, 92 U. S. 316, illustrate the strictness of construction applied to such conditions when they are invoked to work a forfeiture cf the contract. In 2)is. Co. v. Haven, 9,t U. S. 242, the owner of tlie fee, to whom was issued a. policy containing a condition identical with the fourth condition in this policy with respect to tlie interest of the assured being "otlier tlian the entire, uncondi- tional and sole ownership of the property for the use and benefit of tlie assured," was held entitled to recover on his policy, although at the time it was issued there was an outstanding lease for years to a third party, which fact was neither repre- sented to the company nor expressed in the policy. I think there was no breach of the warranty expressed in the eighteenth subdivision of tlie application, which relates to the ownership of the land. The defense under subdivision 19 in the application stands on a different ground. The premises were then subject to four mortgages. If the applicant had falsely answered the inquiries propounded with respect to incumbrances, the policy would be avoided for a breach of a condition of insurance. But he studiously refrained from making any answers to the inquiry on the subject. The paper was incom- plete in that respect. The application was prepared by Pearce and signed by the applicant. It was then transmitted to the company, and the policy was issued directly from the com- pany's office upon the application in its uncompleted condition. When a policy is issued on a written application for insurance, and any of the questions are left un- answered, the objection must be made before tlie policy is issued. A policy issued upon such an application is a waiver of the right to the information called for by the inquiry unanswered, and the contract of insurance will be considered as based only on the answers given to inquiries to which the apiilicant has responded. If the insurer issues a policy upon an uncompleted application for the insurance, he cannot afterward avoid the policy on the ground that tlie answers were not full. Liberty Hall Assn. v. Ilousatonic Ins. Co., 7 Gray (Mass.) 2GI ; Hall v. People's Ins. Co., 6 id. 185; Hohn v. Farmers' Ins. Co., 5 Lans, (N. Y.) 275; Com. v. Hide & Leather ^ Ins, Co., 112 Mass. 1.39. The plaintiff at the trial, in order to meet a defense that tlie information with regard to incumbrances was fraudulently withheld, offered to show that Pearce, Waeeanties. 407 quiries are put to him relative thereto, yet, if he leaves any ques- tion unanswered, or if his answer is equivocal, and it is evident that it does not fully meet the inquiry, and the insurer issues a policy without requiring a definite answer in reference to the matter, he is treated as having waived more definite information, and cannot afterwards set up the failure of the assured to give a full answer to the inquiry, to defeat the policy. If he was not satisfied to take the risk without full replies to his inquiries, he should have sought further information before the contract was completed, and cannot afterwards repudiate his liability because full answers were not given. By entering into the contract, under such circumstances, he waives further information} " A fair and reasonable construction of the contract " said Mc- Ilvaine, J.,'^ " would require notice of prior insurance to be given at the time of making the application. * * The object of the notice is to enable the insurer to act prudently and intelligently in relation to the risk ; yet, notwithstanding the reference to the condition in the printed policy, it was competent for the insurer to waive the con- dition^ and we think it was waived in so far as it related to the notice of prior insurance. The risk was taken upon an application that the agent of the company, filled up the application, and that the different in- cumbrances on the property were spoken of between him and Pearce before the application was filled up, and that therefore there was no omission to make known the existence of the incumbrance's. Upon such a defense the evidence proffered was competent. Franklin Fire Ins. Co. v. Martin, iO X. J. L. 568, 574; 29 Am. Kep. 271, and cases cited; In-t. Co. v. Woodruff, 26 N. Y. S. 541, 552; Dodye County Ins. Co. v. Royers, 12 Wis. 337. The testimony was objected to, and on a disclaimer by the defendant's counsel of the defense of a fraudulent misrepresenta- tion or fraudulent concealment, the evidence was withdrawn. The defense was at the trial put solely on a breach of warranty. It is therefore sufficient to say that we do not find that the applicant entered into any contract of warranty on this subjecf.. 'In Bohn v. Farmers' etc., Ins. Co., 5 Lans. (N. Y.) 275, the policy required the assured to state the nature of his title, and whether there were incumbrances. He made no reply to the question. Held, a reply was waived by the issue of a policy. In Dayton Ins Co. v. Kelly, 24 Ohio St. 345; 15 Am. Rep., there was an inquiry relating to prior insurance, which was not answered. It was held a waiver of any information upon the point, 612. In Roth v. City Fire Ins. Co., 6 McLean (U. S.) 324, the assured failed to answer an inquiry calling for information as to the materi- als of which the building was composed, and it was held that information on that point was waived, and could not be set up as a fraudulent concealment. In Haley V. Dorchester Ins . Co., 12 Gray (Mass.) 545, the assured was asked to state "who occupies the building?" In Dodye Co. Mut. Ins. Co., 12 Wis. 387, the application called for statement of the way the barn was occupied. In Liberty Hall Assn. v. Housatonic, etc., Ins. Co., 7 Gray (Mass.) 261, the question " how many tenants ? " and in all these cases the questions not being answered, it was held that issuing the policy on defective application was a waiver of defects. ^Dayton Ins. Co. v. Kelly, ante. 408 Application^. formed a part of tlie policy. The interrogatory in the application for insurance, in relation to prior insurance, was not answered. The acceptance of the risk upon such an application is a waiver of any notice which a truthful a.nswer to the interrogatory would have disclosed.'" ^ The rule may be said to be that, in all cases where the answer of the assured prof esses to he, and prima facie is, a full and complete answer to the inquiry, if anything material to the risk is omitted which the inquiry called for, it is fatal to the policy, whether omitted through the fraud or mistake of the assured ; hut if it is not prima fade a complete answer to the inquiry, and upon its face puts the insurer upon further inquiry, and he issues a policy without eliciting or seeking to elicit further information in reference thereto, he waives a fuller answer, and cannot avoid liability upon the ground that the assured has concealed material facts. He as- sents to take the risk with imperfect knowledge thereof, and he thereby assumes all the consequences incident to his negligence in that respect.2 If the answer to an inquiry relative to incum- brances is not responsive, or if the question is not answered at all, bylssuing a policy without requiring a full disclosure in reference thereto, the insurer is treated as waiving the condition. Thus, in a New Jersey case,^ an application was made for insurance under the regulations of the company. It required that the questions put therein should be truly answered as a preliminary to the issu- ing of the policy. The application contained among others the following questions : " Is there any incumbrance on the property ? " and this was followed by the requisition, " If mortgaged, state the ^ Hall V. People's Ins. Co., 6 Gray (Mass.) 185; 21 Ohio St. 176; Liberty Hall Association v. Housatonic Ins. Co., 7 Gray (Mass.) 261; Nichols v. Fayette Mut. Fire Ins. Co., 1 Allen (Mass.) 6-3; Allen v. Charlestown Ins. Co., 5 Gray (Mass.) 384; Haley V. Dorchester Mut. Fire Ins. Co., 12 id. 545; Dodge Co. Mut. Ins. Co. v. Sogers, 12 Wis. 337. ^ Harmei- v. Protection Ins. Co., ante; Haly v. Dorchester Ins. Co., 12 Gray (Mass.) 545; Con. v. Hide & Leather Ins. Co., 112 Mass. 136; Dayton\. Ins. Co., 24 Ohio St. 345; Dodge Co. etc., Ins. Co. v. Rogers, 12 Wis. .387. ' Jersey Ins. Co. v. Carson, 44 N. J. L. 210. See also WasJiington Mills Ins. Co- V. Weymouth etc., Co., 185 Mass. 503. In Alkan v. N. H. Ins. Co., 53 Wis. 1-36 a fire insurance policy, declared that it should be invalidated by any omission to make known a material fact respecting its condition, situation, value or occupancy of the property. The assured was not asked, by the printed form of application or otherwise, whether there were incumbrances on the property. It was held, that the contract was not invalidated by his mere omission to volunteer a statement of the fact that there was a lien on the property, to a large amount, for taxes ; nor by his omission to disclose that he had entered into an oral executory contract to lease the property. Warranties. 409 amount." Over against the question the agent of the company ■vfTote, " Expects to borrow f 2,500 and use the policy as collateral," and opposite the following requisition he wrote nothing, but made a dash only. When the application was made the property was subject to four mortgages, amounting to $3,700. It was held that the policy having been issued upon an application in which the question as to the incumbrances had been left unanswered, without intention to deceive, there was no warranty upon that subject. In a Massachusetts case,i the plaintiff had held a policy with the defendant company upon buildings owned by it situated upon land to whicli it had also title. It sold the land but retained the ownership of the building with the right to remove the same be- fore a specified time. It then procured a policy with the defend- ant upon the buildings, making no misrepresentations nor con- cealing anything as to the title, but not disclosing the title to the land. Before the time for removing the buildings expired they "were burned. It was held that the policy was valid. The de- fendant saw fit to issue this policy without any specific inquiries of the plaintiff as to the title to the land and without any repre- sentations by the plaintiff on this point. It was its own careless- ness, and it cannot avoid the policy without proving intentional misrepresentation or concealment on the plaintiffs part. An in- nocent failure to communicate facts about which the plaintiff was not asked will not have this effect.^ It was also held that the measure of damages that plaintiff was entitled to recover was the actual intrinsic cash value of the property destroyed, and such a 1 Washington Millx eto. Co. v. Weymmith etc. Ins. Co. , 135 Mass. 503. 2 Com. V. Hide & Leather Ins. Co., 112 Mass. 136; Foiule v. Sprbvjfield hvt. Co., 122 id. 191; Welsh v. Phlla. Ins. Co., 127 id. 383. But it has been held that where the tenns of a policy provide that " if the interest of the assured in the property be any other than the entire, unconditional, and sole ownership of the property for the uses and benefit of the assured, or if the building stands on leased ground, it must he so represented to these companies, and so expressed in the written part of this policy; otherwise the policy will be void, " it is the duty of the party applying for insurance to disclose the nature of his interest in the property to be insured, and from the mere fact that the company's agent made no inquiry concerning the ex- tent of applicant's interest, a waiver of the provision on the part of the company cannot be presumed. Such provisions are upheld and enforced, not simply on the iground that it is a warranty to be enforced independently of their materiality, but upon the ground that it calls for the disclosure of material facts. Waller v. North- em As. Co., 10 Fed. Eep. 232; Ins. Co. v. Lawrence, 10 Pet. (Mass.) 507; Jenkins v. Ins. Co., 7 Gray (Mass.) .370; Bofirback v. 7ns. Co., 62 N. T. 47; Hallv. Ins. Co., 6 Gray (Mass.) 186; Liberty Hall Assn. v. Ins. Co., 7 id. 265; Com. v. Ins. Co., 112 Mass. 1.36; Findley v. Ins. Cq., 30 Penn. St. 311; I'arten v. Ins. Co., 9 Cush. Schultz V. Merchants' Ins. Co., 57 Mo. 331; 5 Ben. F. I. C. 562. '^Murdoch v. Chenango, etc., Ins. Co., 2 N. Y. 210. ^ Young v. Washington Co. Mut, Ins. Co., 14 Barb. (N. Y.) 545; Stebbinsv. Globe Ins. Co., 2 Hall (N. Y.) 602. * O'Neil V. Buffalo F. Ins. Co., 3 N. Y. 122. ^ Gates V. Madison Co., 5 N. Y. 469. Waeeanties. 415 lates against the premises becoming unoccupied, the policy is not avoided by their nonoccupancy.' When the applicant undertakes to set forth the occupancy of a building, he must state it fully. Thus, if he describes it as " his store," and it turns out that, in fact, his store is in a building occupied as a tavern, and taverns -are classed as hazardous, his neglect to state the fact is such a fraudulent concealment of a material fact as will avoid the policy,^ and he is also debarred from recovery for a loss if he uses, or per- mits the premises to be used for a purpose that is more hazardous than that for which it was used when insured. Thus, where a barn was insured as a " tavern barn," and there was a condition against increase of risk, it was held that the use of the barn as a " livery stable " ^ was a violation of the condition that invalidated the policy. In all cases, it may be said that, where the policy prohibits certain uses of the property, or the keeping of certain articles, there is a prospective or promissory warranty on the part ■of the assured that the premises shall not be devoted to such uses, •or that such articles shall not be kept ; and its breach, whether by the assured himself or by his tenants, with or without his consent, avoids the policy.* So where the assured represents that certain things will be done, or where the policy states that certain things are to be done, as that a chimney of a certain character is to be •erected, or that certain safeguards are to be employed, this is a promissory warranty on the part of the assured that must be per- iormed within a reasonable time, if no time is fixed.* So where the application or the policy states that a " watch is kept on the premises nights," this is construed, in view of the purposes for ■which the premises are employed, as a promissory warranty that a suitable watch will be kept while the premises are devoted to such use ; and whether it has been substantially kept, or rather, whether a watch suitable, in view of the risk, has been kept, is a question for the jury.^ So where the policy provides that if the premises ' CfNeil V. Buffalo Ins. Co., ante. 2 Pradhomme v. Salamander, etc. Ins. Co. , 27 La. An. 695. ' 'Hobly V. Dana, 17 Barb. (N. T.) 111. *Mead v. North Western Ins. Co. , 7 N. Y. 530. As to the assured's responsibility ior tlie acts of tenants, see Duncan v. Sun Mut. Ins. Co., 6 Wend. (N. T.) 488. ' Murdoch v. Chenango Ins. Co. , ante. ^ Hovey v. Am. Mut. Ins. Co. 2 Duer (N. Y.) 554; Glendale Woolen Co. v. Pro- tection Ins. Co., 21 Conn. 19; May v. Buckeye Ins. Co., 25 Wis. 191. 416 Application. are devoted to certain uses, or certain articles are kept or used, an additional premium must be paid; as, if camphene is used for lights, the habitual use of the premises for such purposes, or the keeping or use of such articles for any purpose, violates the condi- tions of the policy and invalidates it.* But where the policy merely prohibits the keeping of certain articles for sale, and then provides that certain kinds of illuminators shall not be used, any illuminator except those expressly prohibited may e used,, although embraced in the list of hazardous articles, unless, from the description of the risk, a license to do^those things, or keep or use such articles, can be implied.® A warranty is to be construed in reference to the subject-mat- ter to which it relates, and the knowledge of the insurer as to the condition of the property. Thus, where a policy upon a building in the course of constriKtion, contained a clause "water tanks to be well supplied with water at all times," it is complied with, if the tanks at the commencement of the risk are reasonably advanced towards completion, compared with the then state of the buildings. 1 Westfallv. Hudson It. Ins. Co., 12 N. T. 289; SteUinet-v. Granite Ins. Co., & Duer (N. Y.) .594. 2 Wall V. Howard Ins. Co., 14 Barb. (S. Y.) .383; affd Ct. of Appeals 17 X. Y. 197. In Gates v. Madison Co., etc., Ins. Co., Jf. Y. 469, it was held that where a policy- contains such a condition, an habitual, and not a casual use is referred to, and that a mere temporary use for such prohibited purpose. See also, Sand v. Citizen's Ins. Co. , 2 Gray (fflass. ) 221 ; Shaw v. Eobherds, 6 Ad . & El. 76 ; Dobson v. Sotheby, 1 M. & M. 90. So where the alleged breach arose from making repairs. Thus, a provi- sion prohibiting the use of the premises for the purpose of carrying on or exercising^ any trade, etc., and, among others, " house building or repairing," is to be under- stood as referring to a use of the premises for carrying on the trade of building or re- pairing houses, and is not broken by making repairs to the building itself. Grant V. Hoioard Ins. Co., 5 Hill (N. Y.) 10. So where the conditions specified certain trades as hazardous, and houses building or repairing were mentioned as insurable only at special rates, and oils and turpentine were classed among articles hazardous. The policy, by its terms, was to become void if the building should be used for any trade or purpose denominated hazardous, or specified in the special rates of insurance annexed, or for the purpose of storing hazardous articles. It was held that tlie in- surers were liable for a loss, although at the time of the loss the dwelling insured was repairing and painting, and for that purpose oils and turpentine were introduced Ordinary repairs on a building insured are covered by such a policy, the object of • the restraining clause being only to prevent the habitual use of the building for the specified trade or purpose, and the habitual deposit, in stcre, of the specified articles.- O'Neil V. Buffalo F. Ins. Co., 3 N. Y. 122. The things required to be done, by the conditions, are conditions precedent, and excuses for non-perfomiance are not, in general, admissible. Notice of loss given thirty-eight days after the fire, is not given "forthwith," within a requirement to that effect in the conditions, and affords no ground of recovery. Inmanv. Western F. Ins. Co., 12 Wend. (N. Y.) ib'Z; HcEvers v. Lawrence, Hoffm. Ch. (N. Y.) 172. So where gunpowder was prohibited, putting it in a building for the purpose of blowing it up to stop the spread of a fire, was held not a storing. City F. Ins. Co. v. Corlies, 21 Wend. (N. Y.) 367; see also, Hynds v. Schenectady Ins. Co., 11 N. Y. 554. Warranties. 417 and their construction is afterwards continued with reasonable dis- patch until the time of the fire.^ If it be doubtful from the words of a policy whether certain statements made by the insured relative to the subject of insur- ance are to be regarded as warranties or representations, they will be regarded as representations merely.^ Where an application is made a part of the policy, and the answers to questions therein are declared to be a warranty " so far as the same are known to the applicant or are material to the risk " in order to defeat the policy upou the ground that any of the answers were false, it must not only be shown that the answers were false, but also that the insured hiew them to be false, and that they are material to the risk? In the case last cited two of the interrogatories were " what ma- terial is used for lubricating or oiling the bearings or machinery ? " Ans. " Lard or sperm oil." " Is the machinery regularly oiled ? If so, by whom ? " Ans. " Yes, by engineer and millers as often as necessary." The evidence show that during the whole life of the policy, an oil, known as " Fine engine oil " was constantly used in the mill for lubricating purposes, and that the machinery was ' Gloucester Manuf. Co. v. Howard Fire hw. Co., 5 Gray (Mass.) 49'7. ^Thus, in WilHon v. Conaay Fire. Inn. Co., 4 R. I. 141, where the written ajjpli- cationforthe policy contained, amongst others, the following questions and answers: " Are the works operated on account of the proprietors, or are they rented ? Ans. By the proprietor. Are they immediately superintended by one of the proprietors ? If not, by whom ? Ans. Yes ; " which answers were both untrue. It was held that evidence was inadmissible to show that these misstatements were under the cir- cumstances immaterial to the risk; since, whether they were to be regarded as war- ranted or not, they were, being asked and answered, made by the parties material as representations, and so their truth made a condition of the policy, whether they were in fact material or not. In Wllxon v. Ham}>den Iiix. Co., 4 R. I. 159, which w js an action for a loss growing out of the burning of the same property as the pre- vious case, the court held that in construing the answers to the interrogatories in an application, although the proper meaning of the words used is to be first resorted to, yet the meaning attached by the applicant to them, clearly ascertainable from the connection in which he uses them, is to prevail over their proper meaning. Inac- curacies in the answers to such interrogatories, cavised by the ambiguity of the inter- rogatories, taken in their connection with each other, are to be charged to the ac- count of the insurers who prepared the applications. Where the applicant for in- surance on a cotton mill and machinery, to previous question had answered that the buildings and machinery, with certain specified exceptions, belonged to one person, himself, and that certain machinery, not to be insured in the policy, belonged to one A. H., and that " the works " were not operated by the proprietors but were rented, and in reply to the question, " Are they (the works) immediately sitperintended by one of the proprietors ?" answers " Yes; " the answer is suflHciently verified by the fact, that "the works" were superintended by the tenant A. H., in common par- lance, a "proprietor," as distinguished from his employees, and who actually owned a part of the machinery run in the works, whether the meaning intended to be con- veyed, or actually conveyed by the answer, under the circumstances, be considered. " Bedman v. Hartford F. Iiw. Co., 47 Wis. 7'J. 27 41 8 Application. not usually oiled by the engineer or miller, but by another person specially employed for that purpose, Dyan, J., said : " The circuit judge held that answers to the above questions were absolute and continuing undertakings in the nature of express warranties, and that the failure by the plaintiffs to use lard and sperm oil, and to have the machinery oiled by the engineer or miller, invalidated the contract of insurance and released the defendant from any and all obligations under it. Hence the nonsuit. This ruling ignored the questions whether the plaintiffs knew that there had been a departure from the requirements of the contract in respect to the oil used for lubricating purposes, or the person who used it, and whether the risk or hazard of fire was thereby increased. By the terms of the policy the application is made a j)art of it. The two instruments are therefore parts of the same contract, and must be construed together, as though all of the statements and stipulations contained in each were written in one instrument. Hence the stipulation at the close of the application must be treated as if written in the policy. It is manifest that such stipulation is not qualified or changed by anything in the policy. The condition, therein that the ap- plication shall be considered a warranty by the assured means just such a warranty as is stipulated in the application — no more and no less. Were this doubtful, the fact, that the application came under the immediate scrutiny of the assured while negotia- tions for the insurance were pending, and the policy did not, would resolve the doubt by making the stipulation in the applica- tion controlling. Hence the case turns entirely upon the construc- tion of the stipulation in the application. Counsel for defendant maintain that the fii'st clause of the stipu- lation, to wit, that " the foregoing is a just, full and true exposi- tion of all the facts and circumstances in regard to the condition, situation, value and risk of the property to be insured," is not qualified or affected by the next sentence— " so far as the same are known to the applicant, and are material to the risk," — but that such sentence is an additional stipulation that the insured have stated in the application all facts known to them which are mate- rial to the risk, although the information is not called for in the in- terrogatories. If this is the correct construction, the plaintiffs cove- nanted against both the suggestio falsi and the suppressio veri, and it would seem to follow that a breach of the covenant in either respect would be fatal to the contract under the last clause of the "Waeranties. 419 stipulation, which reads, " and the same is hereby made a condi- tion of the insurance, and a warranty on the part of the assured." But the defense does not rest upon any alleged concealment of facts material to the risk and known to the plaintiffs, but upon their false affirmations, or their failure to comply with continuing ■or promissory undertakings, in respect to the precautions used, or to be used, against loss by fire of the insured property. Hence, the construction contended for would render the words " so far as the same are known to the applicant and are material to the risk" ■entirely immaterial and inapplicable in the present case. Omitting these words from the stipulation, there remains a posi- tive unqualified covenant that the statements contained in the ap- plication are true. This would make the case substantially like the Blumer case, and would sustain the nonsuit on the hypothesis assumed at the outset. On the other hand, counsel for the plaintiffs maintain that the words " so far as the same are known to the applicant and are material to the risk," contained in the stipulation, qualify and limit the preceding clause, and restrict the condition and warranty thereinafter mentioned to such statements in the application as were material to the risk and known to the plaintiffs to have been ialse. Under this construction the contract cannot be declared void unless it is made to appear not only that the application con- tains some false statements of fact, but that the insured knew it to be false, and that the same was material to the risk. And as to a promissory or continuing statement or undertaking, true when made, but afterward departed from, it must appear that the change increased the risk or hazard of loss, or it is immaterial. It seems obvious that one of the constructions contended for must be adopted, and the question is, which of the two is the more reasonable and just ? In determining this question we shall enter into no minute analysis of the stipulation, nor indulge in any ex- tended discussion. There are a few general considerations which •control our judgment, and these will be very briefly noticed. In the first place, we think there is no authorized rule of con- struction which will permit us to hold that the stipulation may be extended to facts and circumstances concerning which no interrog- atory is propounded in the application. More than one hundred questions are propounded therein to the plaintiffs, calling for most minute information upon every matter which would seem to be of any interest to the insurer, and there is no general interro- 420 Application. gatory calling for information in respect to matters not specially inquired after. Under these circumstances the plaintiffs might well have believed that every fact which the insurer deemed ma- terial to the risk was specially called for, and that the stipulation was only intended to bind them in good faith in their answers to the interrogatories propounded to them. We think any intelligent and prudent business man would have so understood it. The stipulation was framed by the insurer, and had it been intended to require the insured to go beyond the interrogatories and disclose facts not called for therein (if any existed) material to the risk, a general interrogatory calling for such facts would have been in- serted ; or at least, the stipulation would have been framed to ex- press that intention more clearly. We cannot assume that the in- surer would leave its intention in that behalf to rest in uncertain and doubtful inference, when it was so easy to express it clearly and unmistakably. If these views are correct they are fatal to the construction claimed on behalf of the defendant. Moreover, that construction would work a forfeiture of the con- tract, and it is a maxim that in a doubtful case the construction should be preferred which will save the contract, rather than one which will destroy it. The use of the word warranty in the stipulation is not very sig- nificant ; certainly it does not control the construction. There may be a warranty without the use of the word, and its use may not in every case create one. The vendor of a horse who repre- sents to the purchaser that the animal is sound, the purchaser relying upon such representation, warrants the soundness of the horse, although he does not use the word warrant. But un- less the representation is material, it is no warranty. On the other hand, if the vendor warrants the horse sound so far as he knows, that is no warranty in the legal sense of the term, and he can only be held liable for an unsoundness on proof that he knew the fact. That is, he is not liable as a warrantor, but only for his fraudulent and false representation. And here too the represen- tation must be material, that is to say, it must have been an in- ducement to the contract, or there is no liability. So the stipula^ tion under consideration, notwithstanding the use of the word warranty, may, without doing violence to the language employed, be construed as merely an agreement against false and fraudulent material statements in the application. Regarding the statements upon which this case turns as continuing or promissory represen- Waekanties. 421 tations, the same elements of knowledge by the plaintiffs that they were false or have been departed from, and of materiality, must be proved to exist, or the contract cannot be held void. For the reasons above suggested, and because we believe that to be the more natural and reasonable construction of the language em- ployed in the stipulation, we adopt the construction claimed on be- half of the plaintiffs. This is substantially the construction given to a similar clause in a policy in a Massachusetts case.^ We hold, therefore, that to escape liability on the policy, the defendant must show that the use of " Fine Engine Oil," instead of lard and sperm oil, was kno^wn to the plaintiffs, and increased the risk ; or that the risk was increased by the fact that some per- son other than the engineer and miller usually oiled the ma- chinery. The judgment of nonsuit cannot be sustained unless such con- ditions of knowledge and materiality were conclusively proved. That they were not, will sacrcely be denied. Besides, testimony offered by the plaintiffs to negative the existence of one of these conditions, was rejected. The judgment must be reversed for the following reasons : 1. The testimony tended to prove that the plaintiffs believed that the oil used in their mill for lubricating purposes, although denominated " Fine Engine Oil," was a compound composed mainly of lard and sperm oil. We think the testimony was sufficient to send that question of knowledge to the jury. 2. The court rejected testimony, which, had it been received, might have tended to show that the oil used in the mill during the life of the policy was as good and safe as lard and sperm oil. The evidence should have been received on the question of the materiality of the statement on that subject in the application. 3. There does not appear to be any evidence that the machinery "was not properly oiled by the person employed for that purpose. If it was properly oiled, the representation in that behalf, although false, is immaterial. The burden was upon the defendant to show the materiality of the statement, and it failed to do so. 1 Boughton v. Ins. Co., 8 Met. (Mass.) 114. Fitch v. Am. Pop. L. Ins. Co., 59 N. T. 557. 422 Applicatioh. CHAPTER IV. PEOMISSOEY "WAKBAlirnBS. Sec. 179. Promissory warranties, what are. Sec. 180. Effect of failure to keep. Sec. 181. Construction of. Sec. 182. Rule in Aurora Fire Ins. Co. v. Eddy. Sec. 183. Rule in Ripley v. ^tna Ins. Co. Sec. 184. Custom of trade — Incidents of business. Sec. 185. How extent of warranty is determined. Sec. 186. Watchmen. Sec. 187. Water — Substantial compliance — ^Excuses, when. Sec. 188. Force pump. Sec. 189. Rule in Gloucester Manufacturing Co. v. Howard Fire Ins. Co. Sec. 190. Conditions precedent. Sec. 191. Continuing warranties. Promissory ■warranties, what are. Sec. 179. Promissorj'- warranties, or an agreement or assurance by the insured that certain things shall be done, must be strictly and literally performed, or rather actually performed. It has been held in several cases, that such warranties are met by a substantial compliance J ^ but it seems to be pretty well settled that the com- pliance must be strict and literal. Thus, in a New York case,^ where the application or survey was referred to and made a part of the policy, it was held that an answer made by the applicant to an inquiry, " Is there a watchman kept in the building during the night ? " that " there is a watchman nights," was a promissory war- > Percival v. Maine Ins. Co., 33 Me. 242; Hovey v. Am. Mut. Ins. Co., 2 Duer (N. Y.) 554; Parker v. Bridgeport Ins. Co., 10 Gray (Mass.) 202; Crocker v. Peo- ples' Mut. Ins. Co., 8 Cush. (Mass.) 79. ^ Bipley v. JEtna Ins. Co., 30 N. Y. 136. ■ Waeeanties 423 xanty on the part of the assured that a watch should be kept there every night during the life of the policy, and that such warranty was broken by a failure to keep a watch there from twelve o'clock Saturday night until twelve o'clock Sunday night, and the policy thereby avoided. And it was held that evidence of a custom on the part of similar establishments in the vicinity, not to have a watchman during such period, was not admissible to control the warranty.^ The parties make their own contract, and the only office of the courts is to construe and effectuate the contract made. It cannot add to, or detract from it, but must carry out the evident purpose and intention of the parties, clearly expressed in the contract, however great may be the hardship to either party, and it is not for the court to say that this condition or that shall not be enforced, or be regarded as operative, because not material to the risk ; it is enough that they agreed upon it, however foolish, improvident, or immaterial.^ But in order to make a representation a warranty, it must be made so by the terms of the policy itself, or by some direct reference therein to the representation, or to papers in which it is contained, which are adopted as a part of the policy,^ as the sur- vey,* the application,^ or any other documents referred to in the ^ First National Bank v. Ins. Co., of North America, 50 N. Y. 48. See, as to effect of custom upon the construction of conditions, Citizens' Ins. Co. v. McLauqh- lin, 53 Penn. St. 485. In First National Bank v. Ins. Co., 5 Lans. CS. Y.) 20-3; aff'd 50 !N. Y. 48, it was held that, where, by a policy of insurance, the owner of a* mill was required to keep a watchman on the premises nights, the condition must be strictly performed, and the fact that the sheriff had levied upon the property and locked up the buildtag, and taken away the key, did not excuse the omission, and that the warranty was not satisfied by the presence of the sheriff, during the night, who did not undertake the duty of watchman, in a shed two rods from the building, although he entered and examined the mill twice during the night. In N. Y. Belting Co. v. Washington F. Ins. Co., 10 Bos. (N. Y., 428; Sai/les v. N. W. Ins. Co., 2 Curtis (U. S.) 610; Gloucester Manuf. Co. v. Howard F. Ins. Co., 5 Gray (Mass.) 497; Crocker v. Peoples' F. Ins. Co., 8 Cush. (Mass.) 79; Lee v. Howard Ins. Co., 3 Gray (Mass.) 583; Lawless v. Tenn. F. Ins. Co., Hunts' Mer. Mag. Feb. 7, 1853, 205; Glen v. Lewis, 8 Exoheq. 607; Aurora F. Ins. Co. v. Eddy, 49 111. 106; Percival v. Maine, etc., Ins. Co., 33 Me. 242; 3 Ben. F. I. C. 314; Hovey v. Ameri- can Ins. Co., 2 Duer (N. Y.) 554. 2 State Mut. Fire Ins. Co. v. Arthur, 30 Penn. St. 315. 'Daniels v. Hudson Biver, etc., Ins. Co., 12 Cush. (Mass.) 416; Wilson y. Con- way Fire Ins. Co., 4 K. I. 141; Wall v. Howard Ins Co., 14 Barb. N. Y. 383. * Jennings v. Chenango Ins. Co., 2 Den. (N. Y.) 75; Fanners' Ins. Co. v. Snyder, 16 Wend. (N. Y.) 481; Ripley v. ^tna etc., Ins. Co., 30 (N. Y.) 136. ^ Garcelon v. Hampden, etc., Ins. Co., 50 Me. 580; Draper v. Charter Oak Ins. 424 Application. policy, as the charter of the company, by-laws, etc., and made a part of it.i This must also be regarded as subject to the qualifica- tion that there is nothing in the policy, or the documents referred to, that shows that the statements made were to be regarded rather as representations than as warranties.^ Thus, in the case referred to in the last note, the application and the answers made thereto were termed representations in the policy, and tlie court held that, inasmuch as the contract undertook to fix the character of the application and answers therein given, the character so given thereto in the policy, should be adopted, and the application and answers should be treated as representations and not as warranties- But this is, of course, subject to the qualification that the policy does not, in direct terms, provide that such representations are to be treated as warranties, as in such a case they would be treated as made warranties by the agreement of the parties. In a Maine case,^ a doctrine similar to that held in the Massachusetts case, was adopted. In that case, the applicant covenanted in his ap- plication that it contained " a just, full and true exposition of all the facts and circumstances 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, and are material to the risk, and the policy declared the application a part of the policy, and that it is made and accepted upon the representation of the assured in his application. The court held that, from the language used in the policy, it was doubtful whether the answers of the assured could be regarded as warranties, but that in any view, taken in connection with the application, they must be treated as qualified by the statement therein, " so far as material to the risk," and could not be available as avoiding the policy, unless they were, in fact, shown to be material, thus putting them upon the same ground as mere representations, and establishing the doctrine that a warranty will Co., 2 Allen (Mass.) 564; Bipleyv. ^tna, etc., Ins. Co., ante; Kennedy v. St. Law- rence Co., etc., Ins. Co., 10 Barb. (N. Y.) 285; Tebbetts v. Hamilton, etc., Ins. Co. 1 Allen (Mass.) 385; see same case, 3 AUen, 569; Kentucky Ins. Co v. Soutliard, 8 B. Mon. |Ky.) 634; 2 Benn. F. I. C. 765; Delonguemare v. Tradesmens' Ins. Co., ante; Jefferson \. Cotheal, ante. ' Commonwealth Ins. Co. v. Monninger, 18 Ind. 852; Suneral v. Dubuque, etc., Ins. Co., 18 Iowa, 319. ''■Houghton v. Manufacturers', etc., Ins. Co., 8 Met. (Mass.) 114. * Garcelon y. Hampden, etc., Ins. Co. Waekanties. 425 not be raised when the language used in the contract itself leaves it doubtful whether the answers were so intended or treated by the parties. Tailure to keep warranty avoids policy. Sec. 180. Wher-e the assured, expressly or by fair implication, promises to do a specific act in reference to the risk, a failure to do it will avoid the policy, and if it relates to some change in the building, or its use, and no time is named in which it shall be done, he will be required to do it in a reasonable time ; and as to what is a reasonable time, is a question for the jury in reference to the materiality of the change, its character, and the evident expectation of the parties from the circumstances existing at the time when the application was made. Thus, where the insured in his application, which was made a part of the policy, stated that there was one stove in the building, and that the pipe passed through the ■window, but that a stove chimney would be built and the pipe j)ass into it at the side ; it was held that this amounted to a warranty that a chimney should be built within a reasonable time, a viola- tion of which would avoid the policy. And where, after the insurance, zio chimney was built, but the stove was removed to another part of the building, and the pipe passed through a stone fixed in the Toof, and the secretary of the company indorsed upon the policy *' consent is given that the within policy remain good notwithstand- ing the stove has been removed ; " it was held that this did not vfaive compliance with the terms of the warranty.^ "Warranty construed in reference to risk, and beneficially to insured. Sec. 181. No particular form of words is necessary ; it is enough if the language is such, as applied to the risk, to indicate that it "was the intention of the parties that a certain thing should be done, or a certain state of things continue,^ and the language must be such as to leave no doubt that a continuing warranty was intended. As in case of doubt, it will be treated either as a mere representa- 1 Murdoch v. Chenango, etc., Ins. Co., 2 N. T. 210. ^ Stout V. City F. Ins. Co., 12 Iowa, 371 ; Jenningsv. Chenango Ins. Co., 2 Den. (N. Y.) 75 ; Wilson v. Conway Ins. Co., 4 E. I. 141 ; Bomadaih v. Hunter, 5 M. & G. 639 ; Murdoch v. Chenango Ins. Co., 2 N. T. 210 ; Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19 ; Sayles v. N. W. Ins. Co., 2 Curtis (U. S.) 610. 426 Application. tion or a warranty in presently In no cage will the courts extend the warranty heyond its apparent scope. Nothing will be implied, but the rights of the parties will be deter mirfed by the language used. A warranty will neither be extended nor created by con- struction ; it must clearly appear either in express terms or as a. necessary result from the nature of the contract.^ The rule is, that representations in a policy are construed to be warranties when it is apparent that they had in themselves, or in the view of the par- ties, a tendency to induce the company to enter into the contract on- terms more advantageous to the insured than without them? The contract must embrace everything relied upon by the as- sured, and nothing can be imported into it by parol. There can be no warranty except as to matters stated and written or printed in the contract, but representations may be either in writing or by parol. If, however, written representations are made, parol rep- resentations are excluded, the writing is presumed to embrace alL that were made, or that were required by the insurer, but, if no written application exists and parol representations were made, in reliance upon which the policy was issued, they may be proved.* Aurora Pire Ins. Co. v. Eddy — Smoking — Buckets filled with water — Stoves used in Building. Sec. 182. Warranties are to be construed according to the evident intent of the parties in view of the language used, the subject-matter to which they relate, and the matters naturally or usually incident thereto. Impossible matters are not within their provisions, neither are unusual matters, where a fixed and definite usage exists, nor un- lawful acts, unless the stipulation is specific and imposes an absolute duty upon the assured, which excludes the idea that the warranty is. '^ Sheldon Y. Hartford F. Ins. Co., 22 Conn. 235 ; Lindsey y. Union Ins. Co., .? R I. 157 ; Belonguemare v. Tradesman's Ins. Co., 2 Hall (N. T.) 489 ; Frisbie v. Fayette Ins. Co., 27 Penn. St. 325 ; Wall v. Howard Ins. Co., 14 Barb. (N. Y.> 483 ; Garcelon v. Hampton F. Ins. Co., 50 Me. 580 ; Jefferson Ins. Co. v. Cotheal, 7 Wend. (N. T.) 72 ; Lycoming Ins. Co. v. Mitchell, 48 Penn. St. 367. " Jefferson Ins. Co. v. Cotheal, ante, "Frisbie v. Fayette Ins. Co., ante, » Boardman,v. N. H. Mut. F. Ins. Co., 20 N. H. 551 ; Glendale Woolen Co. v. Protection Inn. Co., 21 Conn. 19 ; Lycoming Ins. Co.,y. Mitchell, 48 Penn. St. 367 ; Witherell v. Maine Ins. Co., 49 Me. 200 ; Nicoll v. American Ins. Co., 5 W. & M. (U. S. C. C.) 529 ; Snyder v. Farmer's Ins. Co., 13 Wend. (N. Y.) 92. See Wain- wright v. Bland, 1 M. & W. 32. "Warranties. 427 limited in any of these respects.^ This rule, as well as the distinc- tion between a warranty in presenti and a continuing warranty, as well as the true rule for construing warranties, is most excellently illustrated in an Illinois case.^ In that case, there was a stipula- tion in the policy that the assured should keep eight buckets filled with water on the first floor and four in the basement, for use at all times in case of fire ; also, that smoking was prohibited in or about the buildings. There was also a statement in the applica- tion that no stoves were used to heat the buildings. The defend- ant claimed that there was a breach of these warranties on the part of the plaintiff. The facts appear in the opinion of Walker, J., which is so valuable as a guide to the true interpretation of contracts of this class that I give the main portions of it here. He said : " There was a stipulation in the policy that the assured should keep eight buckets filled with water on the first floor where the machinery was run, and four in the basement by the reservoir, ready for use in case of fire. In considering the case when pre- viously before us, we held that a reasonable construction of this clause required that while, from freezing or unavoidable causes, a literal compliance with the warranty might have been impossible, and could not have been in the contemplation of the parties, still, it was incumbent on the assured to show that the required number of buckets, in good and serviceable condition, were at the places designated in the agreement, ready for instant use. This being the requirement, it devolved upon the assured to prove that he had complied therewith. On that question, there was some contrariety in the evidence, which the jury were required to reconcile, or, if unable to do so, then to give weight to such as they believed to be true. In such cases, it is the province of the jury to carefully weigh the whole of the evidence, and to find according to its weight, and the presumption is, that they have done so, unless we see from the record that they misunderstood or disregarded the proof. The court will not disturb their finding on any question, unless it appears clearly to be unsupported. In this case, while We might have arrived at a different conclusion, we are not pre- pared to say that there were not the required number of buckets ^ See very. able opmion of Learned, P. .T., in Wliliney v. Black Miver Ins. Co., 9 Man. (N. T.) 36, as to effect of the character of the risk upon the construction of the policy. 2 Aurora F. Ins. Co. v. Eddy, 50 111. 106. 428 Application. in their places, in good order and ready for instant use. The testi- mony on this question introduced by appellee is more positive and affirmative in this character than that of appellants. The wit- nesses of the latter, in the main, only say they did not see the buckets, but fail to state that they had searched for the buckets, or had their attention called to the matter. It is true, that two of them say they had, at one time, occasion to use some buckets but only found six. This may haye been true, and the proper number still have been in the mill. Dodds, on his examination in chief, seems to be positive as to the want of buckets, but the value of this testimony is greatly impaired by his cross-examination, when he was not at all positive on the subject. On the other hand, appellee's witnesses all examined expressly to see if the buckets were there. At most,- it seems to be no more than doubtful whether the buckets were all there ; but it is by no means clear, nor is there a clear preponderence of evidence, that there was not the requisite number. It is next urged that there was smoking allowed in the factory, contrary to the stipulation in the policy. It was agreed, that smoking should be strictly prohibited in and about the premises. Eddy swears he prohibited smoking in and about the building, and this was a literal compliance with his part of the agreement to pro- hibit smoking. In the case of The Insurance Co. of North America V. McDowell, 50 111. 121, it was stated, in answer to a question propounded to the assured, and which became a part of the con- ditions upon which the policy was issued, that smoking was not allowed. And it appears there had been smoking by some of the employes about the mill, but as soon as the attention of the as- sured was called to the fact that it was contrary to the terms of the policy, he forbade it, and put up a notice that it was not allowed. It was there held, that in such a case the assured only undertakes that he himself will not do the act, or allow others to do so, if by reasonable precaution he can prevent it. In -this case appellee prohibited smoking, and there is no evidence that he had any notice that his orders had been disregarded, so as to require him to resort to other and more energetic steps for its prevention. He did not agree that, if there should be smoking in or about the buildings, the policy should be void. He, or any man who is at all qualified to transact the most ordinary business, would not enter into such an engagement, as strangers and others over whom he had no con- trol were liable to smoke about the buildings. Had the evidence Warranties. 429 shown that his orders were disregarded, and that it had come to his knowledge, then a different question would have been pre- sented for our consideration. But the jury were, under the evidence before them, warranted in finding appellee had used reasonable efforts to prevent smoking in or about the buildings. It is next urged that there was a violation of the condition, that if the title to the property should be transferred or changed, the policy should be void. It appears that when the property was in- sured Eddy was only the owner of the equity of redemption, Town then holding a mortgage on the premises, and loss, if any, was pay- able to Town, as his interest might show. Subsequently, appellee conveyed the premises, with other property, to Brown, and he, at the same time, and as a part of the same transaction, gave back to appellee a defeasance. This arrangement was made to enable Eddy to take up his mortgage to Town, which was done, and to prociire means for other purposes. That this conveyance and defeasance only constituted a mortgage, is so obvious that the citation of authorities to establish the proposition is wholly unnecessary. The question is then presented whether the execution of a mort- gage on the premises was such a change or transfer of the property as rendered the policy void. It was but an equity of redemption that was insured, and this transaction still left appellee as fully the owner of the equity of redemption as he was at the time the in- surance was effected. This was not, therefore, any change or transfer of title in appellee, but the only change was, that a differ- ent person held the mortgage, and it was, perhaps, for a different amount. But appellee's title was the same. But even if this were not so, still, the execution of a mortgage on the insured premises has been held, in the case of the Commercial Ins. Co. v. Spankneble, 52 111. 53, not to be a sale, alienation, conveyance, transfer, or change of title, such as is prohibited by a similar clause in a policy, and that the right to insist upon such a forfeiture is stricti juris ; that liberal intendments and enlarged constructions will not be indulged in favor of such forfeitures. They must be brought clearly within the forfeiting clause. This, then, disposes of that question. It is also urged that, by erecting and putting into operation machinery for the manufacture of rope increased the hazard and avoided the policy. It appears that at the time the risk was taken appellee notified the agent that he intended to put in rope ma- chinery, and he inquired whether it would affect the policy, and was informed it would not, as the term flax factory was broad enough 430 Application. to embrace it, and we have no doubt he was correct in his defini- tion of the term flax factory. It is believed to be quite common in such establishments to manufacture rope. It is a usual part of the business, and for that reason we incline to the opinion that this was no breach of the condition. But if it was, still the agent of the company assured appellee that it would not' be, and shall appellee be misled when he is procuring a policy, and induced to take one that he intends, and the agent of the company assures him is broad enough to cover rope works, when it does not, and shall appellants now be heard to say, it is true our agent misled appellee, and induced him to do an act that we knew would avoid his policy, and thus enable us to obtain the premium when we in- curred no risk? A court of justice would never sanction such a fraud, and thus enable parties to obtain and enforce such an unjust advantage. The agent was acting within the scope of his authority, and was, when appellants authorized him to take policies, empow- ered to give a construction to the written portion of the policy, if no more, and the company must be held estopped by this declara- tion of their agent. The instruction given on behalf of appellee, on that question, was proper. It is also urged that there was a breach of the warranty in the policy, that no stoves were used. The question was asked, ' How is the building warmed ? If any stoves and pipes, how are they secured?' To this it was answered, 'No stoves used.' Appellee agreed in the application, that if any untrue answer was given therein the insurance was to be void, and tha policy of no effect. It is not contended that the buildings, or any part of them, were then warlned by a stove, but that one was subsequently used for the purpose, and that this representation was a continuing one, and was a warranty that a stove would not be used for warming pur- poses. In a former case ^ a similar representation was held by this court not to be a continuing warranty that there should be no fire in the tannery, except under the boiler, as represented, during the life of the policy, but only a representation of the condition of the property at the time the policy was issued. We will not give a forced construction to language to enable a party to enforce a for- feiture, but rather adhere to the natural import of the words used, lu this case the questions and answers are in the present and not in the future tense. The use, then, of the stove was not a breach of the warranty. But if used recklessly it might be regarded as in- creasing the risk. Dodd testifies, that on the evening of the loss 1 Schmidt v. Peoria F. & M. Ins. Co., 41 lil. 295. Waeeantibs. 431 he made a fire and heated it red hot. But he says that the princi- pal or foreman, or Eddy, was not there, and he says Ticknor, Turner or Eddy never directed him to make a fire in the stove, and he says ' the bosses ' did not want him to make the fire, but he was asked to do so by the girls who worked in the factory, that they might warm their feet before going home. Hoborn also testified, that he had seen fire in the stove and that he had seen it red hot. Other witnesses, who had better opportunities of seeing and knowing the facts, speak of seeing fire in the stove, but do not •speak of its being unusually hot ; and it was for the jury to say, whether it was used in a grossly negligent manner, and they have found it was not, and seem not to have given much weight to the ■evidence of Dodd and Hoborn, and from the uncertainty they manifest in reference to other matters about which they testify, we are not prepared to say that it was entitled to receive more weight than was given to it." Appellants asked, but the court refused to give, this instruction: ' The Jury are instructed, that so far as relates to the question of buckets, the policy requires that the plaintiff must keep " at all times ready for use in case of fire, four buckets of water " in the basement story and eight buckets on the middle floor ; and the plaintiff must show affirmatively that he did substantially so keep .said buckets of water, and if he has not proved these facts, the jury must find for the defendant.' While this instruction may not be entirely incorrect, it was cer- tainly calculated to mislead. What would amount to a substantial compliance with a contract, is very indefinite, and a question about vrhich well founded differences might exist. This form of instruc- tion was held to be erroneous when this case was previously before this court. We then but followed the decision on the same point in the case of Taylor v. Beck, 13 111. 336. The court below had •already given an instruction, clear, definite, and free from misap- prehension on this question. It was this : ' If the jury believe from the evidence that buckets could not be kept in the mill filled with water all the time, in accordance with the literal provisions of the policy, because of freezing, then a literal compliance with the said provisions of the policy concerning buckets, was not required and could not have been in the contem- plation of the parties when the policy was made, but all that was lequired by the plaintiff in order to comply with such stipulation 432 Application. ■was to have the required number of buckets in good and serviceable condition at the proper places ready for instant use.' This is the construction we gave in the former opinion, on the previous trial. The instruction on this point, as well as all others,, is free from objection. It presented the law of the case fairly to the jury. It is objected that the court below permitted appellee to intro- duce evidence tending to prove a promise by the president and secretary of the company to pay the loss, after it had occurred. The evidence was proper for the consideration of the jury. It might rea- sonably be inferred from such evidence, that these officers had , carefully examined the circumstances of the loss, and become con- vinced it was a fair one, and was properly payable. It would certainly be evidence to that, if to no greater extent, and it was clearly admissible. After a careful examination of this record, we fail to perceive any error requiring a reversal of the judgment, and it must, there- fore, be affirmed." Rule in Ripley v. .SItna Ins. Co. Watchman. Duty to keep on Sundays. Sec. 183. The distinction between a warranty subject to the qualifications stated in the previous rule, and one where such a construction is excluded by the language used, was well illustrated in a New York case,i in which in answer to a question in the ap- plication, whether there was a watch kept in the mill nights, the in- sured answered " there is a watchman nights." The application was referred to and made a part of the policy, and the court held that this constituted a warranty that there should be a watchman in the building every night, and that, it being conceded that no watch was kept from twelve o'clock Saturday night until twelve o'clock Sunday night, the warranty was broken and the company released from liability, even though the loss had no connection with the breach. The court also held that the language was so ex- plicit as to exclude evidence of a custom of similar establishments not to keep a watch during that period. It is proper to say, how- ever, that there was at the time this decision was rendered, no statute in New York prohibiting secular labor upon Sunday, so that that question was not raised or passed upon by the courts. But in a. 1 Bipley v. j^tna Ins. Co., 30 N. T. 136. Waeeanties. 433 Connecticut case,^ the question was presented under a policy issued in and controlled by the laws of Massachusetts, and the point was made that the keeping of a watchman between the hours of twelve o'clock Saturday nights and twelve o'clock Sunday nights, was unlawful under the statutes of Massachusetts, but it will be seen by a reference to the opinion of the court that the statute was not proved, and the court did not seem to be informed whether there was such a statute or not. It is true the court intimated that the existence of such a statute would make no difference, as, even though the warranty required the doing of an unlawful act, it was obligatoi'y. But this doctrine can hardly prevail. The courts are hardly inclined to uphold a provision of a contract that requires the violation of a penal statute by the other party, particularly when the contract will hear a contrary construction ; and a contrary and much more acceptable doctrine was held in a Wisconsin case,^ the gist of which is given elsewhere in this work. Custom of Trade. Incidents of business. Sec. 184. An insurer is bound to know of the existence of cus- toms or usages incident to any business that he undertakes to insure,^ as well as all the risks usually incident thereto, and when he takes a risk, he is presumed to contemplate all the perils connected with it, to the minutest detail thereof, so far as the same are usually connected therewith, in the prosecution of the business,* and even 1 Glendale Woolen Co. v. The Protection Ins. Co., 21 Conn. 19. " Prieger v. Exchange Ins. Co., 6 Wis. 86. ' May V. Buckeye Ins. Co., 25 Wis., 291. In Sims v. State Ins. Co., 47 Mo. 54 ; 4 Am. Rep. .311, tlie defendants insured a tobacco warehouse, and the assured stated the use of the building to be a "tobacco pressing, no manufacturing." Hogsheads were manufactured in a shed adjoining. The court held that it was for the jury to say whether the manufacture of hogsheads was an incident of the busi- ness. ^ In United States etc., Ins. Co. v. Kimherley, 34 Md. 224 ; 6 Am. Rep. 325, a policy was issued " on a four-story warehouse * * * first floor occupied by machinery used for making barrels, with privilege of storing barrels on tlie premises, and other merchandise not more hazardous." The policy contained a clause requiring a true and accurate description of the use and occupation of the premises, under the penalty of forfeiture. The policy further declared, in printed words, that it was the intention of the parties that in case the insured premises should be used or appropriated for the purpose of carrying on or exercising the trade, business or vocation of (a large number of manufactures specified therein, including) "cooper, carpenter, cabinetmalv-er," * * * "so long as the said premises shall be wholly or in part appropriated or used for any or either of the pur- poses aforesaid, these premises shall cease and be of no force or effect vmless other- wise specially agreed by this corporation, and such agreement shall be signed in 28 434 Application. though the particular business insured is not conducted in the usual manner, yet, if the insurer sends an agent to examine the risk, he is presumed to act upon the knowledge of such agent as to all matters apparent to observation or which would have been ascertained upon reasonable examination and inquiry, and he can- not defend against the policy upon the ground that he was misled as to the risk in any matter chargeable to the fault, ignorance or incapacity of the agent. As to all the ordinary, apparent hazards he is presumed to act upon such agent's knowledge and examina- tion, and is estopped from setting up false representations or fraudulent concealment of facts by the assured relating thereto.i Thus, where the defendant took a risk on a sulphuric acid manu- factory, and machinery, and chemical apparatus connected with the establishment, it was held that they must be presumed to know the methods of the business and the incidents of the risk, and, having sent an agent to examine the risk before taking it, they were estopped from repudiating their liability upon the ground of fraud on the part of the assured, as to matters which it was the business of the agent to have seen and known.^ In a recent case in Massachusetts^ the defendant company insured the plaintiff " on his stock of rags, old metals, bones and barrels " contained in his storehouse. The plaintiff is a junk dealer, " his stock " consisting of old articles and materials, paper stock, pieces and fragments of all kinds ; and it could not be particularly described in a policy or other contract without great prolixity, said the court, " We think it was competent for the plaintiff to prove that by a usage of the trade the terms " rags " and " old metals " had acquired a broader writing in or on the policy." The premises, at the time the insurance was effected, were used for making and storing barrels as mentioned in the written portion of the policy. Subsequently small circular saws and a work-bench were introduced and boxes were manufactured, but this kind of work had ceased from two to four months when a loss by fire occiu-red. The saws and work-bench had remained in the building and a lathe had been put up the day preceding the fire for the purpose of making broom-handles and brush-blocks. In an action on the policy, held, (1) that the description of the property was not a continuing warranty, but a warranty in presenti ; (2) that the policy was suspended during the prohibited use of the premises, but was revived when the use ceased to exist ; and (3) that there was no such " appropriation " of the premises, at the time of the fire, to a prohibited use as was contemplated in the policy or as prevented a recovery. 1 Washington, etc., Ins. Co. v. Davidson, 30 Md. 91. ^ Washington, etc., Ins. Co. v. Davidson, ante. 2 Mooney v. Howard Ins. Co., (Mass. S. C. ) 1885. Warranties. ^ 435 signification than belongs to these words as commonly used. It was an application of the rule that where words have two mean- ings, one common and the other peculiar and technical, it is com- petent to show that they were used in the latter sense.^ The usage upon which the plaintiff relied was not a particular or a local usage, but was a general usage of the trade. The defendant asked the court to rule " that a usage or custom of a particular trade, in order to bind the defendant, must be proved by substan- tive evidence to have been known to them or their agent, and that it was not enough that the jury should presume such knowledge, if they found such a usage to have been of long continuance." The court refused this ruling, and instructed the jury " that the plaintiff must prove that the alleged usage was known to the de- fendant, and that they would be warranted in finding that it was known to the defendant, if they found upon all the evidence that -there was such a usage or custom, and that it was well defined, uni- Tersal, uniform, and of long continuance." Said Morton, C. J., " We understand this*o mean that the jury might infer the knowl- edge of the defendant from the universality and long existence of the usage. A usage such as the instructions required having been proved, the defendant's contract is deemed to have been en- tered into with reference to such usage if known to it. Under- writers insuring by certain words may fairly be presumed to know the mercantile meaning of the words ; and the fact of a wide-spread and established use has at least tendency to show that they had such a knowledge." ^ How extent of warranty is determined. Sec. 185. In construing a warranty in an application, every part of it relating to the matter to which the warranty pertains, must be taken and construed together ; and the warranty, modified ■or enlarged by every matter pertaining thereto, is to determine the rights and obligation of the insurer.^ Thus, in the case last referred to, the plaintiff, in answer to an inquiry, stated that he ' Macy V. Whaling Ins. Co., 9 Met. (Mass.) 354 ; Daniels v. Hudson Ins. Co., 12 Cush. (Mass.) 416. 2 Howard v. Great Western Ins. Co., 109 Mass. 384, Croucher v. Wilder, 98 id. -322. 3 McCulloch V. Norwood, 58 N. T. 563. 436 Application. was the owner of the property, and that no other person had an interest therein ; but in answer to a question as to incumbrances, he answered, " by contract." He was in possession under a con- tract for a deed, but the premises had not been conveyed to him. The insurer claimed that this constituted a breach of warranty as to title ; but the court held that all his statements in reference to title must be taken together, and that the last answer qualified the first in such a way as to preclude the insurer from setting up a warranty of absolute owne?ship, or exclusive interest, and, as a whole, truthfully set forth his interest in the premises. The language of the policy is to be looked to, and the intention of the parties is to be gathered from that, if possible, and the lan- guage is always to be construed most liberally for the assured. If it can be construed so as to prevent a forfeiture, it will be so con- strued, because forfeitures are odious to the law, and the insurer, selecting his own language, is presumed to use such as expresses his intention and excludes every use of the premises which he de- sires to exclude. Thus, where a policy provided that, if gunpow- der, saltpetre, phosphorus, etc., were kept on the premises, or if camphene, burning fluid, refined coal or earth oils were kept for sale, stored or used on the premises in quantities exceeding one bar- rel at an}' one time, it was held that the keeping of gunpowder in quantities less than one barrel did not avoid the policy, because, by a fair construction of the policy, such was the expressed inten- tion of the assured, although a contrary construction might be put upon it, and probably, in fact., was what the insurer intended.^ The conditions or statements in a policy may constitute both an affirmative and promissory warranty, as where the policy describes the building as " occupied for stores below, the upper portion to remain unoccupied during the continuance of this policy," the por- tion relating to the lower part of the building, is an affirmative warranty that is met, if true when the policy was made, but that portion of it relating to the upper stories is a promissory warranty that is broken, if at any time during the life of the policy, the upper portion of the building is occupied.^ In all cases, if the de- scription merely relates to the present condition of the property, 1 7ns. Co. V. Slaughter, 12 Wall. (U. S.) 404. Blumer v. Phenvx Ins. Co., 45 "Wis. 622 ; 48 id. 535. 2 Stout V. City F. Ins. Co., 12 Iowa, 371 ; 4 Ben. F. I. C. 556. Waerantiks. 437 and there is nothing in the policy to indicate that the state of thinjs then existing is to remain as described, the warranty is merely affirm- ative, and is met, if true when made ; but if from the language of the policy and the usages of the business insured or which is carried on upon the premises, it is evident that the parties contracted in re- liance upon a continuance of the state of things described.^ That the usages and incidents of the business are to be considered in de- termining this question, has been held in numerous cases. In pol- icies in which it is stated, " a night watch kept,y it is held that this amounts to a warranty that a suitable watch shall be kept ac- cording to the usages of such business during the life of the policy, so long as the property is devoted to such uses.^ So when the building is described as a barn, " no fire is kept and no hazardous goods deposited," while there is a warranty that the building shall not be devoted to a more hazardous purpose, yet a temporary haz- ardous use, essential to the repair of it, does not avoid the policy, because it is an incident of the risk,^ and the same is true even as to express conditions in the policy, when the description of the iDusiness is such that, taken in connection with its usual incidents it imports a license to do certain prohibited things. Generally, it -may be said that a description relating to the occupancy of a building is a warranty in presenti, and does not amount to a war- ranty that such occupancy shall continue during the life of the pol- icy,'^ or that a certain state of things shall continue,^ but it does import a warranty that the hazards of the risk shall not be mate- rially increased, but any change not producing such a result is not a breach of warranty.^ ^ See opinion of Lyon in Blumer v. Phenix Ins. Co., 45 Wis. 622. ^ May Y. Buckeye Mut. Ins. Co., 25 Wis. 291 ; Prieger v. Exchange, etc., Ins. Co., 6 id. 89. 3 Bohson V. Sothehy, M. & M. 90 ; Catlin v. Springfield Ins. Co., 1 Sum. (U. S.) 434; Billings \. Tolland Ins. Co.; Land v. Citizen's Ins. Co.; Shaw \. Eobberds, Ad. & El.; Williams v. N. E., etc., Ins. Co., 31 Me. 219. ' O'Niel V. Buffalo F. Ins. Co., 3 K Y. 122; Erisbiev. Fayette, etc., Ins. Co., 27 Penn. St. 325; United States F. & M. Ins. Co. v. Kimberly, 34 Md. 224 ; Prieger v. Exchange Ins. Co., ante ; v. May Buckeye Ins. Co., ante ; Maher v. Hibernian Ins. Co., 6 Hun (N. Y.) 353; Smith v. Mechanic's etc., Ins. Co., 32 N. Y. 399. * Schmidt v. Peoria, etc., Ins. Co., 41 111. 295 ; Cumberland Valley, etc.. Protec- tion Co. V. Sckell, 29 Penn. St. 31 ; Catlin v. Springfield F. M. Ins. Co., ante. ^ Whitehead v. Price, 5 Tryw. 825. In Maynll v. Mifford, 6 Ad. & El. 670, the policy covered cotton mills, warranted brick built. The policy staterl that thoy 438 Application. Watchman. Sec. 186. "When the policy provides that a watchman shall he kept nights, it is construed as binding the assured to keep a watch- man on the premises every night, until the usual hours for re- suming work in the morning ; ^ but unless the language is specific,, and requires the watchman to be kept constantly on the premises, the question as to whether the warranty has been broken by a. temporary absence of the watchman from the premises, is for the- jury, and, as bearing upon the question, the usage of other similar establishments in this respect is admissible ; " but in order to make evidence of a usage in this respect admissible, it must either be so general that the courts will presume that the insurer had notice of its existence, or it must be shown that he in fact had knowlege thereof, so that it will be presumed that the parties contracted in reference to it. " For this purpose," said Mullen,. J., ^ "the cus- ton must be established, and not casual, — uniform, and not vary- ing, — general, and not personal, and known to the parties." The court fell into an error, which resulted from the wrong use of terms. There is a wide distinction between an usage and a cus- tom. Long usage makes custom, but it is not every usage that amounts to a custom, but only such usages as have become so fixed and permanent in connection with a particular business as to were warmed and worked by steam, lighted by gas, and worked by day only. Plea; the steam engine, upright and horizontal shafts, parts of said mills were without leave of insurers, worked by night, and not by day only. Keplications : that the engine, upright and harizontal shafts, were not part of said mills, and were not, without leave of insurers, worked by night, and not by day only. The jmy found the issues upon that plea for the defendants. Motion for judgment non obstante veredicto. It was held that the plaintiff was entitled to judgment, notwithstanding the verdict, for the plea was bad, because working a part of the machinery at night was not working the mills at night. In Aurora F. Ins. Co. v. Eddy, 55 111. 213, the application — made a part of the policy — stated that no stoves were used in the building. A stove was subsequently put into the building to heat it, and the court held that this was not a breach of the warranty. That the language did not amount to a promise on the part of the assured that no stove should be used therein. 1 Crocker v. People's Ins. Co., 8 Cush. (Mass.) 79; 3 Bennett's F. I. C. 234; Rip- ley V. ^tna Ins. Co., 29 Barb. (N. Y.) 552; Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19; 3 Bennett's F. L C. 213. 2 Crocker v. People's Ins. Co. , ante, the policy contained this clause, " a machine shop ; a watchman kept on the premises." There vras no watchman at the time of the fire, and had been none for some ten days prior to the fire. May v. Buckeye Ins. Co., 25 Wis. 291. But see Gendale Woolen Co. v. Protection Ins. Co., ante, for instances when evidence of usage will not be permitted. 3 Ripley v. JEtna Ins. Co., -SON. Y. 136; 3 Benn. F. L C. 223. Wakbanties. 439 have become an incident thereof and a law thereunto. When an usage has ripened into a custom, no proof except of the existence of the custom is necessary, because the law presumes all persons to be aware of it ; but an usage simply, must not only be shown to exist, but also it must be shown that the parties knew of its ex- istence. At common law, custom is immemorial usage — usage so long continued that its origin cannot be discovered. If its inception can be shown, upon the ground that thereby the person by whose particular will it was originated is thereby ascertained, it cannot be treated as a custom, because a custom, being a law, cannot have its origin in the impotent act of any particular individual, but in the will of the whole.^ Thus, a distinction of a very important and de- cisive character exists between an usage and a custom, and this distinction must not be lost sight of in the construction of policies of insurance, even though the courts, by confusing terms, some- times seem to fail to observe the distinction. When a custom is shown, it is as much a part of a contraot in reference to which it re- lates as a statute is, because it is a part of the laiv pertaining to those matters, and, unless specially excepted against in the contract, will control its interpretation. Where the warranty is, " a watch kept," the assured is treated as contracting to keep a suitable watch, and it is for the jury to say whether or not there has been substantial compliance with the warranty, and in determining that fact, it is competent to show that such a watch was kept as is usually kept in similar establishments.^ on V. Welln, L. R., 7 Q. B. 214 ; Bex v. Joliffe, 2 B. & C. 54 ; Master Pilots, etc., V. Bradley, 2 E. & B. 428. ^ Crocker v. Peoples Mut. Ins. Co., ante. In Parker v. Bridgeport Ins. Co., 10 Gray (Mass. ) 30, in a policy upon a saw-mill, the assured covenanted " that a repre- sentation given in the application for this insurance contains a just, full and true exposition of all the facts and circumstances in regard to the condition, situation, value and risk of the property insured, so far as the same are known to the assured and material to the risk; and that if any material fact or circumstance shall not have been fully represented, the risk hereupon sliall cease and determine, and the policy be null and void." The applicant, to a question, " Is a watch kept upon the premises during the night ? Is any other duty required of the watchman than watching for the safety of the premises ? " answered. '■ A good watch kept; when usually at work ; watchmen work at the saws " ; and answered in the negative this question: " Is the building left alone at any time after the watchman goes oS duty in the morning till he returns to his charge in the evening ? " In fact, no watch was ever kept on the premises after twelve o'clock on Saturday night, or at ten on Sunday night, other than the workmen sleeping there, who were instructed to and habitually did, examine the mill with reference to fires before going to bed; and the fire occurred on Sunday night, when no one was on the premises. It was held that the term "good watch" must be interpreted to mean "suitable" of proper watch " ; and that it was for the jury to decide whether the watch kept was 440 Application. If the warranty is to keep a watch " at all times when the business is not in operation," a temporary absence of the watchman during such periods, avoids the policy, even though the watchman is pre- vented by officers of the law from discharging his duties.^ And a warranty to keep " a watchman nights," includes Sunday nights, even though by statute labor upon that day is prohibited.^ The a suitable an J proper one, and whether the risk was affected by the watch ac- tually kept, as compared with the one stipulated for. 1 In Firxt National Bank of liallston v. Ins. Co. of N. America, 50 X. T. 45, it appeared that, in a survey, which was referred to and made a part of a policy upon a paper null, this inquiry was made, ''Watchman ; Is one kept in the mill 01- on the premises during the night and at all times when the mill is not in operation, or when the workmen are not present?" Answer: "Yes." On the day previous to the destruction of the property by fire, the persona] property in the mill was levied upon by the sheriff, by virtue of an execution against the assured. The sheriff excluded the employees from the mill, took the keys and locked up the building. The deputy sheriff and one of the trustees of the assured remained in the office of the mill, about two rods from it, during the night, up to the time of the discovery of the fire, which occurred about 4 A. M., but they did not keep watch. In an action upon the policy, it was held, that the question and answer in the sur- vey constituted a warranty, that the levy did not excuse from the obligation to per- fonn it ; that the deputy sheriff and trustee were not to be regarded as watchmen withni the meaning of the policy, and that there being a breach of the warranty, plaintiff was properly nonsuited. Gkovbr, J., saying, " Failure to comply with a warranty will bar a recovery m case of loss, whether the loss was caused by such failure or not. Cases, supra. In the present case the survey is made part of the policy. In the survey the following inquiry is made : ' Watchman : Is one 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 ? Ans. Yes. This statement was promissoi-y, but the rights and duties of the parties were the same under it as though it had been affirmative. Ripley v. The ^tna Ins, Co., supra. The proof was, that upon the day previous to the destruction of the property by fire, the sheriff levied an execution against the assured upcn the personal property in the mill, and excluded their employees therefrom, took the keys and locked up the building. The comisel for the appellant insists that this act of the sheriff, being an act that it was his legal duty to perform, must be regarded as the act of the law, and cites authorities showing that when performance of a contract becomes, impossible by the act of God or the law, performance will beexcused. The answer to this, in the present case, is that it was the default of the assured in not paying the judgment that caused the issuing and levy of the execution. The levy does not therefore, excuse it from the obligation to perform the warranty. The counsel further insists, that as the deputy sheriff and one of the trustees of the assured remained in the office of the company, a building abcnit two rods from the mill, during the night and until the discovery of the fire, they should be regarded as watchmen within the meaning of the policy. But the testimony failed to show that they were such, or even so regarded themselves. That shows that they looked through the building twice in the evening, the last time about eleven o'clock, and then went into the office, laid down and dozed until about four o'clock, when the deputy sheriff turned over and discovered the mill in flames, the fire being so extensive as to render all attempts to save the building and property hopeless. It is clear that these persons never undertook with the assured to act as watchmen, and conse- qnently inci,irred no liability to it for negligence in the performance of the duties of such employment. In case of a recovery in the action, the defendant would have no right by subrogation to any remedy against them on that ground. This shows that they were not watchmen within the meaning of the term." - GlendaleWoolen Co. v. Protection Ins. Co., ante; Ripley v. ^tna Ins. Co., ante. But see May v. Buckeye Ins. Co., 25 Wis. 291, where it is held that the law will not presume that the parties contemplated an unlawful act. Warranties. 441 question as to whether the warranty has been complied with, is €xclusively for the jury.^ "When a policy requires a watchman to be kept on the premises, the insured is not required to keep one there constantly, but only at such times and during such periods as men of ordinary care and skill in such business, employ one, and in this respect the usage •of similar establishments is admissible.^ "Water— Substantial compliance— Aurora Fire Ins. Co. v. Eddy. Sec. 187. In all cases, when a strict and literal compliance with "the terms of a warranty is known to be impossible, it is presumed that a substantial compliance therewith was intended, and if there is a substantial compliance, the warranty is met, as when the 3)olicy requires water to be kept in the building, the requirement need only be substantially complied with. Thus, where the policy stipulated that the " insured is to keep eight buckets filled with water on the first floor, where the machinery is run, and four in the basement by the reservoir, ready for use at all times," it was held that this stipulation was to be construed reasonably, and in ■view of natural or unavoidable causes — such as freezing weather — and that, while a literal compliance might not be possible, yet the as- ^ Crocker v. People's Ins. Co., ante ; Hovey v. American Ins. Co., 2 Duer (N. Y.) •554; Sheldon v. Hartford Ins. Co., 22 Conn. 553; .3 Bennett's F. I. C, 551; Hough- ion V. Ins. Co., 8 Met. (Mass.) 114. ^In Crocker v. The People's Mut. Fire Ins. Co., 8 Ciish. (Mass.) 79, the plaintiff procured insurance upon his machine-shop, and the policy contained a provision as follows: " Machine shop, watchman to be kept on the premises." The plaintiff employed a watchman on the 14th of November to watch one-fourth the night, leaving the shop at about half-past seven in the evening. On the 28th of November the watchman was hired for one-half the night, leaving the shop at half-past ten in the evening, and on December 28th at about one o'clock in tlie morning, a fire "broke out and the building was destroyed. The defendant resisted payment upon the ground that plaintiffs had broken this condition of the policy. The plaintiff was permitted to show the usage in this respect, by different similar establisliments. The court charged the jury that, under this condition of the policy, "some watch- man must have been kept on the premises in order to comply with this clause. It must not have been a pretense merely, or only a colorable keeping of a watch- man. But if in good faith, and without fraud, a watchman, was kept upon the premises, and such a watchman, and for such a portion of the time or at such ■specified hours as, in the exercise of ordinary care and prudence, was deemed suf- ficient for the safety of the building, that would be a compliance with the provision of the policy, and that, in order to determine whether or not a watchman was kept •on the premises in good faith and in the exercise of ordinary care and prudence, the jury might refer to the evidence in the case as to what was common and usual in regard to keeping watchmen in other similar establisliments," and upon appeal this ruling was sustained. "'What is common and usual," said Shaw, C. J., ■"under given circumstances, is evidence tending to show what is reasonable." 442 Application. sured must show that he kept the buckets at all times, as required bif the policy, in a good and serviceable condition at the places designated,, ready for instant use} So a warranty in this respect is to be con- strued according to the intent and evident understanding of the- parties, as applied to the condition of the risk, its uses and purposes. Force pump or other appliances, rule as to. Sec. 188. The same rule applies where the assured, by the terms- of the policy, is required to have a force-pump or other appliances for extinguishing iires upon the premises. In such cases, the war- ranty is construed as requiring him to have the appliances there in condition for use at all times ; but even though the warranty is in express terms that the pump shall be " at all times ready for use," yet, if it is ready for use when the fire occurs, the fact that it becomes disabled during the fire, does not operate as a breach.^ Such a warranty will be reasonably construed, and will not be extended beyond its terms. But as a force-pump would be useless, without power to operate it, it will be construed to include such power, but not to include any particular power. But even this- depends upon extrinsic matters, and will be construed in reference to the subject-matter of the risk. This was well illustrated by Curtis, J., in the case last cited. He said : " If this warranty were of a force-pump in a dwelling-house at all times ready for use,. I should hold it satisfied by the existence of a force-pump in a con- dition to be worked, * * considering the nature of the works, and the uniform and notorious usage to have such a pump in such a position driven by power.'' A warranty of this kind, however, is. held not to require the assured to have hose for use in connection with the pump.^ A policy on a mill contained the stipulation that the forcing-pump on the premises should be kept in good working, order. Shortly after the insurance, the pump was out of order and remained so about three months, during which seasonable efforts were made to repair it, and when repaired it continued in ^ Aurora Fire Ins. Co. v. Eddy, i'i IM. 106; Garrett v. Provincial Ins. Co., 2ft Upper Canada, Q. B. 200. 2 Sayles v. N. W. Ins. Co., 2 Curtis (U. S.) 610. ^ Peoria, etc., Ins. Co. v. Lewis, 18 111. 553: mem. of case in 4 Bennett's F. I- C. 187. Warranties. 443 operation until the night of the fire which destroyed the mill, when it was rendered inoperative by freezing. It was held, that the stipulation was not a condition precedent, and required only a substantial compliance, and that there was no defence to an action on the policy. Gloucester Manufacturing Co. v. Howard Fire Ins. Co. Sec. 189. This was well illustrated in a Massachusetts case.^ In that case the policy contained this stipulation : " water tanks to be well supplied with water at all times." An indorsement upon the policy converted it into an insurance upon buildings "in course of construction," and the court held that the warranty in reference to the water tanks and water, was to be construed in reference to the condition of the risk, and that, while in the course of construction, the assured was not required to have them sup- plied with water in the same manner and to the same extent that would be required in the case of finished buildings. In a Wisconsin case ^ it was stated upon the form of application for insurance, and provided in the policy, that such applica- tion was a part of the contract, and a warranty on the part of the insured ; and by such application he agreed to use only lard and sperm oil for lubricating in the mill insured, and also stated that there was a forcing pump on the premises, designed expressly for extinguishing fires, and agreed to have it at all times in condition for use, with a proper supply of good hose on hand It was held that these were promissory warranties, in the nature of conditions subsequent. While a trifiing departure from the letter of such a condition, a merely technical breach, or (probably) an accidental or involuntary failure to perform the condition, not sanctioned by or known to the insured, and which did not increase the risk, would not be held to defeat the policy, yet anj^ substan- tial breach would defeat it. If the insured in this case, in the usual course of business, ordered lard and sperm oil for lubricating purposes, and believed that they obtained and were using such oil, and if the oil used contained lard and sperm oil, and though compounded with a product of petroleum, was as good and safe as 1 Cady V. Imperial Ins. Co., 4 Cliff, C. Ct. 20.3. (U. S.) ^ Gloucester Manuf. Ins. Co. v. Howard Fire Ins. Co. 5 Gray (Mass.) 49*7. ' Copp V. German American Ins. Co., 51 Wis. 637. 444 Application. lard and sperm oil, there was no substantial breach of the condi- tion concerning lubricators. "Warranties conditions precedent. AfBrmative, unless clearly otherwise intended. Instances of application of rule. Sec. 190. A warranty, affirmative or promissory, is in the nat- ure of a condition precedent. An affirmative warranty is the posi- tive and unqualified statement of a fact as then exinting, and for the truth of which the assured vouches to the insurer, and which is satisfied, if the fact is as stated at the time when the contract is entered into. They are sometimes denominated warranties in pre- senti. That is, warranties that a certain state of facts exists in relation to the risk at the time when they are made. Ail warran- ties are treated as affirmative, unless from the language used, and the subject-matter of the risk, a contrary construction is inevitable. Thus, the words " occupied as a dwelling," i " as a hotel," ^ as a paper mill,^ merely relate to the present condition or use of the property, and are not to be construed as warranties that they shall be used for no other purpose. But they are warranties that the prem- ises shall be used for no other purposes materially increasing the risk. In a policy " on a four-story warehouse, first floor occupied by machinery used for making barrels, with privilege of storing barrels on the premises," the warranty was held to relate only to the present use oi. the property, and was not a warranty that it should be used for no other purpose, and the premises having subsequently been used for making boxes, and a circular saw and work bench introduced into the building for. that purpose, which use, however, had ceased before the fire, it was held that the policy was not thereby avoided.* So, where the policy described the building as " a two-story framed building used for winding and coloring yarn, and for the storage of spun yarn, etc.," and the policy also contained a clause 1 Schultz V. Merchants' Ins. Co., b1 Mo. .331: Cumberland etc., Ins. Co. v. Schell, 29 Penn. St. 31. 2 Catlin V. Springfield Fire Ins. Co., 1 Sura. (U. S.) 434. ' Wqod V. Ins. Co. ante ; May v. Buckeye Ins. Co., ante. * United States Ins. Co., v. Kimberly, 34 Md. 224; fi Am. Rep. 325; Billings v. Tolland etc., Ins. Co., 20 Conn. 139; Smith v. Mechanics' and Traders' Ins. Co., 32 N. Y. 399; O'Neil v. Buffalo Ins. Co., 3 N. Y. 122; Blood v. Howard Fire Ins. Co., ante. Warranties. 445 stating it " to be the true intent and meaning of tlie parties here- to, that in case the above mentioned premises shall, at any time after the making and during the time this policy would otherwise be in force, be appropriated, applied or used to, or for the pur- pose of carrying on or exercising therein any trade, business or vocation denominated hazardous, or extra hazardous, or specified in the memorandum of special rates in the terms and conditions annexed to this policy, or for the purpose either of depositing, storing or keeping therein any of the articles, goods or merchandise in the same terms or conditions denominated hazardous, extra-hazardous, or included in the memorandum of special rates, except as herein ex^Dressly provided for, are hereafter agreed to by this corporation, in writing, to be added to, or indorsed upon, this policy, then and from thenceforth so long as the same shall be so appropriated, applied or used, these presents shall cease and be of no force or effect." Among the subjects enumerated in the memorandum of special rates contained in the conditions annexed to the policy are " wool mills, wheelwrights and wool waste, and generally all mills and •manufacturing establishments requiring the use of fire heat not before enumerated." In October, 1861, the manufacture of carpets having been temporarily suspended under the pressure of the times, the insured placed in the building covered by the policy in suit, thirteen hand-looms for weaving woolen army blankets, which looms were in part made from materials before used in manufact- uring carpets, and partly from new materials. On the 1st of November, 1861, defendant, for an additional premium at an en- hanced rate, consented that building " C," one of the several con- stituting the carpet factory, be occupied for weaving, fulling and storage purposes, and gave privilege " to run the mill nights for the term of three months." After this period the insured com- menced weaving army blankets by hand power in the building in- sured by defendants, and continued that business until the whole establishment was destroyed by fire, which occurred in January, 1862, and originated in another building. There was no evidence that the change in the use of the building increased the risk, and the plaintiff offered to show that ths risk was in fact decreased, but the evidence was excluded. It was proved that the process of fulling was never used in the manufacture of carpets, but was a necessary part of the manufacture of blankets ; and that it was not customary for carpet factories to be run nights. The court 446 Application. below nonsuited the plaintiff, but upon appeal the judgment was reversed and the warranty held to be merely a warranty m^resewii, and that a change in the use did not avoid the policy unless it materially increased the risk.^ 1 Smithy. Mechanic's Ins. Co., 32 N. T. 397; Davis, J., said: "The statement of the policy that the building insured was ' used for winding and coloring yarn, and for storage of spun yarn,' was undoubtedly a warranty of its then present use. Jenkins v. Chenango Mut. Ins. Co., 2 Denio, 15; Wall v. The East River Ins. Co., 3 Seld. 370. This is all that is settled by the above cases. But there is no pretense that the Ijuilding in this case was not used at the time of the insurance precisely as stated, and, therefore, none for saying tliat the warranty was broken in irresenti, as it was in the eases cited. The only question, therefore, on this part of the policy is, whether it contains a warranty that the building, during the continuance of the policy, should be used only ' for winding, coloring and storing yarn,' with the fix- tures and machinery then in it. In O'Neil v. The Buffalo Ins. Co., the premises were described as occupied by a certain individual as a private dwelling. The oc- cupant moved from and ceased to occupy the house several weeks before the fire, and it stood vacant when burned. This court held that the description in the policy must be regarded as a warranty of the fact that the person named was the occupant at the date of the policy, and nothing more. 3 Comstock, 122. In Catlin V. The Springfield Ins. Co., 1 Sum. 435, the policy was on a dwelling-house, 'at present occupied by one Joel Rogers as a dwelling-house, but to be occupied here- after as a tavern, and privileged as such,' it was held that there was no continuing warranty that the house should be occupied as a tavern or otherwise, and that the company were liable, although the building was destroyed while vacant, by foul means, which probably could not have occurred if it had been occupied. A dis- tinction was made in the court below between the use of the word ' occupied ' and the word 'used,' in the description of policy as to the effect upon the question of continuing warranty; but to my mind the suggestion is without force. Both relate to the present actual use of the property, and are, when so applied, synonymous in intent and meaning. If the courts do not find a warranty in the phrase occupied in a particular manner, it would be overstraining to find one in the words, iLsed in a specified way. If an insurance company desire to protect itself by a warranty as to future or continued use in the same manner as when insured, it may always do so by language, the object and meaning of which will be understood by both parties; and the courts should not thus construe words which are fully satisfied as a descrip- tion of a present use or condition, into a promissory warranty, unless the mference is natural and irresistible that such was the understanding and design of both parties. Where there is such a warranty as to future use, the designated use must con- tinue, or the warranty will be broken, for courts have no right to say that the assured may abandon the particular use or occupancy, and allow the premises to lie vacant or idle; for the very act of requiring such a warranty is conclusive that the insurer considered the continuance of the designated use or occupancy material to the risk, and made the contract accordingly. In my opinion, there was no continuing war- ranty of future use in the clause of the policy under consideration. The view that the description was not designed as such continuing warranty, is strengthened by the fact that the company have retained in the policy the clause in regard to using or appropriating the property in any manner included in their tabular statement of hazardous, extra hazardous and special rates; and thus, by force of the well known maxim, " expresaio unius est exclusio alterius," assented to changes not with- in the prohibition. Another question of the case is, whether the change of use of the building from the purposes named in the description to the use of the hand- looms for weaving blankets, falls within the prohibition just referred to. In con- sidering this question, it is to be remembered that the property was insured as a part of a manufactory of woolen fabrics — carpets made of wool — and is therefore property within the designation ' wool mills, as used in the list of special rates. In- deed, the factory is described by defendants as ' the mill ' in the privilege given for running nights. It was insured at the special rates fixed by the company because of the kind of business carried on. In making the change, no new or additional business was superadded to that of manufacturing carpets. The latter was tem- porarily abandoned, and the making of blankets temporarily substituted. The same Wakeanties. 447 So where the policy described the building as " a two -story frame building, etc., occupied by the Hon. George J. Goodhue as a private dwelling," it was held that this was merely descriptive of the present use of the building, and was not a warranty that it should continue to be occupied by the same tenant during the whole life of the policy.^ " The description in the policy," said HuGGLES, J., " must be regarded as a warranty of the fact that lie was the occupant, at the date of the policy, and nothing more. The ■description imports nothing more. The defendant insists that the ■description warrants not only that he (the tenant named) was the •occupant at the date of the policy, but that he was to remain the occupant during the continuance of the risk. But the parties have not thought it proper to express themselves to that effect. * * If it had been the intention of the parties to make it a con- •dition that he should remain the occupant during the term of the insurance, it would have been easy to say so, and there is no good reason in the case for supposing that the parties intended what they have not expressed." A policy often contains both an affirmative and a promissory Tnaterial was used, prepared substantially in the same manner, but brought to a differently constructed loom for the purpose of turning out a different fabric. But there was no change of the premises or of the business from something not ' hazard- ous or extra hazardous,' or not specified in the memorandiun of special rates, to ■something coming within either. The wool mills remained wool mills, although they made blankets instead of carpets for the time being, and never by the change lost their character as a manufactory of woolen goods in which they were insured. In no just sense of the prohibitory clause above quoted, was there any change ob- Tioxious to its provisions ; for an establishment within the special rates, because it manufactured woolen goods of one kind, was no more within them becavise it made the same material into a different kind of goods. In my judgment, the policy was not forfeited by force of the clause relied upon by substituting the making of blankets for carpets in the manner described in the evidence, because it was no such change or different ' appropriation ' as is contemplated by that clause. The question is therefore, the same precisely as though the insured, instead of setting up hand looms for weaving blankets in the building named by defendants, had put there the same number of looms for weaving carpets. And as there was no con- tinuing warranty that the particular use of the building stated in the policy should be continued while the policy run, the case ought to have gone to the jury on the -question whether the risk was materially increased by the conduct of the assured without the consent of the company. The evidence whicla was offered to show that the change, in fact, diminished instead of increasing the risk, should have been allowed upon this question. I have not considered the force to be given (if any) to the consent of the company, that one of the buildings, constituting a part of the tnanufacturin g establishment, might be used for a process wholly unknown in car- pet making, but requisite to the manufacture of most other woolen goods, as im- plying that such goods might be made in the establishment as required that process. It is not necessary to the determination of this case, in its present aspect, that any- thing further should be done than to settle the construction of the clauses of the policy above considered." 1 O'Niel v. Buffalo F. Ins. Co., 3 N. T. 152; 3 Bennett's F. I. C. 103. 448 AprLiCATioN. warranty as to the risk. That is, a warranty may be in part affirm- ative, and in part promissory. Thus in an Iowa case,i the policy described the occupancy of the property thus : " Occupied for stores below, the upper portion to remain unoccupied during the continuance of this policy.'' The court held that the former part of the statement was an affirmative, and the latter part a promissorif warranty. The former merely affirmed that a certain state of facts did exist, the latter, not only that a certain state of facts did, but should continue to exist, ^he former was not broken by a. change in the use, unless the use substituted was more hazardous, while in the latter case, an occupancy of the upper portion of the building for any purpose, was a breach of the warranty, and. avoided the policy. Where a policy stated that no stoves " are used in the building," it was held a mere in presenti warranty, and that the use of a stove in the building, subsequently, did not avoid the policy .^ A warranty, being always expressed in the body of the policy, or in papers expressly referred to therein and made a part thereof, is a part of the contract, and a condition precedent, full perfor- mance of which is essential in order to entitle the assured to recover for a loss under the policy ; and this applies equally to an affirma- tive or promissory warranty. The former must be shown to be literally true, and the latter to have been strictly performed, and that too, without any reference to the question whether they were material to the risk. The insurer is permitted to judge for himself upon what conditions he will assume a risk, and what is material thereto, and if he sees fit to insert immaterial conditions in the policy, the assured cannot defend against a breach thereof upon that ground. By inserting them in the policy, the insurer has made them material, and the assured is estopped from going into that inquiry. They are conditions of the contract, and must be literally performed, even though the risk is thereby increased. The assured has no election, but must stand upon his performance ofthem.^ Unless it is' clear from the language used, that the parties in- tended a warranty to apply to the future use of the premises, it will ^ Stout V. City Fire Ins. Co., 15 Iowa 374 ; 4 Bennett's F. C. I. 555. See alsO; Carter v. Humboldt, etc F. Ins Co. , 17 id. 456. ' Aurora F. Ins. Co. v. Eddy, ante, ' Marshall on Ins. 549. Wabkanties. 449 be construed as a warranty in presenti merely. Thus, where the assured stated in his application, " clerk sleeps in the store," it was held that this merely referred to the present occupancy of the store, and could not be construed as a warranty that the same state of things would continue.^ " Whether," says Lowkie, J., " a statement shall be taken as a warranty, is a mere question of interpretation to be ascertained in policies of insurance just as in other contracts. * * Here it does not expressly appear that the clerk was to sleep in the store as a precaution against fire, and it is not otherwise obvious that that was the intention of sleeping there. * * * * jt m^y be a mere license.^ We may illustrate the impossibility of the arbitrary construc- tion contended for, by changing the sentence and making it read, " clerk cooks his victuals in the store." It would hardly be contended that he should continue to do so, for this would increase the risk. Or, let it read, " a tavern is kept in part of the house," this would not be regarded as a warranty that he should continue to do so, for the by-laws show that the company regarded such a use of the house as adding to the risk. The rule seems to be that such representations in, or a part of the policy, are construed to be warranties when it appears to the court that they have had, in themselves, or in the view of the parties, a tendency to induce the company to enter into the contract on terms more favorable to the insured, than without them. If the court cannot say so, then they are treated as representations, and it is left to the jury to say whether or not they are material misrepresentations tending to mislead, and actually misleading the insurers. The rule perhaps may be more concisely stated thus. Any statement or description, or any undertaking on the part of the assured, on the face of the policy, which relates to the risk, is a warranty, an express warranty, and a condition precedent. It is not necessary that it should be stated to be a warranty, or that it should be so by construction. It is enough that it appears upon the face of the policy and relates to the risk^ 1 FrisUe v. Foyette Mut. Ins. Co., 27 Penn St. 825; 4 Ben. F. I. C. 159. ^ 1 Sum. (U. S- C. C.) 435. ' ' In Wood V. 7ns. Co. , 13 Conn. 533, the subject of insurance was described in the policy as " the one undivided half of the paper-mill which the insured owned at W., together with the lialf of the machinery, wheels, gearing," etc., and in a memorandum in the conditions annexed to the policy, paper mills and grist-mills were mentioned among the articles which were to be insured at special rates of 29 450 Application. Continuing Warranties. Sec. 191. The question as to whether a representation of the present state or condition of the risk is, or is not a continuing warranty, is one which must depend upon the evident intention of the parties to be gathered from the contract and the subject matter thereof. A nalted statement that the building is used as a " dwell- ing " a " woolen mill," " paper mill," etc., without other representa- tions relative thereto, is merely descriptive of the character of the risk, and is a warranty only that the risk is as described when the application was made and not that it shall be used as described, during the life of the policy, unless from the language of the policy and all the circumstances a different intention canbe gathered therefrom. This rule is well illustrated by a Connecticut case, which was ably argued and well considered, and which ranks as a leading case upon this question.^ In that case the policy was executed and delivered to the plaintiffs, by the defendants, in their corporate capacity, as alleged in the declaration. It was in the usual form, and contained the following provisions : " And it is agreed and declared, to be the true intent and mean- ing of the parties hereto, that in case the above mentioned build- ing shall, at any time after the making, and during the continuance of this insurance, be appropriated, applied, or used to or for the purpose of carrying on or exercising therein, any trade, business or vocation, denominated hazardous or extrorhasardous, in the con- ditions annexed to this policy, or for the purpose of storing therein any of the articles, goods or merchandise, in the conditions afore- said denominated hazardous or extra-hazardous, unless herein other- premium, in contradistinction to tlaose which were not hazardous, hazardous or extra hazardous. In February, when the insurance was effected, the building in question was a paper-mill, and was used for no other purpose. In August fol- lowing, its use as a paper-mill was discontinued, the rag-cutter and duster were removed, and a pair of millstones, for grinding grain, were put in their places, moved by the same gearing, and by the power of the same water-wheel, all the other machinery remaining as it was. By the use of the millstones, the risk was greater than it would have been if no use had been made of the premises, but not greater than if the paper-mill only had been in operation. In September, dm-ing the continuance of the risk, the premises were destroyed by fire, not caused by the millstones. In an action on the policy against the insurers, it was held that the description of the building as a paper-mill related to the risk ; that it was a wan-anty, and that if the building was not a paper-mill at the time of the loss, the warranty was not complied with ; that at the time of the loss it was a paper-mill, ready for use, and, consequently, the warranty was duly kept ; and that the insurers were not absolved from their obligations by reason of any increased hazard resulting from the alterations in the mill. 1 Wood V. Hartford F. Ins. Co.. 13 Conn. 583. "Wakkanties. 451 "wise specially provided for, or hereafter agreed, by this company, in writing, and added to, or endorsed upon, this policy, then and from thenceforth, so long as the same shall be so appropriated, applied or used, these presents shall cease, and be of no force or •effect." Certain conditions were also annexed, which, by the terms of the policy, were to be resorted to, in order to explain the rights and •obligations of the parties, in all cases not otherwise specially pro- vided for. Among the conditions referred to, were the following : "1. Goods are denominated not hazardous, hazardous, and extra-haz- ardous. Goods not hazardous, are such as are usually kept in dry goods stores, including coffee, cotton in bales, flour, household furni- ture and linen, indigo, potash, rice, spices, sugars, teas, threshed grain, and other articles, not combustible." " 2. The following trades and occupations, goods, wares and merchandise, are denominated hazardous, viz. basket-sellers, copper- smiths, china or earthen or glass ware, or plate glass, in packages, hoxes or casks, groceries with any hazardous articles, gun-makers or smiths, hat-finishers, looking-glasses in packages or boxes, milliners' stock, oil, paper in reams, paper-hangings, pitch, porterhouses, rags, in packages, sail-makers, saltpetre, spirituous liquors, sulphur, tallow, tar, taverns, turpentine, victualling shops, window glass in boxes, and wooden-ware sellers." " 3. The following trades and occupations, goods, wares and merchandise, are denominated extra hazardous, viz. alcohol, apothe- caries, aquafortis, basket bleachers or makers, booksellers' stock, brass founders, brush-makers, cabinet-makers' stock, carvers, china or earthen ware, or looking-glasses unpacked, and buildings in which the same are packed or unpacked, chocolate-makers, color- men's stock, comb-makers, confectioners or their stock, druggists, ether, founders, flax-grate makers, hats of chip or grass, or straw bleaching, hemp, hay pressed in bundles, jeweller's stock, lamp manufacturers, lime unslacked, mathematical or musical or optical instrument sellers, or perfumers' stock, morocco manufactories, pictures, platers, or plated ware manufactories, prints, printers of newspapers, rag stores, ship chandlers, silversmiths' or stationers' stock, soap-makers, spirits of turpentine, stove manufactories, tin or sheet-iron workers, tobacco manufactories, turners, upholstery manufactories, varnish, watch-makers' stock, tools, etc., window or jplate glass unpacked." " Mem. — Bakers, bark-mills, blind-makers, brewers, brimstone- 452 Applicatiom". ■works, book-binders', blacksmiths', boat-builders', cabinet-makers', carpenters', joiners', coopers', chair or coach makers' workshops, chemists, cotton mills, distilleries, dyers, forges, fences, flax-mills, frame-makers, fulling-mills, grist-mills, hat manufactories, houses building or repairing, ink or ivory-black or lampblack manufac- tories, livery stables, lumber or mahogany yards, malt-houses, metal and other mills of all kinds, musical instrument makers, oil-makers, oil-boiling houses, pump and block-makers' shops, paper mills^ piazzas, and privies of wood, printers of books and jobbing, rope- makers or sash-makers, saw or snuff mills, ship-builders' stock in the yard, ships or other vessels in port, or their cargoes, or when building or repairing, steam-engines or boats, sugar-refiners, tallow-melters orohandlers, tar-boiling houses, theatres, or other places of public exhibition, timber yards, turpentine manufactories, vanish makers, woollen mills, and generally all manufacturing es- tablishments, an all trades requiring the use of fire heat, not before enumerated, will be insured at special rates of premium." " 4. Application for insurance must be in writing, and specify the construction and materials of the building to be insured or containing the property to be insured ; by whom occupied ; whether as a private dwelling, or how otherwise ; its situation with respect to contiguous buildings, and their construction and materials ; whether any manufactory is carried on within or about it, and, in case of goods or merchandise, whether or not they are of the de- scription denominated hazardous or extra-hazardous. And a false description, by the insured, of a building insured, or of its con- tents ; or in a valued policy, an over-valuation, shall render abso- lutely void a policy issuing upon such description or valuation. But the office will be responsible for the accuracy of surveys and valuations made by its agents." At the time of the execution of the policy, and thence until the loss and damage by fire mentioned in the declaration, the plaintiffs were the owners of an undivided moiety of the property insured : the other moiety being owned by one Buddington. The interest of the plaintiffs therein, exceeded the sum of 5000 dollars. On the 9tli of September, 1837, the paper-mill, together with the, wheels, machinery and gearing, was wholly burnt and destroyed by fire. The plaintiffs had no other insurance on the property in question, than the insurance by virtue of this policy. At the time of making it, the premises were correctly described ; and the plaintiffs paid the premium to the defendants. Immediately after the loss. Waeeanties. 453 the plaintiffs made the affirmations, and furnished the proofs, declarations and certificates, alleged in the declaration, and re- quired by the conditions of the policy. At the time of effecting the insurance, the plaintiffs resided in the city of New York ; and the premises insured were in the possession and immediate occu- pancy of Buddington, the owner of the other undivided moiety, to whom the plaintiffs had, in March, 1832, given a lease for five years. At the date of the policy, the paper-mill and its machinery were in full operation, being used by Buddington in making paper^ and so continued, until the 23rd of May, 1837, when he discon- tinued the use of the machinery for the purpose of making paper ; and it has not since been used for that purpose. In the month of August, 1837, Buddington, being so in possession, and having so discontinued the use of the paper-mill, introduced into the establishment, without the knowledge or consent of the plain- tiffs, a pair of mill-stones for the grinding of grain ; and put them in a place previously occupied by the duster and rag-cutter ap- pertaining to the paper-mill ; such duster and rag-cutter being re- moved for that purpose. These mill-stones were put in operation, by the water-wheel of the paper-mill and other machinery, which had been applied to move the duster and rag-cutter in the manu- facture of paper. Buddington used the mill thereafter, until it was consumed by fire, for the grinding of grain only, and not for the manufacture of paper ; but all the machinery for the manu- facture of paper remained in the mill, unremoved, except the duster and rag-cutter, in the place of which the mill-stones were introduced. The fire was not caused by the operation of the mill and mill-stones. After the 26th of May, 1837, and at the time of the fire, Buddington held, claiming to be tenant of the property, by virtue of his lease from the plaintiffs, and denying the right of the plaintiffs to enter upon or use the premises ; and so held against the will and consent of the plaintiffs. The risk, by the use of the mill-stones was made greater than it would have been, if no use had been made of the premises ; but the introduction of the grist-mdl machinery did not make the risk to the premises greater than if the paper mill only had been in full operation. A case embracing these facts, was made, partly by agreement of the parties, and partly by the finding of the jury, and reserved for the advice of the court as to what judgment should be rendered thereon ; it being admitted, that if, for the plaintiff, it should be 454 Application. for the whole sum insured by the policy, and interest thereon, from the time it was payable. Sherman, J., said : " The general rule in regard to what con- stitutes a warranty, in a contract of insurance, is well settled. Any statement or description, or any undertaking on the part of the insured, on the face of the policy, which relates to the risk, is a warranty. "Whether this is declared to be a warranty totidem- verbis, or is ascertained to be such, by construction, is immaterial. In either case, it is an express warranty, and a condition precedent. If a house be insured against fire, and is described in the poUcy as being " copper roofed," it is as express a warranty, as if the language had been, '■'■warranted to be copper roofed ; " and its truth is as essential to the obUgation of the policy, in one case as in the other. In either case, it nlust be strictly observed. There may often be much difficulty in ascertaining from the construction of the policy, whether a fact, quality or circumstance specified, relates to the risk, or is inserted for some other purpose— as to show the identity of the article insured, etc. This must be settled, before the rule can be applied. But when it is once ascertained, that it relates to the risk, and was inserted in reference to that, it must be strictly observed and kept, or the insurance is void. The word "warranted" dispels all ambiguity, and supersedes the necessity of construction. If a house be insured against fire, and the language of the policy is, " warranted, during the policy, to be covered with thatch," the insurer will be discharged, if, during the insurance, the house should be covered with wood or metal, although his risk is diminished ; for a warranty excludes all argu- ment in regard to its reasonableness, or the probable intent of the parties. " It is quite immaterial," says Maeshall,i "for what pur- pose, or with what view, it is made ; or whether the assured had any view at all in making it : — unless he can show, that it has been literally fulfilled, he can derive no benefit from the policy." And he adds, that " it is also immaterial to what cause the non-com- pliance is attributable ; for if it be not in fact complied with, though, perhaps, for the best of reasons, the policy is void.'" These positions are in conformity with numerous and high authorities, and with the reason of the rule. Parties may contract as they please. When a condition precedent is adopted, the court cannot ' On Insurance, 249. Wareanties. 455 enquire as to its wisdom or folly, but must exact its strict obser- vance. An entry on the margin of the policy, or across the lines, or on a separate paper, expressly referred to in the policy, will be construed a warrant}^, if it relates to the risk ; that is, if it defines, or, in any respect, limits, the risk assumed. It may, indeed, where the explicit language of a warranty is not adopted, be difficult to ascertain, wliether, on a fair construction, the clause was meant to define or limit a risk ; but when this is ascertained, the insured has no right to dispense with it, or substitute in its place another risk, however advantageous to the insurer. No man can be com- pelled to adopt a better bargain than his own. It is immaterial whether the non-performance, or violation of the warranty, be with, or without, the consent or fault of the insured. Its strict observance is exacted, by law ; and no reason or necessity will dispense with it. The argument of the defendants is, therefore, conclusive, if the policy warrants this building to be and continue a paper-mill, and it was not one, at the time of the loss. In the policy, this estab- lishment is described as " the one undivided half of the paper-mill, which they [the insured] own at Westville, together with the half of the machinery wheels, gearing, etc. ; the other half being owned by William Buddington." If this relates to the risk, it is a war- ranty. That it does, is evident from the memorandum in the con- ditions of the policy, where "paper-mills" are enumerated among those articles which " will be insured at special rates of premium ; " that is, a paper-mill is the subject of peculiar risks, and is to be insured upon special stipulations. Therefore, the description of this, in- the policy, as a "paper-mill," relates to the risk, and is, consequently, a warranty. It is the only subject of insurance; and if it was not a paper-mill, at the time of the loss, the warranty was not kept, and the plaintiffs cannot recover, although the change may have diminished the hazard, and been effected with- out their knowledge, or against their will. It is contended, that the paper-mill had become converted into a grist-mill. The policy is dated in February, 1837. In the August, following, the use of the paper-mill was discontinued, and a pair of mill-stones were added, for grinding grain. They were located in the place previously occupied by the rag-cutter and duster ; and were moved by the same gearing, and by the power of the same water-wheel. No other machinery was used for the grindstones. All remained as it was, except the rag-cutter and duster ; — ^which 456 Application. were dismounted — and all the other machinery might, at any- time, have been employed in making paper. It was, to all intents and purposes, a paper-mill, ready for use. The character of the establishment was no more altered, than if a grindstone had been attached, by a band, to the water-wheel and all the other ma- chinery left at rest. The warranty was duly kept. It has been further contended, that the defendants are absolved from their obligations, by reason of the increased hazard resulting from the use of the millstones.* In most cases of insurance, cir- cumstances occur, which increase the hazard ; but whether they impair the policy, must depend on its construction, or on the general iDrinciples of the law of insurance. The jury have found, that by the use of the millstones the risk is greater than it would have been if no use were made of the premises, but not greater than if the paper-mill only was in full operation ; but that they were not the cause of the loss. Admitting that, as the facts were, the hazard was increased, by the use of the millstones ; yet, to this claim of the defendants, the policy itself furnishes a satisfactory answer. It provides, that if, without the written agreement of the company, the building shall be appropriated for carrying on any trade, business or vocation, or for the storing of any articles, " denominated hazardous or extra hazardous," in the annexed condi- tions, the insurance shall be of no effect, so long as the same shall be so appropriated. In the conditions annexed, grist-mills are not deno- minated hazardous or extra-hazardous, but enumerated in the memo- randum relating to special rates of premium. They were under the consideration of the parties, and advisedly omitted from that class, which should affect the validity of the insurance. An effect of the memorandum is to exclude from insurance the articles which it em- braces, unless specially provided for in the policy ; but they are pur- posely distinguished from those which affect its validity. It is admitted, that the loss has happened, by the risk insured against ; and that all the preliminary steps, to entitle the defend- ants to the benefit of the policy, have been taken. The property insured has not been changed ; the warranty has been kept ; and the obligations of the defendants have not been impaired, by any in- crease of hazard, resulting from the alterations in the mill.''^ 1 See Billings v. Tolland Mut. F. Ins. Co., 20 Conn. 142, 14.3. Glendale Manufac- turing Co. V. The Protection Ins. Co., 21 Conn. .35, where the court guards the language employed in this case against misconstruction. And see Warner v. The Waeeantibs. 457 But in a later case before that court,i where it was provided in the policy that the survey and the description of the property should be a warranty, and the survey consisted of interrogatories and answers, one of which was, " Is there a watchman kept in the mill during the night ? " and the answer was, " There is a watchman nights," it was held that this amounts to a warranty on the part of the assured to keep a watchman in the mill through the hours of every night in the week, and the mill having been burned during a night when there was no watchman in the mill, it was held that the assured had broken his warranty and therefore could not re- cover for the loss.^ In a recent Wisconsin case,^ in answer to a question, " Is the mill ever left alone ? " the assured replied, " No regular watchman, but one or two hands sleep in the mill," and it was held to be a continuing warranty and the mill having been burned at night, and at a time when there was no one in the mill, it was held that the warranty was broken and that there •could be no recovery, the court holding that the warranty was continumg. In this case the court says that the character of the inquiry was such as to clearly indicate that it related not merely to the present method employed to guard the property from fire, iut also to the methods which would exist during the life of the policy, and in this construction, is sustained by a very respectable line of authorities.* But the courts will not give to statements in the application in reference to the use of the property, the force of a continuing warranty, unless from the language used, and the nature ■and usages of the risk, it is evident that it was so intended and un- Middlesex Mut. Assurance Co. 21 Conn. 447. Sheldon v. Hartford F. Ins. Co., 22 Conn. 235. Sexton v. Montgomery Ins. Co. 9 Barb. (N. Y.) 191. Kennedy v. St. Lawrence Mut. Co. 10 Barb. (N. Y.) 285. Masters T. Madison Mut. Ins. Co. 11 Barb. Sup. Ct. 624. Grayv. The Hartford F. Ins. Co., 1 Blatch. (U. S. C. C.) 280; Driggsv. Albany Ins. Co., 10 Barb. (N. Y.) 440. Tillou v. Kingston Mut. Ins. Co. 7 Barb. .(N. Y.) 570. 1 Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19. 2 See Houghton v. Manufacturers' Mut. F. Ins. Co., 3 Met (Mass,) 114 ; Alston v. Mechanics' Mut Ins. Co., 4 Hill (N Y.) 830; Farmers' his. Co., Snyder 16 Wend. (N. Y.) 481 First National Bank v. Ins. Co.. of North America .50 N. Y. 45. Sipley Y. Astor In^. Co., .30 N, Y. 136 May v. Buckeye Ins. Co., 25 Wis. 291. ^ Blumer v. Phenix Ins. Co. 48 Wis. 585. ^First National Bank v. Ins. Co., of N" America 50 N. Y. 45; Ripley v. .^tna Ins. Co., 30 N. Y. 136; Parker v. Bridgeport Ins. Co., 10 Gray (Mass.) ,30; Crockery. Peoples' Ins. Co., 8 Cusb (Mass.) 79; May v. Buckeye Ins. Co., 25 Wis. 291. 458 Application. derstood hy the 'parties?- It has now become so common for insur- ance companies to impose special conditions and restrictions upon the use of the premises insured, that an omission to do so by them, to impose special conditions as to future use, is quite gener- ally treated as leaving the future use subject only to the condi- tions as to the increase of the risk, and the courts in view of this practice, and that the insurer has it in his power to make his con- tract plain and distinct, will in all cases where there is any room for a doubt as to the intention of the parties, construe them favor- ably to the assured.^ 1 Cumberland Valley etc., Ins, Co., v. Schell 29 Penn. St. 31 ; Providential Life Ins. Co., Fennell 49 111; 180 Gelliatt v. Pawtucket Ins. Co., 8 R. I. 282 Benham v. United Guaranty etc., Assn. 7 Exchq. 744 United States etc., Ins. Co., v. Kiniberly 34 Md. 234, Frisbie v. Fayette Ins. Co., 27 Penn. St. 325. ^Boon V. ^tna Ins. Co. 40 Conn. 586. WAEEANTrES. 459 CHAPTER V. "WARRANTIES AKD KEPEESENTATIONS. Representations ; what are ; must be material. Tests of materiality. Fatal representations of interests. As to occupancy. As to method of use. Unlawful act not required. Fluctuating uses ; permanent uses. Rule as to incidental uses. Prohibited uses. Change of use. Distinct contracts. Effect of note of premium on character of risk. Description of use ; warranty in presenti. Effect of list of hazards upon contract. Implied license. Representations substantially true. Ashes ; method of keepiug. Breaches must be plead or relied on at trial. Representations ; 'what are ; must be material. Sec. 192. A representation precedes the contract ; and, being- only the inducement thereto, need only be true as to matters material to the risk, and that influence the insurer in taking or re- jecting the risk, or in fixing the rate of premium therefor.^ It is not, however, for the insurer, but for the jury to say whether the 1 Boardnian v. iV. M., etc. Ins. Co., 20 N. H. .551; Price v. Phoenix, etc., Ins. Co., 17 Minn 497; JVieoJi v. American Ins. Co., 3 W. & M. (TJ. S.) 52;Williams v. N. E., etc., Ins. Co., 31 Me. 289; Columbian Ins. Co. v. Lawrence, 10 Pet. (U. S.) 507; see also same case, 2 Pet. (U. S.) 25; Stebbins v. Globe Ins. Co., 2 Hall (N. Y. S. C.) (yZi: Barber y. Fletcher, IDoug. ZOr>; Daniels V. Hudson Miver Ins. Co., 12 Cusli (Mass.) 4W; Dennisonv. I'homaston, etc.. Ins Co., 20 Me. 125; Delongiiemere v. Tradesman's Im. Co., 2 Hall. (H.Y.S. C.) 589; Ilarmer Y. Protection Ins. Co., Sec. 192. Sec. 193. Sec. 194. Sec. 196. Sec. 196. Sec. 197. Sec. 198. Sec. 199. Sec. 200. Sec. 201. Sec. 202. Sec. 203. Sec. 204. Sec. 205. Sec. 206. Sec. 207. Sec. 208. Sec. 209. 460 Application. representation is material. The mere fact that the insurer insists that the risk would have been rejected, or the rate of premium would have been higher, if the real facts had been known to him, is not enough to weaken the validity of the policy. The jury must find., as a matter of fact, that the representations were material, and in fact influenced the insurer in taking the risk at a lower rate of premium than he would have taken it for, if the real state of the risk had been known.^ , In arriving at a proper result, the jury may consider the evidence of insurance men as to the materiality of the statements, but that is only an aid to the result, and by no means decisive. The jury must say, from all the facts and circumstances, whether the representations were material or not? But in a case where the facts are not in dispute, the question of materiality is for the court.^ 2 Ohio St. 452; Glendale Mfq Co. v. Protection Ins. Co., 21 Conn. 19; Peoria M. & F. Ins. Co., V. Perkins, 16 Mich. 380; Witherill v. Maine Ins. Co., 49 Me. 200; Marshall V. Columbian Ins. Co., 27 N. H. 157; Cumberland Valley, etc., Protection Co. V. Schell, 29Penn. St. 31; Wall v. Howard Ins. Co., 14 Barh. (N. Y.) 383; Carpenter y. American Ins. Co., 1 Story (U. S.) 57; Bothy. City F. Ins. Co., 6 McLean (U. S.) 324; Clark v. N. E. Mut. F. Ins. Co., 6 Cush. (Mass.) 342: Gould v. York Co. Mut. F. Ins. 47 Me. 403. In Kentucky, hy statute all statements of the assured in an application are made " representations and not warranties," and it is also provided that no misrepresentation, unless fraudulent shall avoid the policy, and this statute is held to prevent the assured from losing his indemnity either upon representation or warranty not fraudulent or material. Germania Ins. Co. v. Sudwig, 80 Ky. 223 overruling Farmers' etc. Ins. Co. v. 13 Curry Bush (Ky.) 312. ^In Clasonv. Smith, 3 Wash. (U. S. C. C.) 156, the assured represented to the in- surer that they had no doubt that they could get the insurance in Kew York for 15 per cent. The defendants charged them 20 per cent. In fact, the assured had ap- plied to several offices in New York, and 20 per cent, had been demanded. Iq an action upon the policy this misrepresentation was set up in defense. The court held that the representation was not material, as it did not influence the insurers to take 15 per cent., and that as they charged and received the risk at 20 per cent., it must be presumed that they acted upon their own judgment rather than upon what the assured said. " While," say the court, " the statement could not be defended at tlie bar of conscience, the misrepresentation could have had no influence affecting the rate of premium, because upon their own judgment they demanded 20 per cent, instead of 15 ; nor ought it to have induced the acceptance of the risk at all, nor ia- fluenced the rate of premium, for the representation expressed nothing but an opinion that the insurance could be effected at that rate; and the insurer could not have accepted it as a candid opinion, because the facts showed that it was not ; for, if it were, why leave New York and go to Philadelphia, and then pay 20 instead oi 15 per cent. ? " Hubbard v. Glover, 3 Camp. 313. 2 Wainwright v. Bland, 1 M. & W. 32; McLanahan v. Universal Ins. Co., 1 Pet. (U. S.) 170; McLawsv. United Kincjdom, etc.. Institution, 23 C. C. S. (Sc.) 559; Sexton V. Montqomery, etc.. Ids. Co., 9 Barb. (N. Y.) 191; Power v. City F. Ins. Co., 8 Phila. (Penn.) 566; Mut. Ins. Co., v. Deah, 18 Md. 26; Life Ins. Co. v. Francisco, 17 Wall (tj. S.) 672 ; Percival v. Maine Ins. Co., 33 Me. 242 ; Parker y. Bridgeport Ins. Co., 10 Gray (Mass.) .302; Boardmanv. N. H, etc., Ins. Co., 21 N. H. 551; Bulkley v. Protection Ins. Co., 2 Paine (U. S.) 82. 3 Curry v. Com. Ins. Co., 10 Pick. (Mass.) 535; Fletcher v. Com. Ins. Co., 18 id. 419; 1. Ben. F. I. C. 556. Warranties. 461 The assured is not held to the strict or even literal truth of his representations. It is enough if they are substantially true.^ " It is enough " says Sutherland, J., ^ '■'• if a representation be made without fraud, and be not false in any material point ; or if it be substantially, although not literally true.^ Although," he adds, " the description may differ very considerably from the actual state of the property insured, if such variation were not fraudulently intended and did not in fact affect the rate of insurance, or change the actual risk, it can scarcely be deemed material." * The assured is not bound to state what his opinion is of the risk, but the bald, naked facts relating thereto.^ Where the misrepresentation alleged is of something that is independent of the property insured, the policy is not invalidated when the loss is not affected thereby ; ^ nor when the application was made out by the insurer's agent, and, knowing the facts, he misstated them ; '' or when the facts were stated as they were, by 1 Nichol V. American Ins. Co., 3 W. & M. (U. S.) 527; Edwards v. Footner, 1 Camp. 540. ^Jefferson Ins. Co. v. Cotheal, 7 Wend. (N. Y.) 72; 1 Ben. F. I. C. 354. ' Pawson V. Watson, Camp. 787. The force of this proposition will perhaps be more readily grasped, from a brief statement of what has been held by the courts in various cases involving the question. Thus in Delom/uemare v. Trades'nen' s Ins. Co., ante, the building was represented as completed ; held, complied with if substantially finished. In Collins v. Charlestown Mut. F. Ins. Co., 10 Gray {Mass. ) 155, the build- ing was represented as used for manufacturing lead pipe only. Reels, for winding pipe on, were also made in the building; held, no misrepresentation. In Suckley v. Delafield, 2 Caines (N". Y.) 222, it was represented that the ship would sail with bal- last, she sailed with one trunk and ten barrels of gunpowder; held, a substantial compliance. In Alexander v. Campbell, 27 L. T. (N. S.) 462, the vessel was rep- resented as liaving been new metaled, in fact new metal had only been put on where needed; held, the representation was met. In Ins. Co. of N. America v. McDowell 50 111. 120, the assured represented that no open liyhLs were used in Vie mill, in fact an open kerosene lamp was used in the counting-room; held, no misrepresentation. Inieev. Howard Lis. Co., 11 Cush. (Mass.) 324, the value of the goods was rep- resented as being between $2,000 and $3,000. When the application was made there was not $2,000 worth of goods on hand; held, that the policy was not thereby avoided, if the assured in good faith intended and expected to keep that amount during the life of the policy. In Irvin v. Sea Ins. Co., 22 Wend. (IS". Y. ) 380, it was represented " no spirits allowed on board." There were two kegs of four or five gallons each on board, but they were not onboard for iise, nor were they tapped during the voyage ; held, not a misrepresentation. See also, Wynne v. lAv. , Lon. & Globe Ins. Co., 11 N. C. 121; Dennison v. Tliomaston etc. Ins., Co., 20 Me. 125, Allen v. Charlestown Ins. Co., 5 Gray (Mass.) 384. * See also, Daniels v. Hudson River Lis. Co., 12 Cush. (Mass.) 416; Clason v. Smitli, ante; Chase v. Washington Mut. Ins. Co., 12 Barb. (N. Y.) 695; Williams T. N. E. Mut. F. Ins. Co., ante. ^Dennison v. Mut. Ins. Co., 20 Me. 125. ^Howard F. & M. Ins. Co. v. Cornick, 24 111. 455. ''Michaels. Mut. Ins. Co., 10 La. An. 7-37; Home Mut. F. Ins. Co. v. Garfield 462 Applicatioit. his direction.^ A representation maybe made either in writing or by parol, and is equally fatal to a recovery in the one case as in the other, if false and material to the risk.^ If an answer to an interrogatory is false and relates to a mater- ial matter, it is fatal to a recovery under the policy.^ The assured is bound to answer truly or not at all ; and as to whether, in view of the language of the whole instrument, and the facts attending the risk, his answer is true, or relates to a material matter, is a question for the jury.* It is not necessary that the jiary should find that the assured made the representation with a fraudulent intent ; for if it does not relate to a material matter, it does not de- feat the policy, however fraudulent may have been the intent or pur- pose of the assured.^ The question is, whether it related to a matter so material that if it had not been made on the one hand, or if made on the other, the insurer would have been influenced to reject the risk or materially modify his contract.^ If the representor tion is material to the risk, although the result of accident or mistake it avoids the policy. '' The insurer takes the burden of establishing both the falsity of the statements and their materiality,* and this must be done by 60111, 124; Ayres v. Hartford F. Ins. Co., 17 Iowa, 176; Pitney v. Glen's Falls Ins. Co., 65 N. T. 6 ; Viele v. Germania F. Ins. Co., 26 Iowa, 9 ; Andes Ins. Co., V. Shipman, 77 111. 189 ; Reaper City Ins. Co. v. Jones, 62 id. 458 ; McBride v. Be- public Ins. Co., 30 Wis. 562. 1 Bockford Ins. Co. v. Nelson, 75 111. 548. " Wainwright v. Bland, 1 M. & W. 32. ^Burritt v. Saratoga, etc., Ins. Co., 5 Hill (N. T.) 188; Cumberland Valley, etc., Protection Co. v, Schell, 27 Penn. St. 31. * Cumberland, etc.. Protection Co. v. Schell, ante ; Crocker v. People's Ins. Co., 8 Cush. (Mass.) 79 ; Parker v. Bridgeport Ins. Co., 10 Gray (Mass.) 302 ; Bellatty V. Thomaston Ins. Co., 61 Me. 414 ; Curtis v. Home Ins. Co., 1 Biss. (U. S.) 485. ' Continental Ins. Co. v. Kasey, 25 Gratt. (Va.) 268. 5 HoUowman v. Life Ins. Co., 1 Woods (TJ. S. C. C.) 674 ; Columbian Ins. Co. v. Lawrence, 2 Pet. (U. S. ) 25 ; Quin v. National Ass. Co. , 1 J. & C. (Irish) 316. In Columbian Ins. Co. v. Lawrence, 10 Pet. (U. S.) 507, Storv, J., says, in reference to the effect of a misdescription of the risk, that " if the misdescription were male- rial to the risk, and would increase U, but yet would not reduce the premium, it loould not avoid the policy." Thus holding that the test of materiality is the effect which the misrepresentation had in inducing the taking of the risk at a higher or lower rate of premium. This, however, while one of the tests, is not now regarded as the only one. See Battles v. York, etc., Ins. Co., ante ; HoUowman v. Xi/e Ins. Co., ante ; Battles v. York Co., etc., Ins. Co., 41 Me. 208 ; Swift v. Mut. Life Ins. Co., 2 1. & C. (N. T.)302. ' Carpenter v. American Ins. Co., 1 Story (U. S.) 57. « Cushman v. U. S. Life Ins. Co., 4 Hun. (N. T.) 783. Waeeanties. 463 full proof, as the law wiU not presume fraud, but the reverse, and will not set aside a contract upon that ground, unless the fraud and materiality of the statement are fully established.* Sepresentations affecting the risk. Tests of materiality. Sec. 193. Any representation of the assured, in reference to the property, that is material to the risk, and influences the insurer either in taking or rejecting it, and affects the rate of premium at "which the risk is assumed, if relied upon hy the insurer, and is untrue, avoids the policy,^ and this applies to representations as to the title,^ the character of the risk,* or as to any matter in relation * Pine V. Yanuxem, 3 Teates (Penn.) 30. ^ The distinction between a representation and a warranty ui an application for an insurance is, that in the one case the underwriter's action is induced or affected thereby while a representation may or may not be fatal if false, in proportion as it is material or immaterial to the risk undertaken, Commonwealth Ins. Co. v. Monninger, 18 Ind. 352, and a warranty will be strictly construed. G-rant v. Lex. Ins. Co., 5 Ind. 23 ; Pawson v. Watson Cowp. 601-784 ; De Hahn v. Hartley, 1 T. R. .343. Where the survey is in terms made a part of the policy, the state- ments therein are regarded as warranty. Cox v. 2Etna Ins. Co. , 29 Ind. 586. ; Columbian Ins. Co. v. Lawrence, 2 Pet. (U. S.) 25 ; Sheldon v. Hartford Ins. Co., 22 Conn. 235 ; Nicoll v. American Ins. Co., 3 W. & M. (U. S.) 529. In Girard Fire and Marine Ins. Co. v. Stephenson, 37 Penn. St. 292, the plaintiff, in conver- sation with the defendant's agent who took the application, stated that he expected to be from home much of the time, and that the carpenter's shop would be but little used, though he might want to use it, and that there would be no fire in it. This conversation was not reported to the company, and they issued the policy in ignorance of it. The court held that it could not operate as a defense to the policy, though false, because the insurers not knowing of, could not have been influenced by it. Representations precede and are no part of the contract, but are merely collate •eral thereto. They may induce the making of the contract, but are no part of, tmless in terms incorporated into it. When they are imported into the contract, tihey become warranties, and must be strictly true, otherwise they need only be mCbstantially true, and have no effect, unless they relate to matters material to the risk. Higbee v. Guardian Ins. Co., 66 Barb. (N. Y.) 462 ; Buford v. New York Life Ins. Co., 5 Oreg. 334 ; Cox v. ^tna Ins. Co., 29 Ind. 586 ; Lycoming Ins. Co. "V. Mitchell, 48 Penn. St. 362 ; Daniels v. Hudson Biver Ins. Co., 12 Cush. (Mass.) 416 ; Nicoll V. American Ins. Co., 3 W. & M. (U. S.) 529 ; Wilson v. Conway Ins. Co., 4 R. I. 141 ; Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19. State, «tc., Ins. Co. V. Arthur, 30 Penn. St. 315 ; Wall v. Howard Ins. Co., 14 Barb. (N. T.) 38.3. But, if they are incorporated into the policy, they become warranties, and must be literally, strictly true. Battles v. York Mut. Ins. Co., 41 Me. 208 ; Pennsylvania Ins. Co. v. Gottman, 48 Penn. St. 151 ; Gould v. York, etc., Ins. Co., 47 Me. 403 : Gahagan v. Union etc., Ins. Co., 48 N. H. 176 ; Leathers v. Ins. Co., 2A id. 2.59. ^ Bellatty v. Thomaston Ins. Co., 61 Me. 414. An application made to a mutual Insurance company, in a printed form issued by them, by one of their agents, with- ■out knowledge of the person to be insured, for insurance on a building, stated that "the property to be insured" belonged to him, when, in fact, he owned the build- * In Farmers', etc., Ins. Co. v. Snyder, 16 Wend. (N". Y.)481, the plaintiff de- scribed the building in his application, which was not made a part of the policy as ioUows: "Thick stone partitions running lengthwise through the building to the xoof." The stone partition, in fact, did not extend beyond the garret floor. The 464 Application. to the risk stated by the assured.^ The utmost good faith is re- quired, both on the part of the assured and the insurer, and the ing only, and was a mere tenant at will of the land on which it stood. A policy was issued thereon, expressly made subject to the lien of the company on the in- terest of the assured in any personal property or buildings insured and the land under such buildings, upon which lien the company expressed their intention to rely ; and to the by-laws, the conditions of which were declared to be part of the policy, and provided that the application should be a part of the policy and warranty on the part of the assured, that any p®licy should be void, ' ' unless the true title and interest of the insured be expressed in the proposal or application ; that property held by lease, or standing on land so held, shall not be insured, unless- specially described as such in the application ;" that, "incase the application is made through an agent, the applicant shall be held liable for the representation," and that " no insurance agent or broker forwarding applications to. this office is. authorized to bind the company in any case whatever." The court held that the assured, by accepting the policy, adopted the representations of the agent ; that the failure to specify the nature of his interest avoided the policy ; and that parol evi- dence of the agent's knowledge of the actual facts was inadmissible. Kibbe v. Ham- ilton, etc., Ins. Co., 11 Gray (Mass.) 16.3. Two partners, in an application for in- surance on a building which was required to contain " a full, fair and substantially a true representation of all the facts and circumstances respecting the property, so- far as they are within the knowledge of the assured and are material to- the risk," stated that they owned the land on which it stood. In fact, one of them, to whom the policy was made payable, owned it, and the other was charged on their books with half its cost. The partnership was afterwards dissolved, and all that owner's interest in its assets transferred to his co-partner, to whom the insurers, with notice of the facts, agreed that the policy should " stand good." It was held that the in- surers were liable for a loss by a subsequent Are. Collins v. Charlestown etc. , Ins. Co., 10 Gray (Mass.) 155 ; Phenix Ins. Co. v. Lawrence, 4 Met. (Ky.) 9. A lessee of land for a term of years, with the right to remove the buildings to be erected thereon at the termination of his term, effected an insurance of the buildings, as the owner thereof ; the policy contained a condition 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." It was held that the insured, being the absolute owner of the buildings, had a right to insure them as such, and was not bound to disclose the extent of his interest in the land . Hope, etc. , Ins. Co. v. Brolaskey, .35 Penn. St. 282. If an application is expressly made a part of the policy, and the policy is also made subject to the conditions and limitations ex- pressed in the by-laws annexed, and these by-laws provide that the policy shall be void if the application shall not contain a full, fair and substantially true represen- tation of all the facts and circumstances respecting the property, so far as they are within the knowledge of the assured and material to the risk, and the premises are subject to two mortgages made by the insured, the mentioning of only one of them, in reply to a question in the application, ' ' Is the property mortgaged or otherwise court held that the policy was valid, unless the fact that the stone partition did not extend higher than the garret floor was material to the risk, and that the jury were the sole judges of the fact. In Boardman v. N. H. Mut. Ins. Co., 20 jST. II. 551, the application stated that the store was occupied by tenants, including a cabinet- maker. The third story was vacant. There were carpenters' and joiners' shops in the first story. It was held not to be a warranty as to occupancy, and not to avoid the policy, unless the jury found that the difference in occupancy was mate- rial to the risk. Stebbins v. Globe Ins. Co., 2 Hall (K. Y.) 632. ^ Hollowman v. Life Ins. Co. , 1 Woods (U. S. ) 671 ; Continental Ins. Co. v. Kasey, 25 Gratt. (Va.) 268; Quin v. National Assurance Co., 1 J. & C. 316. Where repre- sentations material to the risk are shown to be false, the contract of insurance does not take effect. By reason of the fraud, the minds of the parties have not met, and no contract has ever existed, unless the insurer, knowing of the fraud, has waived it. Taylor v. ^tna Ins, Co., 120 Mass. 254; Towney. Fitchburg, etc., JR. B. Co., T Waekaxties. 465 same rules of construction that are applied in ordinary contracts, are not always applicable in these cases. If they were, the con- sequences might be disastrous/ The distinction, however, between a representation and a war- anty, is marked, as in the one case it is sufficient if the statement incumbered, and to what amount ? " will avoid the policy. And the fact that tlie insured did not tlien recollect the other mortgage is immaterial. Towne v. Fitchburg, etc., las Co., 7 Allen (Mass.) 51. A policy was' issued imder the conditions and limitations expressed in the by-laws of the insurance company, one of which was that, when any property insured should be taken possession of by a mortgagee, the policy should be void, and the application, whicli was expressly made a part of the policy, contained an agreement tliat, if the answers did not give a full, just and true exposition of all the facts and circumstances in relation to the condition, situa- tion, value and risk of the property to be insured, the policy should be void, the omission to disclose in the application tlie fact that possession of the premises to be insured had been taken under a second mortgage, and a subsequent retaking of pos- session under the same mortgage, without the consent of the underwriters, will avoid the policy. Battles v. York, etc., Ins. Co., 41 Me. 208 ; Smith v. Empire Ins. Co., 2.5 5arl3. (N. Y-) 497. The policy will also be rendered invalid if, in reply to a question in the application calling for the amount of incumbrances, the answer was that there were two mortgages, for S 2,700 in all, the first of which was for $1,150, and the second for $1,550, when in fact the first was for $1,150 as principal, and for accrued interest to the amount of $300 more. Jacobs v. Eagle Ins. Co., 7 Allen (Mass.) 132 ; Murphy v. People's, etc,- Ins. Co., id. 239. Allen, (Mass.) 51; Campbell v. N. E. Ins. Co., 98 Mass. 381. Where the insurer received the representations of its own agent as to the nature of the interest of the assured in the property, it cannot set up a misdescription to defeat the policy. At- lantic Ins. Co. V. Wright, 22 111. 462. It is not a material misdescription that a mill, situated in the corner of one section, is described as being in the adjoining comer of the next section, just across a stream. Prieger v. Exchange Ins. Co. , 6 Wis. 86 A representation as to the contiguity of other buildings, in an application incor- porated into the policy, is a warranty, and if the assured is required to state all the buildings within ten rods, a failure to do so will render the policy void, if the in- surer so elects {Huntley v. Perry, 38 Barb. (N. Y.)569;) but if, in answer to an inquiry. What is the relative situation of otlier buildings ? the answer was, " Two buildings with fifty feet;" the court held that this must be construed to mean within fifty feet, and that it was sufficient, although one was within two feet. Allen v. Charlestown etc., Ins. Co., 5 Gray (Mass.) 384. A false description of the interest of the assured in a policy, when, by the charter of the company, the insurer has a lien upon the property for payment of the premiums, invalidates the policy whether the assured knew that the charter gave sucli lien or not. PinJcham v. Morany, 40 Me. 587. So also, where the by-laws are made a part of the policy, and they require a true statement of title, although there was no intent to deceive. Ilayward v. JV. E. Mut. F. Ins. Co., 10 Cush. (Mass.) 444; Wilbur v. liowditch Ins. Co., 10 id. 446. But the misstatement must be radical, if it is in effect correct, although not so technically, tlie policy is not avoided. Tlius, where the by-law of a mutual com- pany, to which the policy was made subject, provided that the policy should be void unless the true title of the assured was expressed in the proposal, the plaintiff called the property "his," but stated it was incumbered. In fact, two mortgages then existed on the estate, given by a former owner to third persons; and the former owner's equity of redemption had been sold on execution to another person before the plaintiff acquired his interest in the estate. The court held that, as the insured still had the right to redeem and make his title absolute, there' was no essential mis- representation of title. Buffum v. Bowditch Ins. Co-, 10 Cush. (Mass.) 540; Chase V. Hamilton Ins. Co., 22 Barb. (N". Y ) 527. 1 Farmer's Mut. Fire Ins. Co. v. Marshall, 29 Vt. 23. 30 466 Application. is siihstantially true,^ whereas a warranty must be strictly true whether material to the risk or not^ and whether it was made bona fide by the insurer, believing it to be true, or through ignorance or mistake, or fraudulently and with a purpose to deceive it.* ' Mh. Marshai.1,, in his excellent work upon Insurance, thus clearly and accu- rately defines the distinction between representations and warranties : " Ther? is a material diilerence," he says, " between a representation and a warranty. A war- ranty being a condition upon which tlie contract is to take effect, is always a part of the written policy, and must appear upon the face of it." This must be regarded as subject to the qualifications, except in cases where the order for insurance or application is referred to in the policy and made a part of it, in which case the war- ranty may be shown by the order or application and need not be stated in the policy. " Whereas," he continued, " a representation is only matter of collateral information or intelligence Oii the subject insured, and makes no part of the policy. A warranty being in the nature of a condition precedent, must be strictly and liter- ally complied witli, but it is sufficient if a representation is true in substance. By a warranty, whether material to the risk or not, the insured states his claim of indem- nity upon the precise truth of it, if it be affirmative, or upon the exact performance of it, if it be executory ; but it is sufficient if a representation be made without fraud, and be not false in any material point; or if he substantially, though not literally performed a false warranty, avoids the policy as being a breach of a condi- tion upon which it is to take effect, and an Insurer is not liable for any loss though it do not happen In consequence of the breach of the wan-anty. A false representa- tion is no breach of the contract, but if material to the risk, avoids the policy on the ground oi fraud, or at least because the insurer has been misled by it." Lycoming Ins. Co. V. Mitchell, 48 Penn. St. 367; Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19; Witherell v. Maine Ins. Co., 48 Me. 200; State, etc., Ins. Co., v. Arthur, 30 Penn. St. 315. 2 State Mut. Fire Ins. Co. v. Arthur, .30 Penn. St. 315. ' Richardson v. Maine Ins. Co., 46 Me. 394; Bowditch etc.. Ins Co., v. WinsUm, 8 Gray (Mass.) 38. In an application for fire insurance, an agreement by the assured that it is a full and true exposition of the facts as to the situation, value, and risk of the property, so far as known to him, is within tlie rule that conditions which work a forfeiture must be most liberally construed for the assured. And the test of the materiaUty of a representation therein is its probable effect on the judgment of the insurer. Mulville V. Adams, 19 Fed. Kep. 887. Tlie test of the materiality of an undisclosed fact in one's application for insurance is whether disclosure thereof would have in- fluenced the rate of premium. So held, as to failure to disclose occupancy of the insured premises by two tenants instead of one. Hardman v. Fireman's Ins. Co., 20 Fed. Rep. 594. If a contract of insurance provides that the answers to questions shall constitute part of the contract and be deemed a warranty, the insured cannot, in a suit on the policy, contend that a certain false answer was immaterial to the risk. Thomas v. Fame Ins. Co., 108 111. 91. A party applying for insurance is bound to answer questions concerning facts material to the risk, truthfully. Lueders v. Hartford Life & Annuity Ins. Co., 4 McCrary. tJ. S. C. Ct. 149. But in the absence of special stipulations in a fire insurance policy, misrepresen- tations will not avoid it unless material to the risk. Mosley v. Vermont Mut. Mre In.1. Co., 55 Vt. 142. Neither will an innocent failure by an applicant for insurance to communicate facts about which he was not asked, avoid the policy. Washington Mills Emery Maytnf. Co. v. Weymouth & Braintree Mut. Fire Ins. Co., 135 Mass. 503. But under a policy containing a provision that all statements in the application " shall be taken to be warranties," it was held that an answer that the quantity of land was sixty acres, and the value of the land and buildings 6 1,700, when in fact the insured dwelling-house was on a farm of fifty acres and was worth $1,400, would prevent a recovery. Bennett v. Agricultural Ins. Co., 50 Conn. 420. An applicant for insurance, when asked concerning incumbrances, permitted the Wakeaistties. 467 I'atal representation of interest. Sec. 194. A false representation as to the Interest of the assured in the property, is regarded as material, and such as, if substan- agent, who was also a director in the company, to write as the answer that there were none, although the applicant at the same time said that he had given a note and did not know whether judgment had been entered up or not. It had been, and constituted a lien It was held a breach of the warranty, the policy stipulating that all statements in the application constituted warranties. Blooming Grove Mut. Fire Ins. Co., V. McAnerney, 102 Pa. St. 335; s. c. 48 Am. Rep. 209. Where the warranty contained in an application for fire insurance was that the statements were "just, full, and true, so far as the same are known to the appli- cant,." it was held that the absolute truth of the statements was not warranted, and that the burden was upon the company to prove a breach, as where the building in- sured was described as " two stories high " and the main part was so, but a small rear addition was only one story high. Wilkins v. Germania Fire Ins. Co., 57 Iowa 529. The knowledge, by the agent of a company, of the purpose for which a certain building was used, is no excuse for the insured in knowingly making false state- ments in reference thereto. Hansen v. American Ins. Co., 57 Iowa, 741. Not is it any excuse that the assured himself did not make the false statements, as be is responsible for what his agent does in that respect. Thus A., agent of B., in applying for a policy, answered that C, widow of D., was the owner of the prem- ises, and a policy with said condition of avoidance was issued, insuring C, loss, if any, payable to B. as mortgagee. A. applied for a second policy, stating that the jiame should be E. instead of 0. in the first policy, which was altered accordingly; but he repeated the statement that the owner was D.'s widow. The title was in E., an infant three years old, who had no general guardian. It was held that the mis- representation was material; and that B. was not relieved by a clause that the mortgagee's interest sliould not be invalidated by any act of the mortgagor or owner, and that a policy voidable " in case of any misrepresentation whatever, either in the written application or otherwise," is avoided by a misrepresentation, whether ma- terial to the risk or not. Graham v. Fireman's Ins. Co., 87 N. Y. 69; 41 Am. Rep. 349. A. in Chicago employed B. of Chicago to place insurance. B. employed C. of New York, who obtained a policy from a New York company. C. represented that there was other insurance upon the property for $200,000. The other hisurance in fact was for $28,000 only. C. represented that the board rate in Chicago was f. It was, in fact, Ij. The company, upon learning the latter fact, demanded back the policy ■of C, having delivered it upon the express agreement that it should be void if the board rate should prove to be more than j. The policy contained the usual clauses thai the party effecting insurance should be deemed the agent of the insured, and that the policy should be void in case of misrepresentations. A. did not return the policy, and the property was destroyed by fire. It was lield tliat A. could not recover from the company for the loss. Armour v. Transatlantic Fire las. Co., 47 N. Y. .Super. Ct. 3.52. Under a condition that "all fraud by false swearing or otherwise shall cause a forfeiture," &c., mere mistake or innocent over-valuation does not constitute a de- fence. Car.Hon v. Jersey City Fire Ins. Co., 43 N. J. L. 300; 39 Am. Rep. 584. In a clause in a policy: " if the interest of the insured in the property, whether as •owner, trustee, consignee, factor, agent, mortgagee, lessee, or otherwise, be not truly stated," &.C., the word " property," is held to apply both to personal and real property Girard Fire & Marine Ins. Co. v. Ilelmrd, 95 Penn. St 45. But where the insurer of a building is in a condition to enforce specific perform- ance of a contract to convey the land whereon it stands, he may represent liiniielf as the owner in fee-simple without any breach of warranty. East Texas Fire Ins. Co., V. Dyches, 56 Tex. 565. In a suit upon a policy, the company defended upon the ground that the plaintiff had concealed a fact concerning which specific inquiry had been made. It was held that an instruction that the defendant must sliow the materiality of the fact, and that plaintiff, knowing it to be material, intentionally suppressed it, was erroneous. Fame Ins. Co. v Thomas, 10 111. App. 545. A statement, in an application for insurance, that there was an incumbrance on 468 Application. tially false, avoids the policy. In reference to such representations, Marshall, J.,' pertinently says: "The contract for insurance is one in which the underwriters generally act on the representation of the assured, and that representation ought consequently to be fair, and to omit nothing which it is material for the underwriters to know. It may not be necessary that the person requiring insurance should state every incumbrance on his property, which it might be required of him to state if it was offered for sale ,* but fair dealing requires that he should state everything which might influence, and probably would influence, the mind of the under- writer in forming or declining the contract. A building held un- der a lease for years, about to expire, might be generally spoken of as the building of the tenant, but no underwriter would be will- ing to insure it as if it was his, and an offer to insure it, stating that it belonged to him, would be a gross imposition. Generally speaking, insurances against fire are made in the confidence that the assured will use all the precautions required to avoid the calamity insured against which would be suggested by his interest. The extent of this interest must always influence the underwriter in tak- ing or rejecting the risk and estimating the premium. So far as it. may influence him in this respect, it ought to be communicated to him Underwriters do not rely so much upon the principles, as on the interest of the assured, and it would seem, therefore, to be always material, that they should know how far this interest is engaged in guarding the property from loss." In this case, the plaintiffs represented the property to be theirs, when in fact their title was a leasehold interest in one-sixth of it, as mortgagees of one-half of two-thirds, and under an executory contract whose conditions had not been complied with for a moiety of the two-thirds, which, if complied with, would give them title to two-thirds as mortgagees. The court held that, as a matter of law, these facts did not sustain the representation of the plaintiffs, that they were the owners of the property, and, the court below having directed the jury that this proof established such an interest in the property in the plaintiffs, as they had described in their offer for insurance, the the property of about $.3,000 when it was over $4,400, it was held to defeat a re- covery on the poUcy, although no fraud was intended, Globe v. Germania F. Ins. Co., 56 Iowa, 400. ^ Columbian Ins. Co., v. Lawrence, 2 Pet. (IT. S.) 48: Bohrback v. Germania F. Ins. Co., 62 N. Y. 47. Waeeantiks. 469 judgment was reversed.^ A condition in a policy that any interest less than a perfect title, or not absolute must be represented and expressed in the policy, is not broken by the existence of a lien for purchase money reserved in the deed -^ nor where only the naked legal title is in a third person is a condition that " any in- terest not absolute" broken by an answer of the assured describing the premises as " his when the whole beneficial interest therein, is in him.^ The court held that the whole beneficial interest in the property, and the possessions being in the plaintiff, his interest was absolute and was properly expressed by the pos- sessive, " his ; " said Dixon, J., " I can see no substantial reason for regarding the plaintiff's rights as an absolute interest in the property, and not considering them as the entire, unconditional and sole ownership of it. The mere fact that Wilson had the naked legal title did not destroy the plaintiff's ownership * ane^as his owner- ship was of the fee simple in equity, and was not held jointly or in common with another, it was entire and sole.' ^ ^s to occupancy. Sec. 195. When the answers of the assured in the application, set forth the manner of occupancy, it will not be construed as a promissory warranty, but merely affirmative, and if true in presenti, the policy is not avoided, because at a subsequent period during the life of the policy, the premiums are used for another purpose not more hazardous.^ Thus, a statement that " the building is a 1 See sec. 86, page, 168, et seq. See also, Strong v. Manufacturers' Ins. Co., 10 Pick. (Mass.) 40; 1 Ben. F. I. C. .326; Curry v. Com. Ins. Co. 10 id. 435. 2 Woody V. Old Dominion Ins. Co. .31 Gratt (Va.) 362. ' Martin v. Franklin Ins. Co. 44 N. J. L. 485. * Bonham v. Iowa Ins. Co. 25 Iowa 328. 5 Dolliver v. St Joseph Ins. Co. 128 Mass 315. ^ New England Ins. Co. v. Wetmore, 32 111. 221. Wherethe application described the occupation as " a four-story warehouse. First floor occupied by machinery "used for making barrels, with privilege of storing barrels on the premises, it was held that this was only a warranty as to the present use of the premises and that a subsequent change in the use, not more hazardous, or not within prohibited uses, would not avoid the policy. U. S. Fire, etc., Ins. Co. v. Kimherly, .34 Md. 224. Where the insured in his application stated that the building was " occupied for stores below, the upper portion to remain unoccupied during the continuance of this policy," was construed as only a warranty j?i presenti in reference to thelower "floor, but a continuing warranty as to the upper. Stout v. City F. Ins. Co., 12 Iowa, 371. So, where the application described the building, as " a two-story 470 Application, dwelling occupied by a tenant," is a warranty that at the time when the application was made, it was so occupied, and if false, avoids the policy, but it is not a warranty that it shall continue to be so occupied during the whole life of the policy,^ and, unless oc- frame building, used for winding and coloring yam, and storing spun yam." Held^ only a warranty inpresenti as to occupancy. Smith v. Mechanics', etc. Ins., Co., 32 N. Y. 399. So, where a kiln drying n^chine was described as designed " for burn- ing hard coal," it was held that this could not be construed as a warranty that it should be used with hard coal, or that the insured would not use other fuel therein if necessary. Tillowv. Kinyston Mut. Ins. Co., 7 Barb. (N. Y.) .570. In Dolli- ver V. St. Joseph Ins. Co,. 132 Mass. 39, the policy was written in midsummer and contained a statement that the insured buildings were used for the storage of ice. It was held that this was not a warranty that ice was there stored at that time. The fact that ice is produced by natural causes only in the winter season, so that the houses used for storing it will ordinarily be empty for a part of the year, indicates that the words in the policy were not intended or under- stood as warranting that ice was actually stored in the buildings at the moment of issuing the policy, but as descriptive of the business ordinarily done in them. In this sense they were operative as a part of the policy. The case is unlike that of Goddard v. Monitor Ins. Co. , 108 Mass. 56. In' the case at bar the language, properly interpreted, described the existing state of things with accuracy; and that the policy took effect. The application for the policy was in writing. The clerk of the insurance broker through whom the policy was procured stated to the insurance company's agent that the buildings were then full of ice. Held, that this statement, though false, did not vitiate the policy. The broker's clerk was not in any sense the agent of the assured, and was not the person who procured the policy. The application for the policy having been made in writing to the defend- ant, it had no right to rely on any verbal representations or statements made by a messenger sent by the broker to its agent, nor to assume that such statements or representations were made with the knowledge or consent of the assured. ' Cumberland, etc., Ins. Co., v. Douglass, 58 Penn. St. 419. Unless the character of the occupancy is known to be otherwise by the agent or company insuring. Sarsfield v. Metroplitan Ins. Co., 61 Barb. (N.Y.) 4-79. Where the application stated that no lamps were used in the picking room of a factory, and it appeared that at the time when the application was made, lamps had been suspended there for years, and were occasionally used, it was held that the policy was void. Clark V. Manufacturer.^' Ins. Co., 2 W.& M. (U. S.) 472. In Sarsfield v. Metropolitan Ins. Co. 61 Barb. (N.Y.) 479, in an action upon a policy of insurance to recover a loss by fire, the insurance was upon the plaintiff's " two-story frame dwelling-house situated," etc." and it was provided in the contract that if, at any time during the period covered by the policy, the premises ' ' shall be used for the purpose of carrying on therein any trade or occupation," etc., denominated hazardous or extra-hazardous- in the printed classes of hazards annexed to the policy, that " from thenceforth, so long as the same shall be so used, this policy shall be of no force or effect." Among the printed class of hazards annexed to the policy, and denominated extra- hazardous, were " billiard saloons and their contents," " lager beer saloons,"^ " restaurants," bar rooms" etc. It, appeared that at the time of the fire, one por- tion of the building was used as a billiard saloon, another portion as a restaurant or eating-house, and that a bar was kept there. It also appeared that one room in the second story was used as a billiard saloon at the time the contract was made. Held, that the description of the building as a dwelling house in the policy, was a war- anty by the insured that the building was a dwelling-honxe. and u.ted as such exclusively and that no trade or occupation was carried on tliere which was denominated hazar- dous or extra-liazardous in the printed list annexed to the policy. Held, also, that the use of the building for such purposes, at the time of the fire, rendered the policy of no force or effect at that time, and that plaintiff could not recover. Such statement is a warranty in presenti, and such use at the time when the contract was- made avoids the policy, unless the agent effecting the insurance knew the use to which the building is devoted. Waerantibs. 471 cupied in a manner that increases the risk, the policy is not aYoided. Thus, where the application stated that the building was occupied as a dwelling-house, but was hereafter to be occupied as a tavern, and the policy contained the same language, with the addition, " and to be privileged as such," it was held that this did not amount to a warranty that it should be used as a tavern.^ So, where the application set forth that the premises were occupied by a tenant, naming him, it has been held that this is merely a war- ranty in presenti and if true, the policy is not avoided, because such tenant ceases to occupy the premises, and another succeeds him during the life of the policy.^ So, where the ^ipplication states matter which is merely descriptive of the occupancy, un- less from the whole tenor of the policy and papers referred to, show that it was intended as a warranty, it cannot have that effect, as where in an application for insurance upon a stock of goods, the insured stated that the " clerk sleeps in the store," but upon the night when the fire occurred he was not there. It was held that this was merely descriptive of the general character of the occupancy, at the time when the application was made, and not a warranty that the clerk should continue to sleep there every night.^ As to method of use. Sec. 196, So, where the policy stated that there was "no fire in or about the building, except one under a kettle, securely imbed- ded in masonry, used for heating water, and made perfectly secure against accident, it was held that this could not be regarded as re- ferring to the future use of the building, and was merely descrip- tive of the manner of its use, as to fires, at the time when the policy was issued, and if true then, the policy was not avoided because other fires were used in the building subsequently during the life of the policy.* But if from the language used, it is evi- 1 Catlin V. Springfield F. Ins. Co., 1 Sum. (U. S.) 434. 2 (yWeil V. Buffalo F. Ins. Co. 3 N. T. 122. 3 FHsUe V. Fayette Ins. Co., 27 Penn. St. 325. * Schmidt v. Peoria M. & F, Ins. Co., 41 111. 293. In Williama v. N. England Mut. F- Ins. Co., 31 Me. 219, the applicant, in answer to an Inqiiiry, " how many- stoves are used in the building ?" answered " none," and it was held that the use of a stove for a few days in drying paint, did not avoid the policy, as tlie state- 472 Application. dent that the parties referred to the future as well as present use of the building ; the statement, either in the policy or application, when made a part of the policy, will be treated as a continuous warranty, the violation of which will render the contract inopera. tive. Thus, where the policy recited that " no fire is kept, and no hazardous goods are deposited," it was held that the statement re- ferred to the habitual use of the premises, and not to an occasional necessary use, and they having been destroyed by the burning of . a tar barrel upon the premises while making repairs, the policy was not avoided, and a recovery could be had.^ ment could only be regarded as referring to the habitual use of stoves, and was not a warranty that none should be used if rendere d necessary by a contingency. In Aurora Fire Ins. Co., v. Eddy, 55 111. 21.3, a similar doctrine was lield. In Mickey v. Burlington Ins. Co., 35 Iowa, 174, the plaintiff, applying for a policy of fire insurance, covenanted to keep his stoves and pipes well secured. The pipe of one stove passed through a hole iu the floor of an upper room, and the wife, when summer came, took down the pipe in the upper room, and to " secure" the hole, set the bed over it. Afterward, forgetting about the removal of the pipe above, she kindled a lire in the stove below, and lost not only her bed, but the house. The court held that a recovery might be had. It thus seems, that altliough one may not take advantage of his own wrong, he may of his wife's folly. 1 Dobson V. Botheby, 1 Moo. & M. 90. In Houghton v. Manufacturers' Mut. Fire Ins. Co., 8 Met. (Mass.) 114, the policy covering a woolen mill, contained a provi- sion as follows : " If the representations made in " the application of the assured for insurance " do not contain a just, full and true exposition of all the facts and circumstances in regard to the condition, situation, value and risk of the property insured, so far as the same are known to the said applicants, and are material to the risk ; or if the situation or circumstances affecting the risk thereupon shall be so altered or changed, by or with the advice, agency or consent ot- the assured or their agent, as to increase the risk thereupon, without tlie consent of this com- pany," (the underwiters), " this policy shall be void." There were annexed to the application of the assured, various questions by the underwriters, and a notice that it was expected that the answers thereto, would meet the requirements of the underwriter's office, one of which requirements was, that an examination should be, had of the insured premises, thirty minutes after work. Among the written answers of the assured to said questions were these : The factory is worked from " 5 o'clock A. m. to 8^ o'clock p. M. Sometimes extra work will be done in the night." " No watch is kept in or about the building, but the mill is examined thirty minutes after work." The court held that the representations of the assured were legally adopted and embodied in the policy, as part of the contract, to the same effect as if they had been therein set forth at large, also, that although the answers of the assured were representations rather than warranties, and were therefore sufficient, if the statements therein, of the facts relied on as the basis of tlie contract, were made in good faith, and were substantially true and correct, as to existing circumstances, and were substantially complied with, so far as they were executory ; yet that, subject to this qualification, it was a condition prece- dent to the liability of the underwriters, that the answers should contain a just, full and true exposition of all the facts and circumstances m regard to the coiidi- ti(jn, situation, value and risk of the property insured, so far as known to the assured and material to the risk, and that although the assured were themselves the owners and occupants of the property insured, and made the application for insurance, yet the question whether they knew certain facts and circumstances respecting it, which were omitted, or not accurately stated in their answers was a question of fact to be left to a jury. It was also held that the representatioa Warranties. ' 473 "Warranty not to be so construed as to require an unlawful act. Sec. 197. But even though the statements in reference to the use of the building are to be regarded as warranties, yet they are not to be so interpreted, as to reqmre the insurer to do an unlaw- ful act, in order to keep the same, and it will be presumed that, the occupancy or use of the premises as described, was only a war- ranty so far as it could be lawfully performed. Thus, where the application, which was made a part of the policy, described the building as a paper mill, one and a half story high, and used for drying paper ; that the premises were constantly worked, and no watch kept, except the people working in the mill during the night, and the application declared that all the statements con- made by the assured, as to certain usages and practices observed at the factory, concerning the modes of conducting their btisiness, and tlie precautions talien to guard against fire, amounted to a stipulation that such moden of condurtirif/ their business should substantially continue to be adopted, and such precautions substan- tially continue to be taken, during the term of insurance ; and that a discontinuance thereof by the assured, or by those entrusted by them with the iiianayement of the property, without the consent of the underwriters, would render the policy void, . i>y virtue of the proviso therein respecting an alteration or chanrje in the situation or circumstances affecting the risk, and tliat the answers of the assured were to be •construed with reference to the requirements of tlie underwriters, as specified in the notice accompanying the questions ; and that a mere literal conformity and compliance would not be sufficient. The assured were bound, by their representa- tion that the mill was examined thirty minutes after work to make such examina- tion thirty minutes after the extra work, as well as after the other work ; and that the question, what is a cessation of work at the factory, from which the thirty minutes are to be computed, is a question for the jury, under all the circumstances •of each particular case. In lUlbrowj/t v. Metropolis Ins. Co., !> Duer. (X. Y.) .587, the application which was made a part of the policy contained an inquiry : " Dur- ing what hours is the factory worlted ?" The answer was : •' We run the cards, picker, drawing-frames and speeder, day and night, the rest only twelve liours •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 this statement of an intention to cease running when the cards were received, was equivalent to an agreement to that eflfect, the intervening period, at all events not to exceed four months, and a subsequent renewal of night work avoided the policy. In answer to the printed interrogatories of the comnany, an applicant for insurance repre- sented that the premises were a stone building of certain dimensions, roof of wood. After answering the question touching the distances and direction of adjacent T)uildings, etc , he answered in reply to the last question ; '' Are there any other material circumstances ?" " No."' In the notice given the company of a loss, the insured subsequently described the premises as a stone dwelling-house of certain dimensions, etc.. with a one-story wood kitchen part attached thereto. Held, that as It did not appear whether this kitchen part attached to the house was a mere ■temporary structure, or how it was constructed and attached, and whether or not. it was a part and parcel of the house, the court could not say as the case appeared "before them, that the referee was bound to find a false representation or descrip- tion of the " stone dwelling-house." It was also held that whether the omission avoided the policy, under the provision in the by-laws making the policy void, unless the applicant makes a true representation of the property, so far as concerns the risk and value thereof, was a question of fact for the referee, and that if the answer in the negative of the insured, to the question as to the existence of " any other material circumstances," was a warranty, the referee had found, by his decision for the plaintiff, that it was not broken. 474 AppLicATiosr. tained therein were a just, full 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 material to the risk ; and it appeared that the mill was not operated upon Sunday, it was held, that this did not avoid the policy, because it must be presumed that the parties did not contemplate an unlawful use of the property by the assured, but merely that it should be con- stantly used, so far as it could be done lawfully, during the usual customary working days and hours.^ So where there is a general usage as to the time or manner in which a certain business is con- ducted, or a special custom established by the insured as to th& time and manner in which his business is conducted, of which the- company or its agent, through whom the insurance is procured, is- aware, the policy will be presumed to have been made in reference^ thereto, and will be construed in reference to such general or spe- cial custom.^ Thus, where the assured in his application, in an- swer to the questions, " During what hours are the premises worked ? " " From six A. m. to seven p. M." " How many hands are employed?" '■'■About twenty." "Have you a night watch al- ways on duty ? " " PPe have." " Is the building left alone after the watchman goes off duty in the morning until he returns to his charge at evening ? " " It is not." " Is any duty required of him other than watching for the safety of the premises ? " None." " Is there a force pump upon the premises expressly for putting out fire ? " " There is." Is it a good pump, and in condition at all times for immediate use ? " It is." " How often is it tried to know if it is in order ? " " Every two or three days^' and by the terms of the application covenanted that the statements contained therein were a just, full and true exposition of all the facts, etc., material to the risk, and it appeared that in fact., the mill was only run during a part of each year, of which fact the agent was aware, when he took the application ; it was held, that the usage of the plaintiff in the conduct of the business to run his mill only a part of each year, known to the agent of the defendant at the time when the 1 Prieger v. Exchange Mut. Ins. Co., 6 Wis. 86. ^ May V. Buckeye Ins. Co., 25 Wis. 291. But unless the usage is general, so that knowledge thereof by the insurer can be presumed, it is hieldnot to affect the con- tract. Glendale Mj'y. Co. v. Protection Ins. Co., 21 Conn, 19 ; Stebbins y. Globe Ins. Co., 2 Hall (N. Y.) S. C.) 632 ; Hartford Protection Ins. Co., v. Banner, 2 Ohio St. 452 Cobb v. Lime Rock F. & N. Ins. Co., 58 Me. .326 ; or if it leads to ahsurd results. Lecoinb v. Provincial Ins. Co., 10 Allen (Mass.) 305. Waeranties. 475 insurance was affected, must be treated as qualifying the plaintiff's statements, to the extent that the prudential referred measures to in the application, were only adopted during the season in which he usually run the mill} Fluctuatmg.uses — ^Bermanent uses. Sec. 198. It may fairly be stated as a proposition settled by the better class of recent cases, that all matters stated in reference to the occupancy of premises, the occij.pancy of which is fluctuat- ing and subject to change, which merely purport to describe the present condition and occupancy thereof, are to be treated only as warranties in presenti, and do not amount to an engagement that it shall continue during the life of the policy, and if true when made, the policy is not avoided by any subsequent change in the use of the property that does not essentially increase the risk or is not within a class of prohibited uses.^ But when hy the usual course of 1 As to the effect of knowledge by the agent of peculiarities of the business, as con- ducted by the assured, see /ns. Co. v. Sclietteler, 38 111. 16fi ; Rowley v. Ins. Co. , 36 N Y. 550; Columbian Ins. Co. v. Cooper, 50 Penn. St. 331; Viele v. Germanla Ins. Co., 26 Iowa, 9. In Carter & Co. v. Philadelphia Coal Co., 1 Week. Not. Cas. 384, the Supreme Court of Pennsylvania considered the question how far evidence of custom or usage is admissible to interpret a contract. The suit was brought to recover back certain commissions claimed by defendants, and allowed to them on a previous settlement. It appears that defendants, who did business at Philadelphia, managed the affairs of plaintiff company and sold coal for them; that in doing so they employed S. & Co., as brokers, to make sales of coal to the P. & R. railroad company. Plaintiff company now claims that the employment of the brokers was unauthorized, and that the commissions to the amount paid to the brokers shoiild be recovered back. Defendant offered to show that it was the usual and customary method of the Philadelphia coal trade to sell coal through the agency of brokers, to whom a commission was paid; tljat defendants sold largely to the P. & R. railroad company through S. & Co., and that the sales so effected could not have been made in any other way. This offer was rejected, and the court on appeal held that the rejection was error. The court said : " It is not necessary to prove all the elements of a custom necessary to make law ; the object here is to interpret a contract. The usages of a particular trade or business are presumed to be known to those engaged therein. They may, therefore, in the absence of any express stipulation inconsistent therewith, be supposed to have entered into the understanding of the parties in making the contract; they furnish a most valuable aid in arriving at the mutual assent of the parties, and,' when not contrary to law, are admissible in evidence. Lewis \. Marshall, 7M. & Gr. 729 ; United States v. Duml, 1 Gil. (111.) 372 ; Fur- niss V. Hone, 8 Wend. (N". Y.) 247 ; Oatwater v. Nelson, 29 Barb. 29 ; Girard Fire and Marine Ins. Co. v. Stephenson, 37 Penn. St. 293 ; Helme v. The Philadelphia, Life Ins. Co., 61 Penn. St. 107; McMasters v. The Pennsylvania li. E. Co., 70 id. 374. ' United States F. & M. Ins. Co. v. Kimberly, 34 Md. 224 ; 6 Am. Rep. 326. A policy was issued "on a four-story warehouse, * * * first floor occupied by machinery used for making barrels, with privilege of storing barrels on the premises and other merchandise not more hazardous." The policy contained a clause requir- ing a true and accurate description of the use and occupation of the premises under penalty of forfeiture. The policy further declared, in printed words, that it was the intention of the parties that in case the insured premises should be used or appro- 476 Application. business, the uses referred to is permanent and continuous, and from a fair interpretation of the whole contract it is evident that the parties contracted in reference to such continued use of the prop- erty by the insured, and he can fairly be held to have contracted to make no changes in the condition or use of the premises, the warranty will be deemed continuing, except so far as it may be affected by a general custom, special custom of the insured known to the insurer, or as such use may be unlawful at particular periods.^ It must be understood, however, that it is competent for the parties to contract for the use of the premises in a specific manner ; and when they do so, the contract is obligatory and binding ; ^ and in all cases, as to whether the applicant's statements in reference to the occupancy of the premises is to be regarded as a continuing warranty, or only in presenti, must be determined from the language used and the subject-matter to which it relates. This species of contracts are not uniform, nor are they required to be. Every insurer has a right to say upon what terms he will insure priated for the purpose of carrying on or exercising the trade, business or vocation of (a large number of manufactures specified therein, including) " cooper, carpenter, cabinet-maker," * « * " so long as the said premises shall he wholly or in part appropriated or used for any or either of tlie purposes aforesaid, these premises shall cease and be of no force or effect unless othenvise specially agreed by this corporation, and such agreement he signed in writing in or on the policy." The premises, at the time the insurance was effected were used for makingandstoringbarrels, as mentioned in the written portion of the policy. Subsequently, small circular saws and a work- bench were introduced and boxes were manufactured, but this kind of work had ceased from two to four months when a loss by fire occurred. Tlie saws and work- bench had remained in the building, and a lathe had been put up the day preceding the fire, for the purpose of making broom handles and brush blocks. In an action on the policy, it was held that the description of property was not a continmnij warranty, but a warranty in presenti ; that the policy was suspended during the pro- hibited use of the premises, but was revived when the use ceased to exist ; and tliat there was no such " appropriation " of the premises, at the time of the fire, to a pro- hibited use, as was contemplated in the policy or as prevented a recovery. As to effect of description of premises and uses to which devoted, and that it is to be re- garded as merely a warranty in presenti, and that the premises will not be devoted to more hazardous uses, see Marland F. Ins. Co. v. Whiteford, 31 Md. 221 ; Smith V. Merchants' Ins. Co., 29 How. Pr. (N. T.) 884; N. E. F. & M. Ins. Co. v Wetmore, 32 111. 221 ; Herrick v. Union etc. Ins. Co., 48 Me. 588; Lounsbury v. Protective Ins. Co., 8 Conn. 467; Catlin v. Sprinr/field F. Ins. Co., 1 Sum. (XJ. S.) 442; Blood v. Howard F. Ins. Co., 12 Cush. (Mass.) 472; Frishie v. Fayette Mut. Ins. Co., 27 Penn. St. .32.5; O' Neil v. Buffalo Ins. Co., 3 N. Y. 122; Billings \. Tolland, etc., Ins. Co., 20 Conn. 139; Houcjh v. City F. Ins. Co., 29 id. 10; Boardman v. N. H. Mut. F. Ins. Co., 20 N. H. .551; Haiokes v. Dodr/e Co. Mut. Ins. Co., 11 Wis. 188; Annapolis R. B. Co., v. Baltimore Ins. Co., 32 Md. 37; May v. Buckeye Ins. Co., 25 Wis. 291. 1 May v. Buckeye Ins. Co., ante. ^ United States v. Kimberly, 34 Md. 227; Reynolds v. Commerce Ins. Co., 47 N. T. 597; Atlantic Bock Co. v. Liblyy, 45 N. Y. 499; Dittmer v. Germania Ins. Co., 23 La. An. 458; 7ns. Co. v. Slaughter, 12 Wall. (U. S.) 404. Wakkanties. 477 property, and tlie terms agreed upon, as expressed in the policy or contract, must control, except so far as they are qualified by general or special customs, or extraneous matter referred to in the policy. Of course, the language of a policy may be such as to constitute the representations as to occupancy, a continuing warranty, and when such is the case, any change therein would invalidate the policy, but in order to have that effect, the representation must he such as to leave no doubt as to the intention of the parties; and, generally, the cases in which such an interpretation has been put upon the policy, it will be found that it related to the use, or method of use of the property insured, when used for a specific purpose, and not as a restriction of its use to a particular purpose, although such a restriction would be competent, but in order to have that effect, it must be expressly stated, or be fairly inferable from the language used, and no such inference will be made if there is any reasonable ground for a contrary construction ; biit in all cases, the use will be treated as restricted to a use not more hazar- dous, than that to which the property was devoted when the policy issued.^ Thus it has been held that, when the assured in his application stated that no lamps were used in the building, that this should be treated as a warranty that none would be used therein so long as the building was used for the purposes for which it was insured.^ An answer in an application to a question as to what are the facilities for extinguishing fires ? being " a force pump and abun- dance of water,'' it was held that this could not be construed as a warranty, except in presenti, and did not amount to a warranty that the pump should at all times during the life of the policy be kept in repair.^ So a description of a building as an " occupied dwelling-house " 1 May V. Buckeye Ins. Co., ante; Clark v. Inn. Co., 8 How. (TJ. S.) 23.5; Glendale Woolen Co. v. Protection Ins. Co ., 21 Conn. 19; Barrett v. Ins. Co., 7 Cush, (Mass.) 175; Itoberts v. Ins. Co., 3 Hill (N. Y.) 501; Stout v. Ins. Co., 12 Iowa, 371. 2 Clarke v. Manufacturers' Ins. Co., ante. The case of Glendale Woolen Co. v. Protection Ins. Co., 21 Conn. 19, has sometimes been cited, and regarded as holding a different rule, but an examination of that case will disclose the fact that It fully sustains the doctrine of the text. " Gilliattv. Pawtucket, etc., Ins. Co., 8R. I. 282; hut holding a contrary doctrine, see Sayles v. N. A. Ins. Co., 2 Curtis (U. S. C. C.) 610. 478 Applicatiok. is held not to amount to a warranty that it shall continue, to be so occupied during the existence of the policy, but that the warranty is answered if the building was in fact so occupied when the ap- plication was made.i But if it is specially provided in the con- tract that if the building shall be used for any other purpose than that named, or that if it shall be used for a more hazardous pur- pose, the policy shall be void, a fulfilment of this covenant is a condition precedent to a recovery, and if any portion of the build- ing is used for any other more hazardous business, the policy is avoided, as much as though the whole building was so occupied. As if the building is insured as a dwelling-house, and the owner permits a portion of it to be occupied as a work-shop for currying hides, the policy is avoided, even though the owner continues to reside in a portion of the building ! ^ So where the occupancy was de- scribed as that of a grist mill, when in fact a part of the building was occupied as a carpenter's shop occasionally, the policy was held void.^ Hule as to incidental or ordinary uses — Billings v. TollEind Co. Mut. Ins. Co.— Dobson v. Sotheby— Shaw v. Robberds. Sec. 199. In a Connecticut case,* where in a policy of insurance on sundry buildings, they were described as barns, to which this clause was added, " all the above described barns are used for hay, straw, grain un threshed, stabling and shelter ; " and on the trial, after proof of a loss by fire, it appeared, that on the day preceding the night of the fire, the insured had caused about two bushels of lime and six or eight pails of water to be pla'ced in a tub standing in a room generally used for keeping therein unthreshed corn, in one of the barns, for the purpose of preparing the lime or rolling in it some wheat, which he was about to sow upon his farm ; that a short time previous to the fire, he had commenced the painting of his house, and his painter had mixed his paints in the same room, and at the time of the fire, there were in it an oil barrel, con- taining about a gallon of oil, a keg of white lead and a pot with ' Cumberland, etc., Ins. Co. t. Douglass, 58 Penn. St. 419. ^ Gasner v. Metropolitan Ins. Co., 13 Minn. 483. ^ Jennings v. Chenango. Mut. Ins. Co., 2 Den. (N. T.) 75. * Billings v. Tolland, etc., Ins. Co., 20 Conn. 139. Waeeanties. 479 about a pint of mixed paint ; that in another building, described in the policy as used in part for a cider-mill, the insured, before and after the execution of the policy, had been in the habit of re- pairing his farming utensils, and had also made in it a bee-hive, •and planed some boards for a room in his house ; but a day or two before the fire, the building had been cleared out, leaving nothing in it but some apples. The court held, 1. That tlie clause relat- ing to the use of the buildings insured, was not a warranty that they should be used in that manner, and in no other, but was in- serted merely for the purpose of designating the buildings insured, and not to limit their use, or to deprive the insured of the enjoy- ment of his property in the same manner as buildings of that de- scription are generallj'' used and enjoyed ; 2. That the acts of the insured, so far as they were, or could have been, the cause of the loss, were in accordance with the ordinary use of such build- ings by farmers. Therefore, where the court, on the trial of the «ause, instructed the jury, that if the buildings insured were, in the ordinary acceptation of the terms, of the description stated in the policy, and continued such to the time of the fire, and were •only put to the ordinary use of such buildings, the policy re- mained in force ; but that the insured had no right to change the nature and use of the buildings, and if he did he would lose the bene- fit of the policy — that a single act or so, which did not belong to the ordinary and appropriate use of the buildings, would not change their nature and character, and would not vacate the policy, or prevent a recovery thereon, unless such (acts were fraudulent, or grossly careless, and if grossly careless, were the cause of the loss — and the jury found for the plaintiff, it was held no misdirec- tion. Waite, J., in commenting upon the effect of usage or the or- •dinary use of property in construing warranties or conditions in policies of insurance, said ; " The acts done by the plaintiff are set iorth in the motion, so that one can see what they were, and "whether they were a. departure /rowi the common and ordinary use ■of such buildings. We very well know that farmers in the State are in the habit of using their barns for a variety of purposes, connected. "with their agricultural business, besides that of storing their hay, •and stabling their cattle. Their barns are frequently used as a •shelter for their wagons, plows, sleds, and other farming imple- ments. When the plaintiff procured the insurance to be effected on the buildings, it is not to be presumed that he meant to deprive 480 Application;.' himself of their common and ordinary use, or that the defendants-T by their policy, intended any such thing. And excepting, go far as there is an express prohibition in relation to the use of them, the' un- derstanding of the parties undoubtedly was, that the common and ordinary use of them was, to be continued in the same manner as if the policy had never been issued." ■ And in all cases, where the breach complained of is only such a. use of the property as is consistent with its ordinary use, it cannot, in the absence of an express wafranty or condition, be made avail- able. Thus, in a leading English case,' the plaintiff procured an insurance upon an agricultural building under the erroneous name of a barn, but it appeared that the rate of premium would have been the same if it had been correctly described, and the policy recited, " no fire is kept and no hazardous goods deposited," and in repairing the roof, which required tarring, a fire was lighted in the building and a barrel of tar was brought in for the purpose of performing the necessary operation ; it was held that the policy was not thereby avoided, for the condition must be taken to relate to the habitual use of a fire, and not to one rendered neces- sary in the ordinary course of making necessary repairs, or for doing those things essential for the protection and preservation of the property. When there is no warranty, express or implied, that the premises shall continue to be occupied during the whole time of insurance, in the manner or for the purpose specified in the policy, and the policy undertakes to recite what uses are pro- hibited, or will render the policy void, the temporary use of the premises for any other purpose than that named in the policy, if not within the prohibited class, and does not involve a change of business, will not render the policy void, even though such use is more hazardous, and is the proximate cause of the destruction of the property. Thus, in an English case,' the plaintiff effected an insurance upon his premises, describing them as a granary and a kiln for drying corn. He was in the habit of using the kiln for drying corn, and for no other purpose. While the policy was in force, a vessel laden with oak bark was sunk near the plaintiff's premises, and the owner of the bark requested him to allow him to 1 Dobson v. Sotheby, 1 Moo. & M. 90. " Shaw V Robberds, 6 Ad. & El. 75. Wabeanties. 481 dry the bark on his premises, which he did gratuitously, and the owner commenced drying it there. No notice of this was given to the insurers. The fire used in drying the bark was no greater than that used in drying corn, but on the third day, while the bark was drying, the kiln and all the premises took fire and were con- sumed. Lord Chief Justice Denman directed the jury to say, 1st. Whether drying corn and drying bark were different trades ? 2d. Whether drying bark was more dangerous than drying corn ? And 3d. Whether the fire was occasioned by drying the bark ? The jury found that they were different trades ; that drying bark was most dangerous, and that the fire was occasioned by drying the bark, whereupon he directed a verdict for the defendant, with leave to the plaintiff to move for leave to enter a verdict for the full sum if the court should be of opinion, that, upon these facts, he was entitled thereto. Upon a rule to show cause, the court held that the plaintiff was entitled to recover upon the ground that the description of the premises, and their use, was true when made ; that the plaintiff had not warranted not to use the premises temporarily for any other purpose, and that there was no condition of the policy which was thereby violated. Lord Dbnman, C. J., in delivering the opinion, said : " The sixth condition points at an ttlteration of business ; at something permanent and habitual ; and if the plaintiff had either dropped his business or corn drying and taken up that of bark drying, or added the latter to the former, no doubt the ease could have been brought within that condition. Perhaps if he had made any charge for drying the bark, it might have been a question for the jury whether he had done so as a matter of business, and whether he had not thereby (although it was the first instance of bark drying), made an alteration within the meaning of that condition. But, according to the evidence, we are clearly of the opinion that no such question arose for the jury, and that this single act of kindness was no breach of the condi- tion" and a verdict was entered for the plaintiff for the full amount of the loss, so far as covered by the policy.^ Warranties and conditions of a policy must be liberally construed so as to effect- uate, as far as possible, the intention of the parties.^ ^ See, similar in its facts, and identical in its doctrine. Loud v. Citizen's Ins. Co., 2 Gray (Mass.) 221. 2 In the application for a policy, the assured stated that his stoves and pipes 31 482 Application. Prohibited uses — Use for prohibited purpose does not, in all cases, invali- date the policy — Cerif v. Home Ins. Co. — Williams v. Fireman's Fund Ins. Co. Sec. 200. If a certain use of the premises is, prohibited, and there is nothing in the language used from which a license to use the premises for any of such prohibited purposes can be inferred, the policy is avoided by such use. When the insurer annexes a list of hazardous uses, which are prohibited, the use of the premises for any of such purposes is fatal to a recovery for a loss under the policy , as, in such cases, the assured is treated as warranting that the premises shall not he used for any of such prohibited uses during the life of the policy} were well secured, and that he would engage to keep them so. After the policy was issued, the wife of the assured, intending to remove during the summer a stove, tlie pipe of which passed througli the floor in an upper room, and thence Into a chimney, toolc down the pipe in the upper room, and put a bed over tlie hole in tlie floor through whicli the pipe passed, but did not remove the stove and pipe below. A few days after, forgetting wliat she had done, she built a fire in the stove, which set fire to the bed, and burnt the house. Held, that the assured could recover on the policy. Mickey v. Burlington /ns. Co., 85 Iowa, 174. A similar doctrine was held in Loud v. Citizen's etc., Ins. Co., ante, the plaintiffs procured a policy upon lumber, etc., in their two stores on their wharf in Wey- mouth. In the application for insurance, wliich was expressly made a part of the policy, it was stated that the stores were used for storing lumber, etc., and that one room was used for a counting-room. It wa^ also stated that the counting- room was warmed by a coal stove, funnel and stove well secured, and that no lights were used in the building evenings, all of which was true at the time when the ap- plication was made and the policy issued. Subsequent to the issue of the policy, a schooner, when near the wharf, got aground and filled with water. The beds and bedding on board having been broughlondeck, and being wet with the rain, were by the plaintiffs' permission, removed into the store in which the counting-room was. About midnight, one of the plaintiffs, at tlie request of the captain and crew, gave them permission to sleep in the counting-room, but expressly told them they must not make any fire, use any light, or even smoke. There was a stove in the coimt- ing-room, the fuimel of which passed through the loft overhead, but was not then in a safe condition. The captain and crew disregarding the instructions of the plaintiff, kindled a fire, and very soon the huilding was in flames. The defendant claimed that it was not liable for the loss, because the plaintiffs had violated their warranty as to the condition of the funnel, and because they had put the building to hazardous uses without its consent. The court held that the warranty as to the condition of the funnel was only a warranty inpresenti, and was not a continuing warranty, and that the use of the building for one night for the purpose of lodging strangers in distress, was not putting the building to hazardous uses, within the meaning of the condition of the policy. ' In Mead. v. N. W. Ins. Co., 7 N. Y. 530, the policy prohibited the carrying on of certain hazardous trades, and the court very properly held that this amounted to a promissory warranty that no such trades should be carried on upon the premises during the life of the policy, and that the question whether such use was material to the risk, was not open. Welles, J., said : " Upon the trial the defendants' counsel offered to prove by the witness Halliday, who occupied one of the buildings insured at the time of the fire, that he did business and kept articles in said building denominated hazardous and extra hazardous at the time of the fire. The evidence was objected to, and the objection sustained by the judge, to which the defendants' counsel excepted. In this, I think, there was error. The policies all provided that in case the premises Insured should at any time after the making and during the continuance thereof, be appropriated, ap- Warranties. 483 But of course it is understood, that where hazardous or pro- hibited articles are included in the class of goods insured, so as to plied, or used to or for the purpose of carrying on or exercising therein any trade, business, or vocation denomiHated hazardous, or extra hazardous, or specified in the memorandum of special rates in the proposals annexed to the policy, or for the purpose of storing therein any of the articles, goods, or merchandise in the same proposals denominated hazardous or extra hazardous, or included in the memorandum of special rates, unless therein otherwise specially provided for, or thereafter agreed to hy the company in writing, to be added to or indorsed upon the policy then and from tlienceforth so long as the same should be so appro- priated, applied, or used, the policy should cease and be of no force or efEect. The offer was nearly in the language of one of the above provisions to show its violation. The answers given by the respondent's counsel to this point are, first, tbat the fire did not originate in the store occupied by the witness; second, that no knowledge ot the business carried on was shown in the respondent; third, (,hat there was no proof that the business had been changed from the time the insurance was effected to the time of the fire; and fourth, that this point was not reserved by the appellants' counsel at the close of the case, and is not among the objections then raised. Xone of those answers are sufficient. The provision of the policy re- :ferred to amounted to a prospective or promissory warranty, and was as obhgatory as if it had been retrospective or concurrent. It was, therefore, of no consequence that the fire was not produced by its violation or breach. Murdork v. ('Iienamjo Co. Milt. Ins. Co., 2 Comst. 210. It is equally unimportant that the respondent was Ignorant tliat such business was carried on. The question whether a warranty has been broken can never depend upon the knowledge or ignorance or intent of the party making it touching the acts or the fact constituting the breach. It was tin ■ -doubtedly competent for the parties to contract in relation to the future business to be carried on in the building insured without reference to the previous business, and such was tlie case here. That the business prohibited had been carried on up to the time the policy was made was no excuse for a violation of the contract. And finally it was not necessary or proper for the counsel to do more than to ex- <'ept to the decision of the judge at the circuit overruling the evidence offered. He was, in fact, precluded from making the point in any other stage of the case I>y the exclusion of the evidence." Kelly v. Home 2h.s. Co., 1)7 Mass. 288; Davrn V. Merchants' 7n.s-. Co., 1 La. An. 344; Lee \. Howard Ins. Co., 3 Gray (Mass.) 183; "cabinet making" was prohibited. Held, that '" finishing chairs" was Milh- in the prohibition, and was not excused because the policy covered cabinet ware, tjee also, Appleby v. Astor F. Ins. Co., 54 N. Y. 253. So, where " hat bleaching " was included in the list of hazards, and the policy covered a stock of " millinery .goods," it was held that " bleaching bonnets" was "hat bleaching" within the terms of the policy and avoided it. Merrickv. Promncicd Ins. Co., 14 U. C (Q. B ) 439. In Vewees v. Manhattan Lis. Co., 35 N. J. L.366, the policy covered a building "occupied as a country store," and contained a provision that "in case the prem- ises shall, at any time during the period for which this policy would otherwise continue in force, be used for the purpose of carrying on therein any trade or voca- tion, or for storing and keeping therein any articles, goods, or merchandise denomi- nated hazardous, extra hazardous, or specially hazardous, in the second class of the classes of hazards annexed, from thenceforth, so long as the same shall be so used, this policy shall be void." At the time the policy was taken, and from thence lo the time the fire occiu-red, the premises were used in part as a stable. Among the extra hazardous risks that of a private stable was enumerated. This was held a violation of the contract, which was not cured by the fact that insurers' agent, who made the policy, knew at the time that the premises were used for the purpose pro- hibited. In Matthews v. Queen City Ins. Co., 2 Cin, S. C. (Ohio) 109, the policy, specified planing-mills, saw-mills, and carpenter shops as " hazardous ; " and ihe Ttse of the premises for any hazardous trades, business, or vocations, in the conditions mentioned, were prohibited, unless, by agreement, indorsed upon the policy. The policy was on a planing-mill and saw-mill. The second story was used as a carpen- ter shop, a risk in the same class of hazards as planing and saw-mills, and it was held that using the second story as a carpenter shop was a breach of the conditions. The doctrine of this case is not, however, believed to express the true rule in such cases, and the later and better class of cases hold that, where a building is insured 484 Application. overcome the force of a general prohibition in reference thereto, yet when the language of the prohibition is specific, and leaves no doubt as to the intention of the insurer, and the assured at least ought from the language used to have known that the prohibition applied, the meaning of the term used in describing the goods as " groceries " or " goods such as are usually kept in country stores," cannot be permitted to overcome the plain prohibitory words used. Thus, in a California case,' the plaintiff's assignor procured an insurance from the defendant upon his stock of goods and fixtures, in a store occupied by him in Sacramento The goods were covered by two for a hazardous purpose, or rather a purpose denominated as hazardous in the list of hazards embraced in the policy, the use of the premises for any other purpose em- braced in the same list of hazards, does not avoid the policy. Reynolds v. Commerce Iiis. C'o.,47N. Y, 597; Smith \. Mechanicx' & Traders' Inn. Co., .'52 N. Y. 399. At least such is the true construction, unless the risk is increased by such use. State Mat. F. Ins. Co. v. Arthur, 30 Penn. St. 315 ; Reynolds v. Commerce Ins. Co., ante. The fact that tlie use of the premises for a prohibited purpose was without the knowledge of the assured, is held to constitute no defense. Thus, in Hoxsie v.Prov. Mat. Ins. Co., G K. I. 517, the policy covered a building described as "a dwelling- house, the basement being of stone and wood." The charter provided ; "No policy shall extend to any sugar-house, baUe-liouse, distill-house, joiner shop, or other house, except on sucli terms only as shall be specially agreed on by the directors, unless expressly mentioned in the policy." The defendant pleaded that after tlie policy was assigned tlie premises were used and occupied as a joiner's shop, and that thp risk was thereby increased. The plaintiff replied it was so used and occu- pied witliout the knowledge of the plaintiff. It was held that the plea was a good bar, and the replication no answer to it. In Steinmitz v. Fr^anklin F. Ins. Co., 6 Phila. (Penn.) 21, tliepolicy contained a stipulation that "mills and manufactories," among other things, were extra hazardous, and, tlierefore, that no policy would be construed to extend to such a risk, unless liberty be given for the purpose and ex- pressed tliereon. The fifth story of the building was used for making of muslin wmdow shades by nine or ten persons regularly employed In tliat business as the sole means of their livelihood, and it was held that this constituted a manufactory within the meaning of the condition, and was a bar to the plaintiff's action. See also, Gassnerv. Metropolitan Ins. Co., 13 Minn. 483, in which the policy provided that the interest of tlie mortgagee shall not be Invalidated by any act of the mort- gagor ; but the mortgagee sliall notify the insurers of any change of ownership or increase of hazard as soon as the same shall come to his knowledge, and shall, on reasonable demand, pay an additional charge for the same.' The building was in- sured as a dwelling-house, and all sj^ecially hazardous trades (among which was that of a currier) were prohibited. The owner used the premises for currying, and it was held that the policy was thereby avoided. 1 Cer/v. Borne Ins, Co., 44 Cal. 320; 13 Am. Rep. 165. Where the policy forbids the keeping of " benzine, camphene or any explosiee," it is a question of fact for the giver whetlier kerosene, alcohol or any other articles than those specially enumerated are explosive. Willis v. Germania F. Ins., Co., 79 N. C. 285 Wliere a policy pro- vided that it should be void if tlie premises should be used so as to increase the risk, and contained provisions concerning the using, storing, and drawing of benzine, gasoline, and kerosene in a suit on the policy to recover for a loss, there was much conflicting evidence as to whether the premises had been so used as to increase the risk, and as to whether these inflammable substances had been used in the manner contemplated by the policy or not. The clause in question was difficult of construc- tion as to the extent of the risk taken by the Insurers, and the defendant's pleadings stated with unnecessary particularity the particulars of what were claimed as breaches of the conditions. It was held that the whole question, under the circum- stances, was properly left to the jury. Gunther v. Liverpool & London etc.. Ins. Co., 20 Blatchf. (U. S.) C. C. 362. Wakranties. 485 several policies in the defendant company, both of which contained a provision that if the " assured shall keep gunpowder, fire-works, nitro-glycerine, phosphorus, saltpetre, nitrate of soda, petroleum, naphtha, gasoline, benzine, or benzine varnish, or keep or use cam- phene, spirit gas, or any burning fluid or chemical oils, without written permission in their policy, then, and in every such case, this policy shall be void. Kerosene oil, however, may be used for lights in dwellings, and kept for sale in stores, in quantities not exceeding five barrels, to be drawn hy daylight only." The in- sured and his clerk slept in the store, in a back-room adjoining the store-room proper. The store was lighted with gas in the evening, and at night the gas was turned off and a small lamp, filled with kerosene oil, was left burning on the counter in the store all night, to keep off burglars. The court held, as a matter of law, that the use of kerosene oil as an illuminator in the store, was expressly excluded by the language of the policy, and that the fact that the insured and his clerk slept in the room adjoining the store, did not constitute it a " dwelling," within the ordinary meaning of the term, and the verdict for the plaintiff, in the court below was re- versed. In this case, the use of kerosene was expressly prohibited, except as stated in the policy, and Wallace, J., well said, in the eourse of his opinion, " and in the face of this, it would be doing violence to the plain intention of the parties as shown in the lan- guage of the policy, to extend that privilege so as to embrace the case of a store, as such." But all conditions in a policy are strictly construed, and in favor of the assured, upon the ground, that in- asmuch as the insurer fixes his own terms, if he intends to impose restriction upon the insured, he must use such language as clearly ■discloses his intention, and nothing can he claimed hy implication. If there is any doubt as to the meaning of the language employed, the benefit of the doubt is given to the insured.^ In a case recently decided by the Commission of Appeals,'^ the rule of strict construction was well illustrated, and Reynolds, C, in the course of his opinion, showed the utter absurdity of making eonstructions, to uphold and extend conditions which the insurer has seen fit to impose. In that case, the plaintiff procured a policy of insurance in the defendant company, upon his office furniture, ' Smith V. Mechanics' & Traders' Ins. Co., 32 K Y. 399. ^ Williams v. Fireman's Fund Ins. Co., 54 N. T. 569; 13 Am. Eep. 620. 486 Application. fixtures and merchandise, hazardous and extra hazardous, con- tained in premises occupied by him in New York City. It was provided in the policy, that if the premises should be iised for storing or keeping therein, any articles, goods or merchandise, denominated hazardous, or extra hazardous, or specially hazardous^ except as specially provided for in the policy, so long as the same continued, the policy should be of no force. It was also provided that the policy should be void if petroleum, rock oil, earth oil^ benzole, benzine, or naphtha shall be stored in said premises, with- out written permission therefor, endorsed on the policy. There was also a further provision in the policy, that the following trades, occupations and merchandise add to the rate of the building audits contents fifty cents or more per flOO, and to be covered, must be specially written in the policy : "burning fluid, camphene," also, that camphene, spirits, gas or burning fluid, or any similar inflam- mable fluid, when used in stores, warehouses, shojjs, or ma.nufaetories, as a light subjects the goods therein to an additional charge, etc. There was also another provision in the policy, that in case the risk should he increased hy any means within the con- tract of the insured, or by the occupation of the premises for more hazardous purposes, the policy should be void. lb appeared that the plaintiff did not keep any of the prohibited articles for sale, nor did he store them on his premises, or use them for lights in his store ; but, being afflicted with a severe cutaneous disease, he used crude petroleum oil as a remedy therefor, and kept a small quantity thereof for that purpose in a jug, on a shelf in his store, and it was there at the time of the fire. The defendants insisted that the keeping of the oil for medicinal purposes, avoided the policy under the conditions named. The court held that the keep- ing of the oil for the purpose named, was not a keeping or storing within the meaning of the condition of the policy, because it was not for mercantile or commercial purposes, or as a business,^ and ^ Boffman v. ^tna Ins Co., .32 N. Y. 405; Reynolds v. Commerce Ins. Co. of N. Y. 47 id. 597; Cation v. Springfield Ins. Co., 1 Sum. (U. S.) 434; N. T. Equit- able Ins. Co. V. Langdon, 6 Wend. (N. Y.) 623. In Wood v. North Western Ins. Co., 46 N. Y. 421, the policy contained a clause forbidding the use of ''campliene, spirit gas, phosgene," etc., or "any other inflammable liquid." The court held, that a liquid not mentioned by name, to be covered by the clause, " any other in- flammable liquid," must be inflammable, as are those enumerated articles. And where "kerosene" was not named, and there was no finding or proof of its charac- ter in this regard, this court cannot take judicial notice of its qualities. Judicial notice cannot be taken that the article of " kerosene " is in all cases explosive, the legislature having declared that there is a degree of purity to which it may be brought at which it may safely be kept on sale in cities. Waebantibs. 487 that, not being used or kept for any of the prohibited purposes, and the jury having found that it did not materially increase the risk, the keeping and using of it as alleged, did not avoid the policy. The court correctly holding that the insurer having imposed its own con- ditions, must be regarded as having intended no other prohibition than that clearly stated in the policy, and that if the keeping or use of any such articles for any purpose was intended, it should have been so stated in the policy, so that the insured could be upon his guard, and properly protect his interests. Reynolds, C, pertinently said : " It is very clear that, when the policy was written, no one understood that the keeping of petroleum oil for merely medicinal purposes would render void the obligation of the defendant. The provision against ' storing or keeping' was obviously aimed at storing or keeping in a mercantile sense, in considerable quantities, for the purposes of commercial traffic. It was not intended to prohibit its use as a medicine. It might as well be claimed that if the plaintiff went to his medical advisor and had his shirt and drawers saturated with petroleum, with the view to a peaceful repose of a night, and brought them to bed, on the insured premises, or if, indeed, he had taken a quantity inte?-- nally for that purpose, it would have been ' a keeping or storing' within the meaning of the policy." When a policy provides that if the assui-ed "shall keep or have " on the premises "petroleum, naphtha, benzine, benzole, gasaline, benzine-varnish etc. " The policy shall be void, the condition is to be construed reasonably and with reference to the usages and requirements of the business, and where the use of any one of these articles is essential, or is com- monly used for certain specific purposes in the business to which premises insured are devoted, the policy will be construed as im- pliedly excepting such use.^ Thus a policy upon a distillery ^Mears v. Humboldt Ins. Co., 92 Penn. St. 15. In this case Paxson, J., said : " The first assignment of error relates to the use of benzine upon the insured prem- ises. It was contended that the court erred in instructing the jury in answer to the defendant's second point, that if Mears, the assured, purchased from eight to ten gallons of benzine, and used nearly the whole of it in cleaning the engine, boilers, and machinery of the distillery, and such use extended over a period of about two weeks, there was a violation of one of the conditions of the policy in suit and avoids the same. The condition in the policy referred to is as follows: "Or if the assured shall keep or have, in any place on the insured premises where this policy may apply, petroleum, naphtha, benzine, benzole, gasoline, benzine-varnish, or any product in whole or in part of either; or gunpowder, fireworks, nitro-glycerine, phosphorus, saltpetre, nitrate of soda; or keep, have, or )(se camphene, spirit gas or any burning 488 Application. containing buch a condition was held not to be avoided by the temporary taking of benzine upon the premises and using it for the purpose of cleaning the machinery. fluid or chemical oils, without written permission in this policy, then and in every such case, this policy shall be void. It will be observed that in the first portion of this condition the provision is that the assured shall not " keep or have " any of the enumerated articles upon the in- sured premises, while in the latter portion, the "use," of certain other articles is prohibited, in addition to the restrictions contained in the iirst. The words '' keep or have," as applied to the articles first enumerated, evidently were intended to prevent a storage of the prohibited articles upon the premises, either permanently or habitually. While the words are used in the disjunctive, they are evidently synonymous, and signify to retain in possession. It would be straining a point to say that bringing a prohibited article upon the premises upon a single occasion, and for the sole purpose of cleaning machinery, was keepmg or hay- ing it there within the meaning of the policy. The evidence shows, and it is not denied, that the can of benzine used for the purpose above stated was not kept on the insured premises during the period of its use, but was stored in a bonded ware- house, fifty or sixty feet distant. The witness, William Jacobs, who cleaned the machinery, got it from the warehouse from time to time as he needed it. The assured did not keep or have benzine upon the insured premises within any reasonable view of the meaning of the policy. But it is said that he used it there, and that this avoids the policy. The use of benzine is not prohibited in terms. If prohibited at all it must be because benzine comes within the description of burn- ing fluid or chemical oils. We must ascertain the meaning of these general words, used in the latter portion of the condition of the policy, by referring to the pre- ceding special words. Under this construction the words burning fluids or^chemi- cal oils must be held to mean only such burning fluids and chemical oils as are in their nature like camphene or spirit gas. This was the construction placed upon the identical words in Wheeler v. American Central Ins. Co., 6 Mo. App. 235. The same rule is laid down in Wood v. Northwestern Ins. Co., 46 N. T. 421; Morse v. Buffalo F. and M. Ins. Co., 30 Wis. 584; 11 Am. Rep. 587; and Willis v. Hanover and Germania F. Ins. Co., 79 K. C. 285. There was no proof that benzine was of like nature with camphene or spirit gas. It is not a matter of which the court will take judicial notice- It is a question of fact, to be found by a jury upon evidence. See Wood v- Northwestern Ins. Co. and Morse v. Buffalo F. Ins Co., supra. We are not disposed to give the word " use " in this policy the narrow construc- tion claimed for it. It must have a reasonable interpretation, such as was probably contemplated by the parties at the time the contract was entered into. Nearly every policy of insurance issued at the present time contains this condition, or a similar one. What is intended to be prohibited is the habitual use of such articles, not their exceptional use upon some emergency. The strict rule claimed by the defendant would prevent the assured from painting his house or cleaning his furni- ture, as it would be difficult to do either without using some of the prohibited arti- cles. If the company intended the condition to cover such exceptional uses, it ought to have been plainly expressed, and probably would have been. That any one would knowingly accept a policy with such a clause is not probable. We are not without abundant authority upon this point. See Dobson v. Sothehy, M. & M. 90; Shawv. Robberds, 6 Ad. & E. 75; GrantY. Howard Ins. Co., 5 Hill, 10; Van Valken- burg V. Ziw. Co.. 70 N. Y. 605; Franklin Ins. Co. v. Chicago Ice Co., 36 Md. 102; 11 Am. Rep. 469; Eaferty v. Ins. Co., 29 Me. 97; O'Neil v. Buffalo Fire Ins. Co., 3 N. Y. 122. The case of Birmingham Fire Ins. Co. v. Kroegher, 83 Penn. St. 64; 24 Am. Rep. 147, cited by defendants, does not apply. In that case the assured kept a barrel of petroleum for sale on the premises covered by the policy. As bearing upon this point, it is proper to observe that permission to make re- pairs was indorsed upon the policy. While no point was apparently made of this in tlie court below, and we would not therefore reverse for this reason, the fact is en- ■ titled to weight in considering this question. The permission to repair the machin- ery carried with it the right to use such means as might be necessary for that purpose. The second assignment also refers to keeping benzine upon the premises, and is Warkanties. 489 Change of use does not avoid policy. Sec. 201. The fact that a particular use, which is regarded as hazardous, is specially permitted, does not amount to a warranty or condition that such use shall continue during the life of the policy ; but the assured may, in the absence of any express pro- hibition to the contrary, devote the premises to any other use that does not increase the risk.^ Thus, in a Pennsylvania case,'^ a policy of insurance on a building had this condition : " The fol- lowing risks being considered more hazardous than others, build- ings intended to be occupied by persons carrying on any of the undermentioned trades or business, or in which any large quanti- ties of the undermentioned goods are deposited, will be subjected to an extra premium on that account. No policy, therefore, will be construed to extend to such a risk, unless liberty be given for the purpose, and expressed thereon." One of the specifications of such risks was, " mills and manufactories of any kind." With the consent of the company the tenant kept hay, straw, produce, €tc. This he gave up and kept broom-corn, and made brooms by hand. The insurer claimed that this avoided the policy; but the court held that it did not come within the prohibition of " mills and manufactories ; " also that a mill, within the meaning of the prohibition, is not merely a place where something might be ground, nor a manufactory merely where something may be made by hand or machinery, but what common usage recognizes as a mill or manufactory respectively. Distinct contracts. Sec. 202. When two adjoining houses of the same owner are in- sured by one company at the same time, but in two distinct poli- cies, the policies are distinct contracts, and the assured can recover ■covered by what has already been said. The remaining assignments relate to the ■use of carbon oil. It was proved that a small quantity had been used at the same time as the benzine, in cleaning the machinery. It is sufficient to say that carbon oil is not among the prohibited articles. It is not named in the condition. If it was of the same nature as camphene and spirit gas, or other enumerated articles, it was not shown to be so, and the court cannot take judicial notice of it. This prin- ciple has already been sufficiently referred to." See Williams v. Fireman's Fund Ins. Co., 54 N. Y. 569; 13 Am. Kep. 620, Hall V. Ins. Co., 58 N. Y. 292; 17 Am. Rep. 255; Matson v. Farm Buildings las, Co., 73 2^. Y. 310; 29 Am. Eep. 149. ^ Reynolds v. Commerce Ins. Co. , ante. ^ Franklin Ins. Co. v. Brock, 57 Tenn. St. 184. 490 Application'. for damage by fire to one building, although, the other building^ may have been used in a manner prohibited by the policy, and the fire originated in it.^ Rate of premium does not necessarily determine character of risk. Sec. 203. A premium for insurance above the usual rate, is evi- dence indicating, though not proving, that a more than usual risk, was assumed ; but a jury shoijld not infer that a concealed or mis- represented fact was to be at the risk of the insurers.^ Description of use, unless otherwise clearly intended, relates only to present use. Sec. 204. Describing a building insured as a " storehouse," is descriptive only, and not a warranty or representation that nothing should be done in it hut keeping a store or a storehouse. A store- house was insured, and keeping broom-corn was not specified as a hazardous risk. The assured had a right to keep broom-corn there. Keeping it did not prevent his recoveiy for damage to the building by fire, because the danger was greater by keeping it, or because the fire originated in it.^ Xiffect of list of hazards upon contract. Sec. 205. A policy enumerating certain risks as hazardous, does not cover any of them, unless liberty be given to keep the articles mentioned as hazardous ; but if words in a policy are of doubtful signification, the meaning most favorable to the assured is to be adopted.* If the prohibited article was commonly used in the busi- ness at the time when the insurance was effected, the fact that another and less hazardous article might have been employed will not affect the right of the assured. It is presumed that the in- surer knew the custom and necessities of the trade, and such cus- tom enters into and forms a part of the contract and modifies the force of the conditions. If the insurer desires to obviate the use 1 Franklin Ins. Co. v. Brock, ante. ^ Franklin Ins. Co. v. Brock, ante. " Franklin Ins. Co. v. Brock, ante. * Franklin Ins. Co. v. Brock, ante. Warranties. ^ 491 of articles generally employed in the business, he must expressly so provide in the policy.^ Implied license. Sec. 206. When the nature and incidents of the risk are incon- sistent with the conditions of the policy, the latter will be treated as waived. So where the nature or usages of the business insured requires the use of certain prohibited articles, a license to use them will be implied. Thus, where a policy on a wholesale stock of groceries, in the written part of the policy gives permission to keep " all articles kept for sale in such stock," and in the printed portion it is provided that the keeping of gunpowder, saltpetre, etc., without written permission, shall avoid the policy. It was held, that — it being admitted that saltpetre is usually kept for sale by wholesale grocers, and was, in fact, an article in the stock of the assured at the time the risk was taken — the above-written clause limited the printed condition and allowed the keeping of saltpetre ; and that the fact that special written permission was given to keep gunpowder did not prove that it was the only one of the prohibited articles which was excepted from the printed condition.^ But where the words do not import a license to keep any of the prohibited articles, the keeping of such articles avoids the policy. Thus, a policy upon " a general stock of hardware and agricultural implements," does not import a license to keep gunpowder although it is customary for such dealers to keep it. In order to import such a license the words " such as is usually kept by hardware dealers," should have been added.^ In a case before the court of appeals of New York,* the policy covered a printing press, types, negatives " and their stock as pho- tographers, including engravings and materials used in their busi- ness." The policy contained a clause prohibiting the keeping or use of kerosene in a building containing the property insured ex- cept by consent in writing. The plaintiffs used in their business. 1 Stelnback v. LaFayette F. Irnt. Co.. 54 N. T. 98 ; Harpers. The Albany Mut. Ins. Co., 17 id. 194 ; Harper v. iV. Y. City Ins. Co., 22 id. 441 ; Bryant v. Pough- keepsle Ins. Co., 17 id. 200. 2 Stout V. Commercial Union Assurance Co., 11 Biss. (IT. S. C. Ct.) 809. 8 Beer v. Forest City Mu. Ins. Co., 40 Ohio St. 112. * Hall V. Ins. Co. of N. America, 58 N. T. 292. 492 Application. as photographers, a portable kerosene stove, such as was geuerally employed in the business, and while so using the stove, and from its use, the premises were fired and the loss incurred. It was proved that a portable gas lamp or stove might have been as well used in the business, but that a kerosene stove was customarily used. The company was held liable for the loss, Geover, J., re- marking : " When a policy is issued upon a stock of goods in a spec- ified business, the underwriter is presumed to know wJmt goods are usually kept by those insured in that business} When a policy is issued, as in the present case upon the materials used in the busi- ness of photography, it includes all such as are in ordinary use, al- though some other things might be substituted therefor." In an earlier New York case,^ the plaintiff procured an insurance upon 1 Steinback v. LaFayette F. Ins. Co., 54 J^^. T. 98. In Whitmarsh v. Conwai/ Jm. Co., 16 Gray (Mass.) 359, the plaintiffs were mercliants', and procured a policy of insurance upon " tlieir stock in trade, consisting of the usual variety of a country store (except dry goods), and on their store fixtures, etc. ; * * * permission to keep and sell burning fluids and gunpowder, as per application." There were con- ditions annexed to the policy, providing that if the insured should keep or store any of the articles enumerated therein as hazardous or extra hazardous, '" included in the memorandum of special rates or of risks prohibited, unless herein otherwise specially provided for, or hereafter agreed by tliis company in writing, and added to or indorsed upon this policy then and from thenceforth, so long as the same shall be so appropriated, etc. ; these presents shall cease, apd be of no form or effect." There were five classes of hazards enumerated. Among the articles belonging to these classes, and enumerated as such, were " burning fluids," "earthen or glass- ware," "oil," and among a class not to be insured at any rates, were "gunpowder," " friction matches and match shops." The application was expressly made a part of the policy, and in answer to an interrogatory, " Is there any other fact or cir- cumstance affecting the risk ?" the insured stated, " applicant wants permission to use and sell burning fluids, and also to retail gunpowder, to be sold only in the day- time." The plaintiffs kept in their store for sale, during the existenceof the policy, as a part of their usual stock in trade, " whale oil, friction matches and earthen and glassware. " In an action to recover a loss under the policy, the defendants set up this alleged breach of tlie conditions of the policy in defense. The plaintiffs offered to show that all these articles were usually kept in country stores, and so were embraced in the terms of the policy. But the court excluded the evidence, and thereupon the defendants had a verdict. Upon appeal, this verdict was set aside, the court holding that the evidence to show that such goods were usually kept in a country store was admissible, and if established, entitled the plaintiffs to a re- covery "If," said Chapman, J., "the plaintiffs can prove that oil, friction matches, earthenware and glassware, in such quantities as they kept them, compose a part of the usual variety of a country store, they have not violated the policy by keeping them," and lie refers to the case, Elliott v. Hamilton Mut. Ins. Co., 13 Gray (Mass.) 139, as an authority in support of this position. In that case an application was made for insurance on a stock represented as being " all of goods usually kept in a country store " and that there was no cotton or woolen waste or rags kept in or near the property to be insured. The by-laws to which the insurance was specially made subject, provided that no building in which cotton or woolen waste, or oily rags were allowed to remain at night, should be insured ; and that all cotton, hempen, or oily waste or rags, should be destroyed or removed every evening. The court held that the keeping of clean, white cotton rags, if usually forming part of the stock of a country store, did not avoid the policy. 2 Harper v. New York Ins. Co., 22 N.Y. 441 : Harper v. Albany Mut. Ins. Co., 37 id. 194. ■Wakbanties. 493 his printing and book materials, machinery, etc., with privilege for a printing office, bindery and book store. The use of camphene was prohibited by the printed conditions of the policy. The prem- ises were consumed, and the fire was shown to have originated from a lighted match thrown into a pan of camphene which was kept on the premises for cleaning the ink rollers, plates, etc. The use of camphene for this purpose was not only shown to be gen- eral among printers, but also necessary for the purposes named. The court held that the use of camphene by printers being com- mon, and its use necessary, the defendants must be treated as hav- ing taken the risk subject to this usage of the trade, and a recov- ery was upheld. Thus, it will be seen that mere general conditions will not prevail to avoid a policy because of a use of the premises in a particular manner, or because of the keeping or use of certain prohibited articles, when the use of such premises or of such arti- cles are either necessary or usual in the business which the policy covers, provided such use is reasonable, in view of the business and its necessities.^ ' Whitmarsh v. Conway F. Ins. Co., 16 Gray (Mass.) 359 ; Franklin Ins. Co., v. Upder/ralf, 43 Penn. St. 350 ; Ste.inback v. LaFayette Ins. Co. , 54 N. Y. 90. See Steinback v. Boyal F. Ins. Co., 13 Wall. (U. S.) 183, which is in conflict with the previous case, and which really is in conflict witli all the better class of cases, as it was held that evidence was not admissible to show that the business of a " German jobber," as which the plaintiff was insured, included the sale of fire-works. The doctrine of this case is not generally accepted as expressive of the rule of law pre- vailing in such cases. Harper Y. N. T. City F. Ins. Co., ante; Harper y. Albany Mut. Ins. Co., ante ; Bryant v. Poughkeepsie Mvt. Ins. Co., 17 N. Y. 200 ; Elliott V. Hamilton Mut. Ins. Co., 13 Gray (Mass.) 139 ; Niagara F. Ins. Co. v. De Graff, 12 Mich. 124 ; Hall v. Ins. Co. of North America, 58 N. Y. 292 ; Pindar v. Kings Co. Ins. Co., 36 N. Y. 648 ; Duncan v. Sun F. Ins. Co., 6 Wend. (N. Y.) 488 ; Viele v. Germania Ins. Co., 26 Iowa, 9. In Archer v. Merchants' & Mfrs. Ins. Co., 43 Mo. 434, this rule was well illustrated. In that case, the plaintiff procured an insurance upon a wagonmaker's shop and materials. The policy prohibited the use of cam- phene, benzine, etc. The plaintiff had a paint shop in connection with his busi- ness, where the wagons were painted, and had a half barrel benzine in the shop for mixing the paints. A loss occurring, payment was resisted, upon the ground that the keeping of benzine, was in violation of the conditions of the policy. But the court held that, if a paint shop was a common part of a wagonmaker's shop, and paints were used for manufacturing wagons, and were customarily kept in the building and used for that purpose, and benzine was customarily used for mixing paints, the printed conditions were plainly repugnant to the written clause, and were to be rejected. In Minnesota, Plioenix Ins. Co. v. Taylor, 5 Minn. 492, the same rule was adopted as to gmipowder, In that case, the plaintiff procured an insurance upon his stock, "dry goods, groceries," etc., such as are usually kept in a general retail store. The policy prohibited the storing of gunpowder, saltpetre or phosphorus. The plaintiff kept gunpowder for sale, and in an action to recover for a loss, the Company set up this breach of the condition of the policy in defense. The court held that if gunpowder and the articles prohibited were usually kept in general retail stores, the printed conditions were repugnant to the written portions of the policy, and inoperative. 494 Application. In a case quite recently heard in the Commission of Appeals in New York,i the question came up in this form : The plaintiffs pro- cured an insurance on their paper mill, in which kerosene oil was used for lights. The policy expressly provided that petroleum, rock and earth oils, benzine, benzole and naphtha should not be stored or used on the premises, without written permission indorsed on the policy and that refined coal, carbon and kerosene oils, when stored in less quantities than ten barrels, shall be classed as extra hazardous. The plaintiffs, at the time of the fire, had about forty gallons of kerosene oil in the mill, to be used for lighting the mill. Earl, C, in passing upon the question whether a verdict for the plaintiff was sustainable in view of these facts, said : " The quantity was reasonable for the use for which it was provided. This kerosene was not stored within the meaning of the policy, and hence there can be no claim that the provision against storing was violated. But it was used, and the question is, whether its use for lighting violated and avoided the policy. I am inclined to think that the prohibition of the use of rock and earth oils upon the premises in- cludes kerosene. * * But I do not think that its use for lighting was intended to be prohibited. Other use was intended. Kerosene is considered reasonably safe for lighting, and is in ordinary and general use for lighting buildings in all parts of the country outside of cities where gas is used, and the policy must have been made in reference to this well known fact." There was another clause in the policy which covered the subject of lighting, which provided that camphene, spirit gas or burning fluid, phosgene, or any other in- flammable liquid, when used in stores, warehouses, manufactories, etc., which provided that the use of such articles for lighting pur- poses should subject the property to additional rates, and should avoid the policy, unless consent was indorsed on the policy. Kero- sene was not named in the prohibited list, and Earl, C, said : " Construing, therefore, the two clauses of the policy together, I am of opinion that kerosene for lighting was not prohibited." Thus it will be seen that the force of a warranty, or condition in a policy, is to be construed in view, not only of the entire language of the policy and other papers forming a part of the con- tract, but also in view of the subject-matter to which it relates, the necessities of the business, or of the insured, so far as relates to 1 Buchanan v. Exchange Fire Ins. Co., 61 N. T. 26. Waeeanties. 495 the warranty or condition, and the general or s^Decial usage affect- ing the same. This was well illustrated in a New York case,^ iu which a policy was issued providing that, if the premises should be used for the purpose of carrying on any trade, business or vocation denominated hazardous or extra hazardous, or speci- fied in the memorandum of special rates in the proposals -annexed to the policy, or for the purpose of storing therein any articles of goods coming within the same conditions, that, ■during such time, the policy should be of no effect. Oil and turpentine, and house building or repairing, were specially declared to be in the hazardous class. The plaintiff, while having the house painted upon the inside, kept there for use in making such repairs a quantity of paints, oils and turpentine, and while the painters were at work there, and the aforesaid articles were there, the house was consumed by fire. The defendants resisted payment upon the ground that the policy was avoided by a breach of such conditions, but the court held that, in construing the conditions, the subject of the condition should be regarded, and that they should not be strictly, but liberally construed in favor of the insured, and that the policy must be held to relate to the habitual use of such articles upon the premises, and were not intended to, and did not prohibit their use for necessary repairs. As has previously been stated, a warranty in a contract of insur- ance may be qualified by proof of a general custom or of a special ■custom known to the insurer, or by the language of the contract itself, and in construing the language used, the actual intention of the par- ties is to control, in view of the language used, the subject-matter to which it relates, the knowledge of the insurer in reference to the unatiers to which the warranties relate, and the law relating thereto, statutory or common. Thus, where a policy covers a building oc- ■cupied as a country store, and insures the goods therein as a general stock of merchandise, such as is usually kept, etc. ; although the pol- icy specially provides that the keeping of any hazardous articles enumerating them, shall avoid the policy ; yet, if in point of fact, such articles are usually kept for sale in a country store, the con- ■dition in reference thereto is treated as qualified by the nature of the business and the language relating thereto, and the keeping of 1 (ymu V. Buffalo Ins. Co., 3 N. Y. 122. 496 AppLiCATioif. such articles for sale will not avoid the policy,^ even though their sale is prohibited by law,^ so where a business is insured, in which ^ In the Niagara F. Ins. Co., v. Be Graff, 12 Mich, 124, this question arose under a policy covering a stock of groceries. The goods were described in the applica- tion as a stock of dry goods, groceries, etc., and the sum insured was specifically divided, covering in part tlie dry goods, and in part the groceries. The policy had annexed to it a condition that if tlie premises were used for storing, or keeping therein certain hazardous articles, among which were enumerated alcohol and spirituous liquors, " except as herein specially provided for or hereafter agreed to by the corporation in writing upon this policy," the policy should be void, etc. Alcohol and spirituous liquors were kept as a part of the stock, and it was insisted by the defendants that the policy was thereby avoided ; but the court below held, , and so instructed the jury, thatif such articles were iucluded, in the term "groceries" as used in the policy, then their being kept by the plaintiffs did not avoid, but was specially provided for in writing in the policy. The jury found that they were included in the term, and upon appeal the ruling was sustained; Campbell, J, saying, "The question arises whether the court rightly left it to the jury to say, as a matter of fact, whether the term groceries included spirituous liquors and alcohol. That it may include them in the absence of such a statute (a statute prohibiting their sale, {see next note), is not denied, the recognized definitions em- bracing them clearly, so that it may be doubted whether it might not, in that case, require evidence of usage to exclude that meaning, if such articles existed in an insured stock of groceries. New York Equitable Ins. Co. v. Langdon, 6 Wend. (N. T.) 623. There was evidence before the jury in the case before us, that these things did in fact form a part of the stock, and evidence tending to show a knowledge by the agent of that fact. * * * if tlie jury found (as they must have done) that the term groceries included the liquors in question, then the other instructions complained of, which held that, by insuring such a stock the liquors were embraced, although extra hazardous, were clearly correct. Sy the use of a term including them, they are specially provided for in writing in the policy. Insuring a class of goods includes what is usually contained in it, whether extra hazardous or not. Bryant v. Poughkeepsie Mut. Ins. Co., 17 N. T. 200 ; Harper Y. Albany Mut. Ins. Co., id. 194; Harper v. N. Y. City Ins. Co. ,'22 id. 441 ; Belonguemare v. The Tradesman's Ins. Co., 2 Hall (S. Y.) 589 ; More v. Protection Ins. Co. , 29 Me. 97. 2 In Insurance Co. v. Be Graffante ; it was insisted by the defendants that the policy was avoided, if for no other reason, because the sale of the articles was prohibited by law ; but the court held, and so instructed the jury, that if alcohol and spirituous liquors were included in the term " groceries," as used in the policy, then they were specially provided for in the policy, and that the fact that their sale was prohibited would not render their keeping a violation of the con- ditions of the policy, and the jury having so found, upon appeal, the ruling was sustained, Campbell, J., in delivering the opinion of the court, remarks : "It was claimed on behalf of the plaintiff 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 involving marine polices on unlaw- ful voyages and lottery insurances, wliich 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 tlie underwriter "becomes thus directly a party to an illegal act. So, insuring a lottery ticket requi es 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 only to prop- erty, 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 prop- erty in spirituous liquors, or prevent title being transmitted, but renders sales un- profitable by preventing the vendor from availing himself of the ordinary advant- ages of a sale, and also affixes certain penalties; Hibbard v. People, 4 Mich. 125", Bagg y. Jerome, 7 id. 145. If the owner sees fit to retain his property without Waeeantibs. 497 certain prohibited articles are commonly used, although the use of such articles is expressly prohibited ; yet, as the insurer is presumed to know the usages of a business, and the articles usually employed therein by insuring property used in such business, or a building in which such business is conducted, the conditions in reference to such articles is qualified by such usage and the ordinary known necessities of the business, and is regarded as specially provided for in the policy by the terms used to designate the business,^ selling it, or to transmit it into another state or country, he can do so. By insming his property, the insurance company has 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 distinctly illegal purpose. Collateral contracts, in which no illegal design enters, are not affected by an illegal transaction with which they may be remotely connected. In the case of The Ocean Ins. Co. V. Polleys, 13 Peters, 157, an insurance upon a ship known by the insurance company to be liable to forfeiture under the registry laws of the United States, was held valid, and a recovery was permitted for a loss while sailing under papers known to be illegal. The case of Armstrong v. Toler, 11 Wheat. 258, is still stronger. It is difficult to perceive how public policy can be violated by an insurance of any kind of property recognized to exist." The question is, not whether the goods are hazard- ous, but whether they are required in the ordinary course of the person's trade, and are embraced in the class of goods insured. In that case, unless expressly, and in terms prohibited, liberty to keep them in reasonable quantities will be implied. Moore v. Protection Ins. Co., 29 Me. 97. 1 Insurers are presumed to know the general usages of the business in which the property insured is employed, and the policy will be interpreted with reference to such usages. Grant v. Lexington F. , etc., Ins. Co.,^ Ind. 23. In Citizen's Ins. Co. V. McLaughlin 53 Penn. St. 485; 6 Am. Law Keg. {N. S. ) 374, the plaintiffs were the proprietors of a patent leather manufactory, and procured an insurance thereon in the defendant company. It was insured as " a patent leather manufactory, and the building having been destroyed by fire, the company resisted payment upon the ground that benzole was kept or used in the building contrary to the provisions of the policy. The policy provided that benzole in quantities not exceeding five barrels in a small shed, entirely detached from the other buildings, situated on the rear end of the lot, about one hundred feet from the main building, and nowhere else on said premises. It was well known that benzole was an essential article in the prosecu- tion of the business, and was necessarily and universally used in such business. The custom of the workmen was to carry an open bucket of it into the factory as often as wanted, to be used in reducing the composition called " sweet meat," an article used in the process of manufacture, and on the morning of the fire a workman carried an open bucket containing three or four gallons of benzole into the factory, and set it down upon the floor, when it almost instantly ignited, and communicating the flames to the building, it was wholly destroyed. It was shown by the testimony of a witness, that it was the custom in twelve similar factories in Newark, N. J., to take benzole into the buildings in an open bucket, as was done by the plaintiffs, and no evidence was introduced to show a contrary custom in Pittsburgh, where the plaintiff's factory was located. Woodaed, J., in delivering the opinion of the court, said: "the argument on behalf of the company is, that the policy both in letter and spirit meant to confine the benzole to the shed on the rear of the lot, and to exclude it from any other part of the premises; that carrying it from the shed in open buckets across the yard, and setting it down in a room with the door open, was an abuse of the privilege granted by the company, which, if it could have been anticipated, would have prevented their taking the risk; that such use of it was keeping it elsewhere than in the shed, and was, therefore, a palpable violation of the covenant. The answer which the learned judge made to this argument was substantially as follows: You insured a patent-leather-manufactory; you knew, /or you were hound 32 498 Application. and if they know the special usage of the insured and insure him without objection thereto, they are estopped from setting up such matter in defense in an action on the policy. But, if the use of the premises for certain purposes, or the keep- ing of certain articles is prohibited, and the use is not a usual in- cident of the business covered by the policy, which the plaintiff takes the burden of establishing, such use will avoid the policy, even though such use does not^ in fact, enhance the risk or contrib- ute to the loss. And it makes no difference thatthe insured him- self did not assent to the prohibited use. It is enough, if the premises were devoted to such use by one who was lawfully in possession as a sheriff under an attachment or levy ; ' or a mort- gagee before the equity of redemption has expired.^ Thus, in the case first cited in the last note, the plaintiff procured insurance on his dwelling-house and store, in which there was a provision that if the premises were, during the life of the policy, appropriated to 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 presump- tion is that you meant it might be Icept for use in that factory, as the article is ordina- rily used in similar factories. If, therefore, it was kept in the place stipulated, and used accordinr/ to the custom of the trade it was one of the risks covered by the policy. The jury found the fact that the mode of using it was according to custom, and so recovery was liad. It appears to us that the argument was well answered. This business is not envunerated in the list of hazardous risks, and the company could not have expected it to be suspended, nor to be carried on in any other than the customary modes. They insured it. They took the risk, after having their attention drawn to the dangerous article, and after excluding it, as stored in bulk from the policy, But did they mean to exclude it from the factory as an element or agent in the conduct of the business ? To assume that they did, in the absence of language to that effect, would be to assume that they expected the business to stop, or to be carried on out of the usual mode. The words of the policy descriptive of the subject-matter of the insurance, are, "the buildings of their tannery and patent-leather manufactory" and it must be intended that these words included whatever, not expressly excepted, was necessary and essential in conducting such a business. In the case of Harper V. Tfie City Ins. Co., 1 Bos. N. Y. Rep. 520, this was the doctrine applied to a print- ing establishment where the fire originated from the use of camphene, which was one of the hazardous articles enumerated by the policy, but it appeared that camphene was ordinarily used by printers for cleaning their types and plates and was so used in that instance. On this ground it was treated as one of the risks covered by the policy. See also, Girard Ins. Co. v. Stephenson, 1 Wright (Penn.) 198. We think there was no error in the admission of the testimony of F. T. Harden. He gave an intelligible account of the mode of using benzole in twelve factories at Newark, New Jersey, and said it was brought in and used from cans and buckets. If any other custom had been established at Pittsburgh it could have been shown; but in the absence of all other evidence on the subject, this was competent to fix the usage of the business." ^ First National Bank v. Ins. Co., ante. * Witherell v. City F. Ins. Co., 16 Gray (Mass.) 276; Macomher v. Howard Ins, Co., 7 id. 257. Waeeantibs. 499 or used for any purpose denominated hazardous or extra-hazardous in the policy, it should be of no force or effect. In the list of hazardous trades was that of " sail-makers," and in the extra- hazardous class were included " confectionery and confectionery manufacturers." The property being mortgaged, the mortgagee took possession for the purposes of foreclosure, and let the premises to various persons, one of whom occupied a portion of the dwell- ing as a barber's shop, but also kept confectionery for sale in glass jars, on the counter and shelves, in small quantities. The loft of the store was let to a sail-maker about two weeks before the fire, who moved his tools and stock, of the value of about one hundred and fifty dollars, into the building, but had not commenced work there at the time of the loss, but intended to commence the day after the loss. The court held that no recovery could be had under the policy.^ In a Tennessee case ^ in a policy upon a stock of family groceries, it was held that retailing liquors upon the premises con- trary to the conditions of the policy, operated as a forfeiture, the policy providing that " the use of general terms, or anything less than a distinct, specific agreement, clearly expressed, and indorsed on this policy, shall be not construed as a waiver of any printed or written condition or restriction therein. But in this case there was nothing in the language of the policy to import a license to keep liquors as there was nothing to show that they were usually kept and sold as a part of such a stock. Where a policy was issued upon a stock of drugs and medicine of which saltpetre formed a part, it was held that a prohibition in the printed part of the policy, did not apply thereto, but only to the keeping of it in such a way as to increase the risk.^ Where under a policy con- ditioned to be void if the risk was increased without notice, but the insurer gave the insured permission to " make repairs and alterations incidental to the business," and the insured sunk an artesian well on the premises from which gas escaped and com- ing in contact with a burning gas jet near by caused an explosion and set fire to the building, it was held that it was a question for 1 Macomber v. Howard Fire Ins. Co., 7 Gray (Mass.) 257; Lee v Howard Fire Jns. Co., 3 id. 583. 2 People's Ins. Co., v. Kuhn, 12 Hiesk. (Tenn.,) 576. ^ Collins V. Farmville Ins. Co., 79 N. C. 279. 500 Application. the jury whether an artesian well was useful in the plaintiff's business and commonly used when the policy was taken out and that if so, and it did not materially increase the risk, a recovery would be had.i When the conditions of a policy have been broken, by devoting the property to a use prohibited in the policy, the policy does not thereby became a dead instrument, but is merely rendered inopera- tive, is suspended during the period of such use, and at once re- vives when such use ceases. It is the uses to which the property was devoted at the time when the loss occurred, that is to determine the question whether or not a condition prohibiting certain uses has been broken, and the condition is to be construed strictly, and not extended by implication to cover matters that are not withiti its obvious meaning. In a recent case in Pennsylvania,^ the policy provided that the risk of property insured should be determined by the rates annexed, and if the risk should be increased as con- templated by a by-law annexed, the rates should be evidence of the additional risk. The by-law provided that if the insured de- voted any part of the insured building, or one located by him near it, " to a more hazardous business," the policy should be immedi- ately void. The insured for light introduced gasoline, named as increasing the risk ; he afterward removed it ; subsequently, the building was burned. The court held the policy was not void, and that the absence of a stipulation to that effect, the validity of the policy depended on the state of the premises at the time of the loss, and that lighting with gasoline was not devoting the building to a more hazardous business. A policy containing a clause that it should be void if the premises should be used for any trade, business, or vocation denominated " hazardous " should be voidable if after an assessment had been declared, " and notice thereof forwarded to the insured by mail or otherwise," she should for thirty days neglect to pay the same, and such notice was mailed to her while she was out of the State, but on receipt thereof she forwarded the amount, which the company refused to receive, the policy having been annulled, it was held that she could not recover for a loss of the property by fire.^ A stipulation in a policy against 1 Crane v. At. Ins. Co., 2 Flip. (U. S. C. C.) 576. 2 Mut. F. Ins. Co. etc., v. Coatesville Shoe Factory, 80 Penn. St. 375. ^ Greeley v. Iowa State Ins. Co., 50 Iowa, 86. Waeranties. 501 *' keeping or using camphene, spirit-gas, burning-fluid, chemical oils," is not violated by the use of a fluid for illuminating purposes not in its nature like camphene or spirit-gas, for instance, a light coal-oil ; nor is a provision against the storing or keeping certain fluids and oils violated by keeping a fluid not expressly prohibited by the policy, in moderate quantities, for illuminating purposes ; nor is this " so using the premises as to increase the risk " within the meaning of the policy .^ Hepresentations need only be substantially true. Sec. 207. If the representations made by the insured are sub- stantially true, the insurer cannot avoid his liability upon the policy because they are not literally so. It is enough, if the variance is not such as materially affects the risk. Thus, where the insured represented the building as finished, it was held sufficient if it was substantially finished.^ Where the insured stated that there was a dwelling and cabinet shop within fifty feet, and in fact there was a cabinet shop within two feet, it was held not to avoid the policy.^ Where the representation is a mere expression of an opinion, and the insurer ought to have known that it was no more than an ex- pression of the judgment of the assured, unless fraudulent, the policy is not avoided, however erroneous his opinion may have been. Thus, where the assured, in describing the risk, stated that there was, on the east side of the building a small one-story shed, which could not endanger the building if they should burn, but, in fact, the fire was communicated to the building by the burning of the sheds, the insurer was held liable under the policy.* So, where the building is represented to be used for a certain purpose, the insurer is bound to know what is incident to such purpose or business, and cannot escape liability unless such use as is incident to the business is specially excepted. Thus, where the assured stated that the building was used for the manufacture of lead pipe only, but in fact, reels upon which to wind the pipe were also 1 Wheeler v. American Central Ins. Co., 6 Mo. App. 235. 2 Delonguemere v. Tradesman' x Ins. Co., 2 Hall (N. T.) 589; Williams v. JV. E. Mut F, Ins. Co., 31 Me. 219; Pawson v. Watson, Cowp. 785; Kentucky etc., Ins. Co., V. Southard, 8 B. Mon. (Ky.) 634. ' Allen V Charlestown Ins. Co., 5 Gray (Mass.) 384. * Vennison v Thomaston Ins. Co., 20 Me. 125. 602 Application. made there ; it was held that, as such use was incident to the manufacture of lead pipe, and necessary for carrying on the busi- ness, the insurers were liable.^ In an Illinois case,^ the assured ' Collins \r. Charlesiown Ins. Co., 10 Gray (Mass.) 15o. In Sims v. State Ins. Co., 47 Mo. ni; 4 Am. Rep. 311, the assured stated in his application that the building was used for " tobacco-pressing, no manufacturing." In a shed ad- joining, hogsheads were made in whicli to pack the tobacco, and the insurer claimed that this avoided the policy, Jtut the court held otherwise. Bliss, J., in delivering the opinion of the court, said: "The insurance was upon plaintiff's tobacco, in a certain building in DeWitt, Carroll county. In the application for the insurance, and in answer to the question ' for what purpose the building was- used,' the plaintiff replied, 'tobacco-pressing; no manufacturing.' The evi- dence shows that in a shed — an addition to tlie main building — the tobacco hogs- heads were manufactured. This, it is claimed, was a concealment of the uses to which the building was put, was a breach of the warranty, and vitiated the policy. The plaintiff sought to prove that tlie business of making the liogslieads in which the tobacco was packed, was incident to and appertained to the business of press- ing, and by general custom was included, and imderstood to be included, in the term ' tobacco-pressing,' without being specially mentioned. If such were tlie fact there was no false warranty, and it was no more necessary for the plaintiff to state that branch of the business than any other. The officers of the company, in issuing the policy, should be supposed to know all tlie incidents of the busi- ness of tlie insured, and if there was any brancli of it considered extra-hazardous, and wliicli they were unwilling to cover by their contract, it should have been specially provided against. The law, upon this subject has been recently con- sidered by us in Archer V. The Merchants' nnd Manvfactiirers' Ins. Co., 43 Mo. 434, and it is quite unnecessary to review the general doctrine. Whether the prepara- tion of the hogsheads was such an incident to the business as to lie included in it, was a question of fact, and we have only to see if the subject was fairly presented to the jury. The jury were instructed that the application was a warranty as to the condition and occupancy pf the premises, that, if false, would make void the policy, and that the words quoted were an undertaking that there should be no manufacturing in the premises. But they were also further instructed in these words: 'No. 7. The jury will iind for the plaintiff on the fourth ground of de- fense set up in defendant's answer, if they find that the business of tobacco-press- ing only was carried on in the building in which the insured property was cmi- tained, and that the only coopering done therein was that connected with, apper- taining to, and incident to the business of tobacco-pressing, although the jury may believe that said use for setting up of hogsheads was an increase of the risk.' Does this instruction present the question to the jury fairly ? It seems to nie not. It fails to present to their mind the true issue. First, for obscurity; the construction they might put upon it is, that the court supposes that there is a class of coopering incident to the business, and they are to inquire whether llie coopering complained of belongs to that class. The court seems to take for granted the main question in dispute. Tlie sentence is obscure, and may bear another interpretation, but it is so drawn that the jury, especially if inclined against the defendant, might very easily interpret it as assuming the chief prop- osition. Second, it does not give the jury to understand vyhat facts they are to find in order to make any coopering incident to plaintiff's business. "The inquiry should be, whether it is so generally customary for those engaged in the business of tobacco-pressing to prepare their own hogsheads, and in the building where the business is conducted, that such preparation can properly be called an inci- dent to the business. The existence of such a custom is an affirmative proposi- tion, and must be affirmatively found. To illustrate: coopering is necessary for the manufacture of flour, whisivy, powder, etc., and in a loose sense, is incident to the business. So box making is, in the same sense, incident to various kinds of manufacturing; but the making of flour or whisky barrels, or powder, kegs, or boxes, cannot be said to be so incident to the manufacture of flour, wliisky, powder or the articles to be packed in the boxes, as to be included In the general 2 Ins. Co. of N. America v. McDowell, 50 111. 120. Warranties. 503 represented that no open lights were used in the mill. It appeared, however, that one open kerosene lamp was used in the office of the mill, but not in the mill proper. The court held that this was a substantial compliance with the representation.^ Ashes, method of keeping. Sec. 208. A representation in an application for insurance that ashes are kept in brick, iron or other safes or places of deposit, is met if they are kept in any other place equally safe ; ^ and if the application is made a part of the policy, this would equally be the rule, unless the statement can be regarded as a continuing warranty. If the ashes were kept as represented at the time when the application is made the warranty is met, if no increase of risk is created by a change in the mode of keeping them, unless the warranty is clearly continuing.^ Breaches of contract must be plead, or specially relied on at the trial. Sec. 209. In order to avail himself of a breach of warranty in a contract of insurance, or of the falsity of representations made by the assured, the particular matters relied on must either be set forth in the pleadings, or specially relied on at the trial, otherwise they will be regarded as having been waived, and points in refer- ence to which no question of law is raised in the lower court, can- not be raised on appeal.* The question as to whether there has been a breach of warranty, or whether certain representations are false in a substantive matter, is wholly for the jury, and their find- ing, unless clearly contrary to the evidence, cannot be disturbed.* term applicable to such manufacture, unless by a general custom they are pre- pared in connection with and as a part of the business. If it be the custom among country millers to make their own flour barrels in the mill, then the term ' flour mills ' or flour making ' may be properly held to Include the necessary coopering; but the existence of such custom should be clearly and distinctly put to the jury, and in no equivocal or ambiguous terms." ^ In Peoria M. & F. Ins. Co- v. Perkins, 16 Mich. 380, the plaintiff, in answer to inquiries in the application: " For what purposes used?" replied, "It is used for stores." "How many?" "Two." The building was in fact occupied as a boot and shoe store by the plaintiff, also as a newsroom, tobacco store, etc., and the upper story as sleeping rooms. The court held that the representation was substantially correct. 2 Underhill v. Agawam Mut. F. Ins. Co., 6 Gush. (Mass.) 440. ^ Underhill v. Agawam Ins. Co., ante. * Boos V, The World Mut. Life Ins. Co., 64 N. T. 236. ^ Boos V. The World Life Ins. Co., ante. 504 MlSEBPBESKNTATION. Sec. 210. Sec. 211. Sec. 212. Sec. 213. Sec. 214. Sec. 215. Sec. 216. Sec. 217. Sec. 218. Sec. 219. Sec. 220. Sec. 221. Sec. 222. Siic. 223. Sec. 224. Sec. 225. Sec. 226. Sec. 227. Sec. 228. Sec. 229. Sec. 230. Sec. 231. Sec. 232. Sec. 233. Sec. 234. Sec. 235. Sec. 236. Sec. 237. Sec. 238. Sec. 239. Sec. 240. CHAPTER VI. MISEEPKESENTATION AND COKCEALMBNT. Concealment and misrepresentation defined. Concealment of material facts — ^need not be fraudulent — illustrations. Not bound to disclose facts which the insurer ought to know. Nor facts arising subsequent to policy. Must be material facts — test of materiality. Concealment or misrepresentation of interest, etc. Incendiary threats. Interest need not be particularly stated, unless called for. Concealment may be waived. When facts are covered by warranty. Rule when insurer knew the facts. Misdescription, effect of. Falso demonstratio non nocet — Bryce v. Lorillard Ins. Co. lonides v. Pacific F. & M. Ins. Co. American Central Ins. Co. v. McLanathan. Policy can only attach according to its terms. General rule. Oral misrepresentations. Rule in Pawson v. Watson. Actual fraud need not be shown. No distinction between concealment and misrepresentation of facts. Inquiries must be answered. Proximity of other buildings. Failure to disclose true state of title. Insurer bound to know extent of risk. Over valuation. Questions for jury. Misrepresentation as to premiums paid other insurers. Fraud not presumed. Ee-insurers. Examination of risk by insurer. Concealment. 505 Concealment and misrepresentation defined. Sec. 210. A misrepresentation is the statement of something as fact which is untrue, and which the assured states, knowing it to be untrue, and with intent to deceive, or which he states positively as true, not knowing it to be true, and which has a tendency to mislead, such fact being in either case material to the risk; and conceal- ment is the designed and intentional withholding of any fact material to the risk, which the assured in honesty and good faith ought to communicate ; and any fact is material, knowledge or ignorance of which would naturally influence the insurer in making the contract at all, or in estimating the degree and character of the risk, or in fixing the rate of insurance.^ The insurer has a right to be informed of every circumstance which may fairly influence him in taking or rejecting the risk, or fixing the rate of premium therefor,^ and it is settled beyond all question that the suppression •of a material fact relating to the risk, as well as a false representa- tion relating thereto, avoids the policy .^ Therefore, while it is for the jmy to say, where there is any dispute as to the facts, whether a misrepresentation or concealment relates to a fact material to the risk,* yet, as a matter of law, where the facts were such as, if the truth had been known, they would have influenced the insurer in accepting or rejecting the risk, or in fixing a higher rate of pre- mium therefor, the policy is void.^ In determining this question, the jury are to say, not necessarily whether the particular insurer would have been influenced thereby, but whether a man of ord- nary prudence, in business matters, would have been likely to iave been influenced as stated. It follows, then, that facts relat- ' Daniels v. Bud. U. Ins. Co., 12 Cush. (Mass.) 416 ; Houcjhtony. Manufacturers' Ins. Co., 8 Met. (Mass.) 114 ; Locke v. N. American Ins. Co., 13 Mass. 97; Clark T. Union, etc., Ins. Co., 40 N. H. 3.33 ; Girard F. and M. Ins. Co., v. Stephenson, 37 Penn. St. 293; Protection Ins. Co. v. Harmer, 2 Ohio St. 452; Washington, etc., Ins. Co, V. Merchants' , etc., Ins. Co., 1 Handy (Ohio) 408; Lexington Ins. Co. v. Powers, 1 Ohio, 324. ^ As that attempts have been made, or that rumors exist that an attempt has been made, to set fire to adjacent property, that would, if burned, seriously jeopardize the property sought to be insured. Walden v. Louisiana Ins. Co., 12 La. 134 ; 1 Ben. F. I. C. 668. " Lindenau v. Desborough, 3 0. & P. 350; Wainwright v. Bland, 1 M. & W. 32. * Fletcherr. Com. Ins. Co., 18 Pick. (Mass.) 419; Columhianlna. Co. f. Lawrence, 10 Pet. (U. S.)507. * Columbian Ins. Co. v. Lawrence, ante. 506 MiSBBPEESENTATION, ing to the construction, location, situation and uses of the risk are material, as well as its character and value. Concealment of material facts. Need not be fraudulent. Sec. 211. It is the duty of the assured to disclose to the insurer every such fact, even though he does not know that it would have the effect to influence his action in declining or accepting the risk, or iij fixing the terms upon which it would be taken.^ The law implies a contract between the parties, that everything material to the risk, if inquired about, shall be disclosed, and this, whether the party applying therefor knows whether it is material or not. It is not a question what the party supposed or believed in reference thereto, but simply whether in fact it is material, and if so, its- suppression is a fraud, whatever may have been the supposition, knowledge or belief of the insured, and this rule applies with equal force to all species of insurance.^ The maxim caveat emptor does not apply to this species of contracts. In the very nature of things, it rests largely in the confidence of the parties-, and the in- sured is bound to exercise the utmost good faith, and the test by which to determine whether a fact should have been communicated to the insurer, depends entirely upon whether it was material? The rules of fair dealing, equity, and that degree of integrity and good faith that should characterize all commercial transactions, alike require that the parties should contract pari passu. But as has ^ McLanahan Y. Universal Ins. Co., 1 Pet. (U. S.) 170; Columbian Ins. Co. v. Lawrence. 10 id. 507; 2 id. 25; Bunday v, Union Ins. Co., 2 Wash. C. C. (TJ. S.) 243 ; Vale v Phenix Ins. Co., 1 id. 283. The same degree of diligence in disclos- ing matters affecting the risk, is not required in fire as in marine insurance, as the parties are differently situated in reference to the risk, and the insurer, in the dase of fire insurance, has better facilities for ascertaining the nature and extent of the hazard, than in cases of marine insurance, where in a large measure, the insurer must necessarily depend upon the good faith of the insured, in imparting infor- mation in reference thereto. Therefore, a higher degree of good faith is required in the one case than in the other, and in cases of marine insurance, the insured is bound to disclose all matters within his knowledge, material to the risk, whether inquiries are made of him. calling for such information or not, while in tlie case of fire insurance, the insured may be silent as to many matters — indeed, as to all matters open to observation when the insurer examines the property for himself before insuring. Green v. Merchants' Ins. Co., 10 Pick. (Mass.) 402; Fish v. Cot- tinett, 44. N. T. 5.38. Particularly as to such matters as the insurer is presumed to know about. Thus, where a carpenter's shop was insured, it was held that an omission to state that it was heated by a stove was not a fraudulent concealment. Girard, etc., Ins. Co. v. Stephenson, 37 Penn. St. 293. See also, Norris v. N. American Ins. Co., 3 Teates (Penn.) 84; Columbian Ins. Co., v. Lawrence, ante. ^ Von Lindeau v. Desborough, Z C. & P. 353. ' Columbian Ins. Co. v. Lawrence, 10 Peters (U. S. ) 507. CONCBALMEISTT. 507 previously been intimated, the suppression of a material fact, although it is in law regarded as a fraud which renders the con- tract void ab initio, yet does not always evidence or involve fraud in fact. It is equally fatal to the contract whether the conceal- ment is fraudulently made, or is the result of ignorance, accident, inadvertence or mistake.^ " The insured," said Lord Mansfield, in the case referred to from Park on Insurance, " is bound to rep- resent to the underwriters, all the material circumstances relative to the ship and the voyage ; and if he does not, though the omis- sion is by accident or negligence, the underwriters are not liable." In order, however, that a suppression of a material fact should have the effect to avoid the contract, it must not only be material to the risk, but also of some fact that is not equally within the knowledge of the insurer, and that is not patent, or such as may fairly be regarded as probable.^ A misrepresentation of the material fact in a printed application for insurance will not avoid the policy, the owner having given the agent correct answers, but signed the application, wherein the agent wrote them, without knowing its contents.^ Indeed, as a rule, it is now generally held that, where the agent of an insurer knew when a policy upon a mill was issued that it was only used for storage, it was held not as a defence to the policy that the mill had ceased to be operated as a mill. * After a policy was taken out on a mill, the boiler being cracked and in a danger- ous condition, it became necessary to put in another with some additions. These repairs did not increase the risk, and were ex- tended no farther than was reasonably necessary, and were com- pleted several months before the destruction of the mill. It was held in an action on the policy, that the above facts did not render it void under the condition termed the " builder's risk." * 1 Ratcliffe v. Shoolhred, Park on Ins. 181. 2 Pirn V. Lewis, 2 F. & F. 778; People v. Lit)., Lon. & Globe Ins. Co., 2 N. T. (S. C.)268; Green v. MemhanW Ins. Co., 10 Pick (Mass.) 402; Be Wolf v. Fire- ■nan's Ins. Co., 20 John (N. T.) 214; Friere v. Woodhou.se, Holt, N. P. 512; Fish V. IAk., Lon. ife Globe Ins. Co.. 44 N. Y. .^38,- Norris v. Ins. Co., of N. Jmerica, 3 Yeates (Penn.) 84; Lomiueiiiare v. N. Y. F. Ins. Co., 10 .John (N. Y.) 120; Sat- terthwaite v. 7ns. Co., 14 Penn. St. 343; Gerhauser v. Ins. Co., 7 Nev. 174; Lexing- ton In,i. Co. V. Paver, -16 Ohio 324. ^Dahlberr/ v. St. Louis Mvt., &c. Ins. Co., 6 Mo. App. 121. * Humphrey v. Hartford F. Ins. Co., 13 Blatchf. (U. S. C. C.) 504. ^Jajnes v. Lycoming Ins. Co., 4 Cliff (U. S. C. C.) 272. 508 MiSEEPKESlSNTATION. In an action on a policy, the defences were an overstatement of the value of the insured premises, and that at the time of the fire the building was unoccupied. It was held that under Me. statutes, neither of these facts affected the policy unless they materially in- creased the risk, and this it was for the jury to decide.^ The evidence of a manager of the company that companies would not generally insure unoccupied buildings on account of the in- creased risk, and that a risk was greater or less as the amount of insurance is to the whole value of property insured, was held to be inadmisible. A policy described the building as occupied, " second story, storage, cigar manufactory, and manufactureof tinware," and was voidable by any change in the " situation, occupation, use, or con- dition of the premises " without the consent of the company, in- dorsed, etc. It was held that the policy was not avoided by rent- ing, without such consent, a part of the second floor" to a com- mittee, of whom one of the company's agents was a member, for a Tilden and Hendricks club room.^ The policy described the business carried on in the insured building as the manufacture of bath tubs. A tube communicated with an adjacent planing mill also operated by the assured, through which shavings were passed from the latter to the former establishment. Held not a breach of any wM-mnty.^ But in the absence of anything which amounts to an estoppel, a failure of the assured so far as inquired as to state the true condition of the risk avoids the policy. Thus the application for insurance of the plain- tiff's flour-mill contained the following question and answer : " Watchman. Is there a watchman in the mill during night ? Is the mill ever left alone ?" Answer : "No regular watchman, but one or two hands sleep in the mill." By a clause in the application the plaintiff warranted the truth of his statements, and the policy afterwards given stipulated that any false representation by the assured of the condition, situation, and occupancy of the property, or any omission to make known facts material to the risk, should ' Thayer t. Providence WcLshington Ins. Co. , 70 Me. 531. "Miller v Oswego & Onondaga Ins. Co., 18 Hun (N. Y. ) 525. 'Kennei/ v. Home Ins. Co., 71 N. Y. .390. CoifCBALMBNT. 509 avoid the policy. It was held, that the answer in question was an express warranty by the assured that one or two of his hands lodged in the mill each night ; and was also a promissory and con- tinning undertaking from the time the policy was delivered. And also that the plaintiff's mill having been burned some weeks after the policy was delivered, there being at the time no hands lodging in the mill at night, — he could not recover on the policy. If, in such a case, the answer in the application, though true when made, has ceased to be true when the policy is delivered, on this ground also the policy is defeated.^ The jury found generally for the plaintiff, but they found specially that the amount of mortgage incumbrance on the pro- perty at the time of insurance was falsely represented to the in- surance company ; and also that the insured falsely represented that the premises were steadily profitable. It was held that the false representations were material, and that the general verdict should be disregarded, and judgment rendered for the defendant.^ In a Pennsylvania case an omission to mention a carpenter's shop on the premises at the time of the application for insurance, and the erection, after the insurance, of a new building by the insured on an adjoining lot, without notice to the company, it was held, to avoid a policy warranting the application truly to state the situ- ation, &c., and that the assured would notify of increase of risk. In such case, it should not be left to the jury to determine whether the risk had been diminished thereby.^ An application for insurance against fire, on a printed form fur- nished by the company, contained over a hundred interrogatories, with answers thereto, and a statement that the applicant covenants and agrees with the company " that the foregoing is a just, full, and true exposition of all the facts and circumstances in regard to the condition, situation, value, and risk of the property to be in- sured, so far as the same are known to the applicant and are ma- terial to the risk ; and the same is hereby made a condition of the insurance and a warranty on the part of the assured." The policy provided that the application " shall be considered a part of his policy, and a warranty by the assured." It was held that the ' Blumer v. Phoenix Ins. Co., 45 Wis. 622. ^Byan v. Springfield etc. Ins. Co., 46 Wis. 671, 8 Pottsville Mui. Fire Ins. Co. v. Iloran, 89 Penn St. 438. 510 MlSEEPBESBNTATION. stipulation in the policy that the application should be considered a warranty by the assured must be construed to mean such a war- ranty as was stipulated in the application itself, and that the clause " so far as the same are known to the applicant, etc., was not an additional stipulation that the assured had stated all the facts known to him material to the risk, though not called for in the in- terrogatories ; but that it qualified the preceding clause, changing it from an absolute covenant that all the answers were true, to a covenant that they were true " so far as known," etc., and that in an action upon the policy, it could not be held void merely be- cause the application contained some false statements of fact, but it must be shown that these were known by the assured to be false, and were material to the risk. And as to a promissory or contin- uing undertaking, true when made, but afterwards departed from, it must appear that the change increased the risk, and was thus material.^ Not bound to disclose facts w^hich insurer knows or ought to know. Sec. 212. Mr. Marshall, in his work on Insurance, p. 353, very tersely and aptly expresses the rules of law applicable to con- cealment. He says : " Either party may be innocently silent as to 'many matters which are open to both, and upon which they may both exercise their judgment. Aliud est eelare, aliud tacere : Neque enim id est eelare quicquid reticeas ; sed eum quod tu seias, id ignorare, emolumenti tui causa, velis eos, quorum intersit, id scire? This definition of concealment, restrained to the efficient motives and precise subject of any contract, will generally hold to make it void in favor of either party who is misled by his ignorance of the thing concealed. The insured may be innocently silent as to what the underwriter Jcnows as well as he, however he may have come by his knowledge : Seientia utrinque par pares contrahentes faoit. The insured, therefore, needs not mention what the underwriter ought to know, what he takes upon himself the knowledge of, or what he waives being informed of. The underwriter needs not to he told what lessens the risk agreed upon, and is understood to be comprised within the express terms of the policy. He needs not be told what is the result of political speculations, or general intelligence. For ' Redmond v. Hartford Fire Ins. Co., 47 Wis. 89. 2 Clc. de off. 3. c. 12, 13. Concealment. 511 instance, he is bound to know every cause whicn may occasion natural perils, as the difficulty of the voyage, the variation of seasons, the probability of lightning, hurricanes, etc. ; he is bound to know every cause which may occasion political perils, from the rupture of States, from war, and the various operations of war ; he is bound to know the probability of safety from the continuance and return of peace, from the imbecility of the enemy, the weakness of their councils, or their want of strength. If an underwriter in- sure private ships of war from ports to ports, and from places to places anywhere, he needs not be told the secret enterprises upon w^hich they are destined, because he knows that some expedition must be in view ; and, from the nature of the case, he waives the information. If he insures for a certain term, he needs not be told any circumstances to show that the risk may be over in less time ; or, if he insure a voyage, with liberty of deviation, he needs not to be told what tends to show that there will be no deviation. Neither is it necessary to communicate to the underwriters that the ship insured is foreign built, though this enabled her to sail without convoy, and without a license to do so, being within the •exception in the stat. 38 G. III. c. 76, § 6, it being the business of the underwriter to obtain this information for himself.-^ Men argue differently, from natural phenomena and political appear- ances. They have different capacities, different degrees of knowl- ■edge, and different intelligence ; but the means of information and judging upon those subjects are open to both. Each professes to act from his own sagacity, and therefore neither needs to com- municate to the other. The reason of the rule which obliges the parties to a mutual disclosure of all material information, is to prevent fraud and promote good faith ; but it is applicable to such iacts only as vary the nature of the contract, which one party privately knows, and the other is ignorant of, and has no oppor- tunity of knowing, nor any reason to suspect. The question, there- fore, in cases of concealment, must always be, whether there was. Tinder all the circumstances, at the time the policy was under- written, a full and fair statement, or a concealment ; fraudulent, if designed, or, though not designed, varying materially the object of the policy, and changing the risk understood to be run,^ and in both cases avoiding the contract. 1 Long V. Bolton, 2 Bos. & Pul. 209. 2 Per Lord Mansfield in Carter v. Boekm, 1 Bl. 594; 3 Bur. 1909. 512 Misrepresentation. It is a rule that it is unnecessary to make any communication or disclosure of that which the insured undertakes for by a warranty, express or implied ; and, therefore, it is not necessary that there should be any representation as to the state or condition of the ship previous to the effecting of thep^olicy, because, in every contract of insurance, there is an implied warranty that the ship is sea-worthy. This was determined in the following case : An insurance was. made on a ship and cargo from Madeira to Charlestown.' The ship being captured in her voyage to Charlestown, an action was. brought on the policy, in which it appeared tliat the captain had wrote two letters from Madeira to the owner, stating that the ship had been very leaky on her voyage thither, and that the pipes of wine had been lialf covered with water. But, in answer to this, it was proved that the leak had been completely stopped before the ship sailed from Madeira. It was insisted, however, that the not disclosing of the two letters was a material concealment which avoid- ed the policy. Lord Maxsfield told the jury ' that there was no necessity to communicate the letters to the underwriter, or to show the condition of the ship or cargo at the end of the former voyage. ' It is true,' said he, ' that there should be a representation of every- thing relating to the risk which the underwriter has to run, except it be covered by a warranty. But it is a condition, or implied warranty, in every policy, that the ship is sea-worthy, and there- fore there is no necessity for a representation of that. If she sail without being so, the policy is void. The letters might be material evidence to show that the ship was leaky in her outward voyage ; and, if nothing had been done to her at Madeira, there would have been ground to suppose that she was not sea-worthy when she sailed from thence. But the fact now appears that tlie leak was stopped and she was in good condition before she sailed from Madeira.' Accordingly, there was a verdict for the plaintiff. Emerigon 2 mentions a case from which it may be inferred that,, in some instances, the state of the ship ought to be represented to the insurers, and that, in others, the insurers will be presumed to know that the ship is not sea-worthy. That was the case of a ship taken by a French privateer, after an action in which she lost her main and mizen masts. The captain of the privateer brought the 1 SJioolbred v. Nutt at N. P. Hil., MSS. case; Park, 229. iiVol. 1, p. 173. Concealment, 513 prize to an anchor, and immediately sent orders to get her insured, which was done, but without mentioning the state she was in. The ship being retaken by the English, the insurers objected to pay the loss, because the debilitated state of the ship had not been stated to them. They were condemned, however, to pay the full sum insured, upon the ground that they ought to have presumed that a vessel captured after a battle must have been damaged. The following case will show that the insured is not bound to disclose a circumstance made material by a foreign ordinance, which may be known by either party, but which neither is bound to know, and which neither in fact knows. An insurance was made on a Portuguese ship, warranted neutral, at and from Madeira to her port of discharge in Jamaica, with liberty to touch at the Lee- ward Islands.^ The ship was captured by a French privateer, and condemned in the Court of Admiralty in France, on the ground of her having an English supercargo on board, the French hav. ing lately made an ordinance to authorize this, similar to one made in 1756. In an action to recover this loss, it was insisted for the defendant that the plaintiff ought to have disclosed to him that the supercargo was English. But it was determined by Lord Mans- field and the court that, if neither party knew of its arbitrary ordinance, which was against the law of nations, neither was guilty of any fault. If the defendant knew of it, he ought to have inquired what supercargo was on board. But, in this case, both being ignorant of this ordinance, both were innocent ; and, in such case, the underwriter must run all risks. I shall conclude the present chapter with the following singular case, which, though not upon a marine policy, turned upon a question of concealment. An insurance was made for a year, from the 16th of October, 1759, against the capture of Fort Marlborough, in the island of Sumatra, by an enemy, for the benefit of the governor, George Carter.^ The governor's instructions for the insurance were dated the 22nd of September, 1759, and the policy was signed in May, 1760. The fort was taken by Count D'Estaigne within the year, viz., in April, 1760, and an action brought to recover the loss. On the trial it was objected that there was fraud on the part of the 33 1 Carter v. Boehm, 3 Burr. 1905. 2 Mayne v. Walter, MSS. case ; Park, 195. 514 MiSEEPEESENTATION. insured, by the concealment of circumstances which ought to have been disclosed ; pai'ticularly the weakness of the fort, and the probability of its being attacked by the French. This was offered to be proved by two letters ; one from the governor to R. Carter, his brother and agent ; and the other to the India Company, from which it appeared that the French, being unable to relieve their friends on the coast, were the more likely to make an attack on this settlement, which they had designed to take by surprise the year before ; and that the bro'ker who effected the jiolicy, on his cross-examination, said that in his opinion, these letters ought to have been produced or the contents disclosed ; for if they had, the policy would not have been underwritten. In reply to this, it was shown that the governor had ^20,000 in effects in the fort, and only insured ,£10,000 ; that it did not appear that the French had any design to make the attack till the end of, March ; that the governor had acted as in full security down to February, and in that month turned his money into goods ; and that, though his office was mercantile and not military, he was guilty of no fault in the defense of the place, which was not calculated to resist an European force, but only for defense against the natives. The plaintiff had a verdict. A new trial was moved for, on the ground that all the circumstances were not sufficiently disclosed to the underwriters. But the court, after time taken to deliberate, were clearly of opinion that the plaintiff was entitled to recover, and that the verdict ought to stand. Lord Mansfield, in deUver- ing the opinion of the court, said : " The contingency was, whether Fort Marlborough would be attacked by an European power, by sea, between October, 1759 and October 1760. If it was, it must be taken, being incapable of resistance. The underwriter in London, in May, 1760, could judge much better of the probability of this contingency, than Governor Carteir could at Fort Marlbor- ough in September, 1759. He knew the success of the operations of the war in Europe, what naval forces the English and French had sent to the East Indies, and whether the sea was open to any attempt from the French. He knew, or might have known, everything which was known at Fort Marlborough in September, 1759, of the general state of affairs in the East Indies, or of the particular condition of Fort Marlborough, by the ship which brought the orders for the insurance. Under these circumstances, he insures against the general contingency of the place being at- tacked by an European power. If there had been any design on Concealment. 515 foot or enterprise begun in September, 1759, it ■would have "varied the risk understood by the underwriter, on account of his not being told of a particular design tt,en subsisting. But the governor had no notice of such a design, nor was there, in fact, any such design. The attempt was made without premeditation, from the sudden opportunity of favorable occasion by the connivance of the Dutch, which tempted D'Estaigne to break Iiis parol. As to the first concealment, that he did not disclose the condition of the j)lace ; the underwriters knew that the insurance was for the gover- nor, who must be acquainted with the state of the place, and who ■could not disclose it consistently with his duty ; but, by insuring, iie apprehended at least the probability of an attack. With this knowledge, and without asking a question, he underwrote, and by so doing, he took the knowledge of the state of the place upon himself ; though it was a matter about which he might have been informed various ways : It was not a matter witliin the pri- vate knowledge of the governor only. But, independent of that, it is enough that the fort was in the condition in which it ought to be, which was only to resist the natives ; in like manner as that a ship insured is presumed to be sea-worthy. The contingency insured against was, whether the place would be attacked by an European force, and not whether it would be able to resist such an attack, if the ships could get up the river. It was found that this was the contingency in the contemplation of the parties. The second concealment was, his not having disclosed that the JFrench, not being able to relieve their friends on the coast, might make an attack on him. This was mere speculation dictated by -fear, and not a fact in the case. It was a bold attempt for the conquered to attack the conqueror in his own dominion. The practicability of it depended on the English naval force in those seas, of which the underwriter could better judge at London in May, 1760, than the governor at Fort Marlborough in September, 1759. The third concealment was that he did not disclose the design of the French to attack the place the year before. That design rested merely in report ; but taking it in the strongest light, it is the report of a design the year before ; but then drop- ped. Another silence, not objected to was, that it appeared by the governor's letter to his agent, that he was apprehensive of a Dutch war; that he had good grounds for this apprehension appeared from the subsequent conduct of the Dutch, to whom the -loss of the place was owing. The reason why the counsel did not 516 Misrepresent ATioiiT. object to this concealment was, because it must haye arisen from pclitical speculation, and general intelligence ; and it is not necessary to disclose such things to an underwriter. With respect to the opinion of the broker, the jury were not bound to pay the least regard to it. It was mere opinion, after the event. If rightly formed, it could only be drawn from the same prem- ises from which the court and jury were to determine the cause; and therefore improper and irrelevant in the mouth of a witness. With respect to the governor, there was no ground to impute fraud to him. By the same conveyance which brought his orders to insure, he wrote to tiie company everything he knew or suspected. He desired nothing to be kept secret which he wi-ote to them or to his brother. The reason of the rule against conceal- ments is, to prevent fraud and encourage good faith. If the defendant's objections were to prevail, in the present instance, the rule would be turned into an instrument of fraud. The under- writer, knowing that the governor apprehended danger, and that he must have some ground for his apprehension, being told noth- ing of either, signed the policy, without asking a question. If the objection, 'that he was not told' be sufEcient to vacate it, he took the premium, knowing the policy to be void, in order to gain if the alternative turned one way, and make no satisfaction, if it turned out the other. There was not a word said to him of the affairs of India, or the state of the war there, or the condition of Fort Marl- borough. If he thought that omission an objection at the time, he ought not to have signed the policy, with a secret reserve in his own mind to make it void. If he dispensed with the information, and did not think this silence an objection then, he cannot take it up now after the event." Mere silence, especially as to some matter which the assured does not consider it important for the insurer to know, is not such a con- cealment. Aliud est celare aliud tacere. Every fact, untruly stated, or wrongfully suppressed, the knowledge or ignorance of which ivould naturally influence the judgment of the insurer in making the con- tract at all, or in estimating the degree and character of the risk, or in fixing the rate of premium, is material to the risk. If the facts, untruly stated, or purposely suppressed, are not of this character, it is not a misrepresentation or concealment within the meaning of the term.^ ^ Shaw C. J. In Daniels v. Hudson Elver Ins. Co., Cush. (Mass.) 425. Concealment. 517 The assured is only bound to disclose such facts as are material to the risk, and, if inquired of, he must do this at his peril, and any failure in that respect will be fatal to his policy, even though it was the result of a mistake, and was not fraudulent or designed.^ Mere rumors, without any known or reliable origin, need not be ■disclosed, but intelligence, in the ordinary and usual sense of the term, when known, should be disclosed, and two questions are always presented in such cases, to wit : were reliable rumors or reports in circulation, which if true, would be likely to influence the insurer in taking or rejecting the risk, or which would have caused him to fix a higher rate of premium for the risk ; and secondly, were such rumors or reports known by the assured ; ^ and the question of materiality is for the jury.^ Where fraudulent con- cealment is relied upon, the defendant must satisfy the jury either that the assured had knowledge, or the means of knowledge in his possession ; * and the mere fact that an agent of the assured pos- sessed such knowledge, does not establish knowledge on the part of the assured.^ When no inquiries are made, the intention of the assured becomes material, and in order to avoid the policy, they must find, not only that the matter was material, hut also that it was intentionally fraudulently concealed} If the insurer makes any inquiries, the assured has a right to suppose that he inquires as to all matters that he regards as material, and waives knowl- edge as to all other matters, except it he in reference to unusual or extraordinary circumstances, in reference to which the assured has knowledge, hut in reference to which there is nothing to put the insurer upon inquiry? It was well said by Bronson, J., ^Waldewv. Louisiana Ins.- Co., 12 La. 134; Bowery Ins. Co. v. N. Y. F. Ins. Co., 17 Wend. (N. T.)359. ^Burrell v. Bederly, Holt (jST. P.) 283; Greenwell v. Nicholson, 1 Jur, 285; Bor/gs T. American Ins. Co., 30 Mo. 63; Hartford Protection Ins. Co., v. Harmer, 2 Ohio St. 452; Gales v. Madison Co., etc., Ins. Co., 5 N. Y. 43. ' Gates V. Madison Co., etc.. Ins Co., ante ; Perkins v. Equitable Ins. Co., 4 Allen (N. B.) 562; Huguenin v. Ray ley, 6 Taunt. 186,- Elton v. Larkin, 8 Bing. 198; Littledale v. Dixon, 4 B. & P. 151 ; Franklin F. Ins. Co. v. Coates, 14 Md. 285; People V. Liverpool, etc., Ins. Co., 2 T. & C. (N". Y.) 268; Syneersv. Glasgow Ins. Co., 19 Scotch Jur. 49. « Bates V. Hewitt, 4 F. &. F. 1023. ' Clement v. Phcenix Ins. Co., 6 Blatch. (U. S. C. C.) 481. ' Foster y. Mentor, etc., Ins. Co., 3 El. & Bl, 48 ; Gates v. Madison, etc., Ins. Co., ante ; Clark v. Manufacturers' Ins. Co., 8 How. (U. S.) 235 ; Holmes v. Charlestown, etc., Ins. Co., 10 Met. (Mass.) 211. ' Hartford, Protection Ins. Co., y. Harmer ; 2 Ohio St. 452 ; 3 Bennett's F. Ins. C. 518 MiSEEPEBSENTATION. in the case last cited, that " if a man is content to insure my house without taking the trouble to inquire of what materials it is composed, 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 to be greater than he anticipated, unless lam chargeable with some mis- representation concerning the nature of the risk.''' In a case in tlie United States court,i Woodbury, J., in discussing the question, says : " As to the ordinary risks connected with the property insur- ed, if no representations whatever are asked or given, the insurer must be supposed to assume them ; and if he acts anywhere concern- ing them, seems quite as negligent as the assured who is silent when not requested to speak. The rule thus expressed, extended as it was in an Ohio case ^ by Ramsay, J., may be said to be the rule generally applied in such cases. He said, in speaking of the rule expressed in these cases : " This, I confess, seems to me the true rule ; perhaps with the qualification more distinctly indicated, * * that the insured does not withhold information of such unusu- al and extraordinary circumstances of peril to the property, as could not with reasonable diligence be discovered by the insurer, or reasonably anticipated as a foundation for specific inquiries." Where the insured, at the time of obtaining insurance, knows that the building has just previously been on fire, and suspects, but has no reliable reason therefor, that it was set, the question as to whether the concealment of such fact is material, is for the jury, and, in determining that question, it is proper for them to consider the grounds of the assured' s suspicion, as well as the fact that they proved to be unfounded.^ 643 ; Gates v. Madison, etc., Ins. Co., 5 N. T. 43 ; 3 Bennett's F. I. C. 288 ; Clark V. Manufacturers' Ins. Co., 8 How. (U. S.) 235 ; 2 Bennett's F. I. C. 520 ; Burritt V. The Saratoga Inn. Co., 5 Hill (N. Y. 192 ; 2 Bennett's F. I, C. 276 ; Com. v. Hide & Leather Ins. Co., 112 Mass. 136 ; 17 Am. Rep. 72 ; Liberty Hall A.is'n v. Housatonic, etc., Ins. Co., 7 Gray (Mass ) 261 ; Hall v. People's Ins. Co., 6 id. 185. ^ Clark V. Manufacturers' Ins. Co., ante, ^ Hartford Protection Ins. Go. v. Ilarmer, ante. = In Harmer v. Protection Ins. Co., 2 Ohio St. 452 ; 3 Bennett's F. I. C. 643, the plaintiff procured insurance upon some buildings and tobacco stored therein. It appeared that, just prior to the procurement of the insurance, one of the buildings had been on fire, and the plaintiff suspected that it was fired by an incendiary. The plaintiff did not communicate this fact to the agent of the insurer, and, in fact, his suspicions were not well grounded, and it was proved that the building was accidentally fired. The court instructed the jury to refer to and be governed by the true cause of the fire, and not by the belief of the cuisured, in determining the Concealment. 519 Where the plaintiff, in seeking re-insurance of a risk, knowing that the owners of the property had had difficulties about their losses, and were in bad repute among insurers, failed to disclose the fact, it was held a fraudulent concealment.^ So, where there had been a rumored attempt to destroy the premises by an incen- diary, of wiiich the insurer had knowledge.^ But, if there is no foundation in fact for the rumor, it has been held not to amount to a concealment of a material fact ^ Where the assured has attempted to procure insurance elsewhere upon a ship, but, on account of apprehensions of the loss of the vessel, the risk was refused, and he omitted to disclose the exist- ence of such apprehensions, and the vessel was in fact lost, it was held a fatal concealment,^ and it seems that, if he has heard of the loss, and neglects to disclose the fact, and the intelligence proves correct, a policy obtained without disclosing the fact is void,^ and it seems that this is so, if the assured had no actual intelligence of a loss, but had reason to apprehend it,' or even if he had heard rumors of a loss, but did not believe them.^ When the assured is required to give information upon a par- ticular point, he must give it correctly, and he must not, upon materiality of the facts concealed. This ruling was sustained, Ramsay, J., perti- nently remarking : " So far as his belief was of any value as an admission of the true cause, it went to the jury for what it was worth, and the company had the full benefit of it, and, if his belief corresponded with the true cause, of course no injury was done them. If it did not, of what importance was his belief or suspicion to them ? Before the duty of disclosure arises, the fact must be material, to the risk — that is, it must increase the chances of loss. If it was not in truth material, could his erroneous suspicions make it so ? It was not pretended that he knew the cause, orhadreceived any information, true or false, which he failed to communicate. In such cases, the marine rule is, that the assured is not bound to communicate his own expectations and opinions and speculations upon facts," and this was held by the court to be the rule applicable to fire insurance. 1 Bowery F. Ins. Co., v. N. Y. F. Ins. Co., 17 Wend. (N. Y.) 359. see same in principle, Leigh v. Adams, 25 L. T. (U. S.) 566 ; Costa v. Scandrer, 2 P. W- (U. S.) 176. ' Walden v. Louisiana Ins. Co., 12 La. 134 ; American F. Ins. Co., v. Throop, 22 Mich. 146, ' Hartford Protection Ins. Co. v. Harmer, ante. « VaU V, Phcenix Ins. Co., 1 Wash. {U. S. C. C.) 283. ' Johnson v. Phoenix Ins. Co., 1 Wash. (U. S. C. C.) 378; Moses v. Del. Ins. Co., 1 id. 885. " Moses T. Del. Ins, Co., ante ; Hoyt v. Oilman, 8 Mass. 336 : Bowker v. Smith, F. C. (Sc.) 571. ' Graham v. Ins, Co., 6 La. An, 432. 520 MiSREPEESENTATIOlf. any ground, withhold material information or knowledge that he has in reference thereto. By putting an inquiry to him, the in- surers haA'^e made the matter material, and he cannot excuse him- self for not stating all the facts, upon the ground that he did not suppose it was material. As, when inquiry is made as to the present value of the property, it should be stated at its present value, and not at its expected value at some future time.^ In such cases, so far as the question of value is concerned, strict exactness is neither expected or required ; but the insurer is entitled to have the honest judgment of the assured, and not a fanciful or know- ingly false statement thereof. The mere fact that the property is over-valued does not of itself necessarily establish fraud on the part of the assured, so as to avoid the policy ; but if the valuation is knowingly excessive, or if it is grossly and enormously excessive, it is a circumstance to be considered in determining whether it is fraudulent.2 But where, from the character of the risk, it is evi- dently the understanding of the parties that the value will be fluc- tuating, and that the policy relates to the average value, rather than the value at any particular time, if the assured overstates the value of the property as then existing, but states it at a sum that he reasonably expects it soon will be, his statement thereof will not amount to an over-valuation, although his expectations were not realized.^ Assured not bound to communicate facts arising subsequently to issue of policy. Sec. 213. The concealment of a fact transpiring or coming to the knowledge of the assured after the contract is made, even though before the policy is made or delivered, will not avoid the 1 Protection Ins. Co., v. Sail, 15 B. Mon. (Ey.) 411 ; 3 Bennett's F. I, C. 777. 2 Protection Ins. Co. v. Hall, ante ; Franklin F. Ins. Co. v. Vaughn, 92 U. S. 516. See OVEE-VALUATION. ^ In Xee V. The Howard Ins. Co., 11 Cush, (Mass.) 321, the policy contained a clause by which it was covenanted that the application was " a just, full and true exposition of all the facts and circumstances in regard to the condition, situ- ation, uaZue and risk of the property, so far as the same are Isnown and are material to the risk. " The application stated the value of the goods to be between $2,000 and $3,000. The value of the property was much less than $2,000 at the time when the policy was issued, and a loss having occurred the insurer insisted that the policy was void because the warranty as to value was broken ; but the court lield that, if the repesentation was made in tjood faith, that the stock on hand, with that which was to be added and kept during the life of the policy, should range between those sums, the policy was not void. Concealment. 521 policy, unless provision is made therefor. ^ Thus, in an English <5ase,2 this question was carefully considered. In that case it was held that where underwriters have, by initialing a slip, made a contract of assurance, which, although invalid at law and equity for want of statutory requisites, is, nevertheless, in practice, and, according to the u'sage of those engaged in marine insurance, a ■complete and final contract binding upon them in honor and good faith, whatever events may subsequently happen, the assured need not communicate to the underwriters facts which afterward come "to his knowledge material to the risk insured against ; and the non- disclosures of such facts will not vitiate the policy of insurance after- executed. And it makes no difference that, the insurance leing ne- gotiated hy an agent of the assured, the slip was initialed subject to the ratification of the assured.^ In another English case,* a proposal for insurance on freight was made and accepted on the 11th of March. On the 16th the ship was lost. On the 17th the assured with knowledge of the loss, but -without communicating it to the insurers, demanded a stamped policy. The insurers then, for the first time, required to be informed as to the amount of the insurance upon the hull, and inserted in the policy (which the assured accepted) the following warranty: 1 Cory V. Patton, L. K. 9 Q. B. 577 ; Lishman v. N. Western Ins. Co., L. E. 10 O. P. 179 ; Curry v. Com. Ins. Go. , 10 Pick. (Mass. ) 535. In Insurance Co. v. Lyman, 15 Wall. (U. S.) 664, where a parol agreement to insure was made Dec. 31st, and the vessel was lost Jan. 8th, and the policy was not executed and delivered un- til Jan. loth, and it appeared that the plaintiff knew that the vessel was lost before the policy was delivered but did not disclose the fact, and the policy only took •effect from the day of its execution, it was held that no recovery could be had, and that the insured, could not be permitted to vary the terras of the policy actu- ally accepted by him by proving that this contract was in fact made on the 8th. The court said, however, that, if the plaintiff had gone to the insurers and com- municated the loss, and demanded a policy covering the contract, he would then Tiave been in a position to have enforced the parol contract. See also. McLanahan "V. Universal Ins. Co., 1 Pet, (U. S. ) 170, where it was held that, even after the application is made, but before its acceptance, a loss occurs known to the assured, he is bound to use due diligence to Inform the insurer before the contract is com- plete. Also see Scangall v. Young, F. C. (Sc.) 166. But if the contract is com- plete, and no change is made or assented to therein, the insured is not bound to •communicate facts that come to his knowledge after it is completed, but before the contract is executed, by delivery of the policy. Lishman v. N. Marine Ins. Co., h. R., 8 C. P. 216. Mere sensations and apprehensions need not be communi- ■cated, unless predicated to the knowledge of the assured, upon reasonable grounds. Bell V. Bell, 2 Camp. 475. ^ Cory V. Patton, ante. ^L. E.,7Q. B. 304. * 20 W. E. 364; L. E., 7 Q. B. 304. 522 MiSKBPBBSENTATION. " Hull warranted not insured for more than £2,700 after the 20thL of March." The vessel was then insured for an additional £500" in an insurance club, by the rules of which all ships belonging to- members were insured from the 20th of March in one year to the 20th of March in the following year, " and so on from year to year, unless ten days' notice to the contrary be given ; " and in the ab- sence of notice, the managers of the club were to renew each policy on its expiration. The court held, affirming the decision of the court below, that, notwithstanding those rules, the club policy was not a continuing policy beyond the 20th of March of the current year ; and that the ship having been lost before that date, no new effective policy could have been made, and, conse- quently, the warranty was complied with ; also, that the risk hav- ing been accepted by the insurers on the 11th of March, the ad- dition on the 17th of a term for their benefit, and not affecting the risk, did not prevent the policy from being one drawn up in re- spect to the risk accepted on the 11th, and, therefore, upon the authority of Cory v. Patton,^ the concealment of the loss was not a concealment of a materia! fact so as to avoid the policy. This case presents in, perhaps, the strongest possible form, the affirm- ance of the principles first laid down in Cory v. Patton,^ and since acted upon in several cases, that after the acceptance of the risk there is no obligation on the assured to communicate any infor- mation to the underwriter. In this case, after the acceptance of the risk, but before the execution of the policy, the ship was lost, and the fact became known to the assured ; he nevertheless asked for and obtained the stamped policy. The court of common pleas held that the assured was entitled to recover, and the exchequer chamber has affirmed the decision. The weight of recent authority in favor of the plaintiff was felt to be so great that on this branch of the case it was scarcely argued that he would not be eutitled to recover, but for one circumstance. That circumstance was, that, on issuing the policy, the defendants had, with the consent of the plaintiff, inserted the additional term of a modified warranty against doiible insurance ; but this was held to make no differ- ence, and indeed, the desperate nature of the argument shows how difficult it was felt to maintain the defence. For the future. 1 Hagadom v. Oliverson, 2 M. & S. 485. 2 Lishman v N. Western Ins. Co. ante. Concealment. 523 therefore, the observations in Mead v. Davison ^ as to the non- communication of a loss which becomes known to the assured be- tween the acceptance of the risk and the making of the policy, must be read in the light of the late decisions, and of the statute of 30 and 31 Vict. c. 23, which, by taking away the absolute in- admissibility in evidence of a slip, led the way to them. This question has been considered in several American cases, and the same doctrine held,^ and it is difficult to conceive how any other doctrine could be regarded as tenable. When the con- tract has been made, and all its terms agreed upon, the rights of the parties under it are complete, and their duties and obligations thereunder are fixed. A policy issued in pursuance of the agree- ment relates back to the time of the agreement, and can only pro- perly bear that date. Every thing to be done subsequent to the making of the contract, is simply to furnish the evidence by which the contract itself is to be proved. The contract ex- ists, the only defect is in the evidence of it ; when that can be established, the parties' rights are as complete without as with the policy itself. The contract exists as soon as its terms are agreed upon, and the minds of the contracting parties have met.^ When that stage in the negotiations between the parties is reached, and nothing remains to be done but to execute what has been agreed upon, the contract is complete, and the courts will in- terpose to compel either a specific performance of the contract by compelling the execution of the policy,* or by upholding an ac- 1 A. & E. 303. 2 Whittakerv. The Farmers' Union Ins. Co., 29 Barb. (N. T.) 312; Kohne-v. Ins. Co. of N. America, 1 Wa.sh C. C. (U. S.) 93; Baldwin v. Chateau Ins. Co., 56 Mo. 151 ; 13 Am. Rep. 671; Commercial Mut. Marine Ins Co. v. Union Mut. Marine Ins. Co., 19 How. (U. S.) 318; Keim v. Home Mut. F. & M. Ins. Co., 42 Mo. 38. 2 American Horse Ins. Co. v. Patterson, 28 Ind. 17; Li(/hthody v. No. Am. Ins. Co., 23 Wend. (N. Y.) 18; :^enas v. Wickham. L. R.,2 H. L. 296: Hallock v. Conn. Ins. Co., 26 N". J. L. i68; Flint v. Ohio Ins. Co., 8 Ohio, 501; Tyler v. New Amsterdam Ins. Co., 4 Robt (N. Y.) 151; Ellis v. Albany City Ins. Co., .50 N- Y. 402; Com. Mut. Marine Ins. Co. v. Union Mut. Marine Ins. Co., ante; Trustees, etc., V. Brooklyn F. Ins. Co., 19 N". Y. .305; Mobile Marine, etc., Ins. Co v. Mc- Millan, 31 Ala. 711; Kelly v. Commonwealth Ins. Co., 10 Bos. (N. Y.) 82; N. E., etc., Ins. Co. v. Boblnson, Ind. 536; West. Mass. Ins. Co. v. Duffy, 2 Kan. 347; Audubon v. Excelsior Ins. Co., 27 N. Y. 217. * Kentucky Mut. Ins. Co. v. Jenks. 5 ind 99; Commercial Mut. Marine Ins. Co. V. Union Mut Marine Ins Co., 19 How. (U. S.) 318. 524 MlSEBPEESENTATION. tion upon the contract for the loss, if the contract is of insurance,^ or for a breach thereof if it is for insurance, and the company re- fuses to execute a policy.^ Ill a Missouri case,^ the question arose in the same form as in the English cases previously commented on, except that this was a case of fire insurance. In this case an application for insurance was made and accepted February 9th, but the policy was not de- livered, and five days after the contract was made the premises burned. After their destruction the plaintiff, without disclosing the loss, paid the premium and took the policy. One of the grounds upon which the defendants resisted jDayment of the loss was, that the plaintiff had fraudulently concealed the fact of the loss ; but the court held that, as the contract itself was complete on the 9th of February, the plaintiff was under no obligation, legal or moral, to disclose the fact of a loss occurring subsequent thereto. Many cases similar in principle have arisen in our courts, and the doctrine is firmly established.* It follows from the doctrine of these cases, that where a valid contract for insurance has been made, for the breach of which an action could be brought, although the policy has not been made or the premium paid, the non-communication of the fact that the buildings have been destroyed, or of any other fact arising material to the risJc, does not destroy or detract from the validity of the poHcy subsequently obtained.^ The rule as to concealment only applies to facts existing when the contract is made.® ^ Mobile Marine, etc., Ins Co. v. McMillan, 31 Ala. 711; West. Mass. Ins. Co. V. Duffy, 2 Kan. .347; First Baptist Church v. Brooklyn Ins. Co., 19 N. Y. 305. ^Angellv. Hartford F. Ins. Co., 56 N. Y. 171; 17 Am. Men. 322; Audubon v. Excelsior Ins. Co., 27 N. Y. 216. Keim v. Home Mut. F. Ins. Co., 42 Mo. 38. * Baldwin Y. Chateau Ins. Co., .56 Mo. 161; 17 Am. Kep. 671; Angellv. Hart- ford Fire Ins. Co., 59; ISr. Y. 171; 17; Am. Eep. 322; Commercial Mut. Marine Ins. Co. V. Union Mut. Marine Ins. Co., 19 How. (N. Y.) 318; Whittaker v. Farmers', etc., Ins. Co., 29 Barb. (N. Y.) 312. 5 Kernochan v. Bowery Ins. Co., 17 IS". Y. 428; Norwich F. Ins. Co. v. Boomer, 5& 111, 442; Clapp v. Union, etc., Ins. Co., 27 N. H. 143; Belahy v. Memphis Ins. Co., 8 Humph (Tenn) 684. . » /' ^ Curry Y. Com. Ins. Co., ante. Concealment. 525 Must be material facts. Test of materiality. Sec. 214. The rule applicable to the concealment of facts, is the same that applies in the case of representations. Whenever the facts are such that if known to the insurer they would have or might have a real influence upon him, either in accepting or rejecting the risk, or in determining the rate of premium to be charged therefor, it is deemed a concealment of material facts, if a higher rate of premium would have been charged if such facts had been known} Facts that if known, would have induced the taking of the risk at a less rate are not within the rule, because it is of no importance to the in- surer that the risk is less than he had supposed. That is to his advantage. The insured alone suffers from the non-communica- tion of such facts, and no principle of fair dealing or commercial integrity is violated by their non-communication. But where the facts are such that if known, the insurer would be influenced thereby to fix a higher rate of premium, or, in accepting or reject- ing the risk, every principle of honesty and fair dealing requires that the facts should be disclosed, and from whatever cause a failure to disclose them arises, the law treats their suppression as a fraud; 2 and the legal effect is determined by the materiality of the matters stated or suppressed,^ and the question is one for the jury, it being left for them to say whether in fact the insurer was influenced thereby in taking the risk or fixing the rate of premium therefor ; * and their finding is conclusive.* ^ Boggs v. American Ins. Co., 30 Mo. 63. ^ Columbian Ins. Co. v. Lawrence, 2 Pit. (U. S.) 25. ^ Kohn-v. Ins. Co. of N. America, 6 Biim. (Penn) 219; Ins. Co. v. Lyman 15 Wall (U. S.) 664; Bowere Ins Co. v. iV. F. Ins. Co. 17 "Wend. (N. T.) 359; N. A. Ins Coy. Throop, 22 Mich. 141; Eitty. Washington Ins. Co. 41 Barb. (N. Y.) 353. * Maryland Ins. Co. v. Iiuden,(} Cr. (U. S.)338. In Sussex County Ins. Co., v. Woodruff, 26 N. .J. 541, the insured did not disclose tlie nature of his inter- est in the premises. The policy covered his " woolen manufactory and machinery therein." He was simply mortgagee. The court held that the question was ex- clusively for the jury, whether the concealment of his interest was material or not. A similar question arose in Franklin Ins. Co. v. Coates, 14 Md. 285, and a similar doctrine held. In that case the assured procured a policy " on their lumber." Their real interest was that of material men for lumber supplied the builders. The court held that it was for the jury to say whether the conceahnent of their real interest in the property was material. See also, Perkins v. Equitable Ins. Co., 4 Allen (N. B.) 562 ; Gates y. Madison County Mut. Ins. Co., 2 N. Y. 43 ; Little- dale V. Dixon, 4 B. & P. 151. ^ In an early case in Massachusetts, Curry v. Com. Ins. Co., 10 Pick, 535, the defendants, imder a policy, set up the concealment of the following facts in defense. t)26 MiSKEPKKSENTATION. Story, J., in a leading American case,^ gave the rule applica- ble to representations or concealments thus : " Whenever the nat- ure of this interest would have or might have a real influence upon the under-writer, either not to underwrite at all, or not to un- derwrite except at a higTier premium, it must he deemed material to the risk, and if so, the misrepresentation or concealment of it will avoid the policy. One of the tests, and certainly a decisive test, whether a misrepresentation is material to the risk, is to ascertain whether, if the true state of the property or title had been known, it would have enhanced the premium. If it would, then the misrep- resentation or concealment is fatal to the policy." It must be a concealment of such facts as affect the risk to such an extent, that the risk taken is different from that which the insurer understood he was taking, and induces him to enter into a contract different from that which he supposed he was entering into.^ The distinc- tion between a false representation, and a concealment of matters xelating to the risk is, that in the one case, the contract is induced by facts stated, while in the other, it is by facts suppressed, and the same rules apply in either case. Concealment of or misrepresentation of interest. Incendiary threats. Rumors of, etc. Sec. 215. The concealment of facts relating to the interest of the assured in the property,^ or relating to peculiar hazards to which the property is exposed, as incendiary threats to destroy it, or rumor- ed attempts to do so,* or threats, or attempts to burn adjacent build- It appeared that the plaintiff had been instrmnental in securing the arrest of an escaped convict, who, while being returned to prison, uttered threats of revenge by setting buildings on lire, in case he should ever find out who had informed against him. The court below left the question as to the materiality of these facts to the jury, and they having found a verdict for the plaintiff, upon appeal, in passing upon this question, Wilde. J., said : " As to the other objections, that respecting the alleged concealment, and that of the supposed increase of risk, by the addition to the house — these seem to depend on facts which have been settled by the jury, and we are of opinion that the evidence well supports the verdict. The instructions of the judge to the jury were perfectly correct on both points." 1 Columbian Ins. Co., v. Lawrence, 10 Peters (U. S.) 516. " Hodges v. Marine Ins. Co. 5 Cr. (LT. S.) 100. 2 Sussex Co. Ins. Co- v. Woodruff, ante ; Franklin Ins. Co. v. Coates, 14 Md. 285 ; Columbian Ins. Co. v. Lawrence, 10 Peters (U. S.) 507 ; Catron v. Tenn. M. & F. Ins. Co., 6 Humph. (Tenn.) 176 ; Cousins v, Nantes, 3 Taunt, 513. * In North American F. Ins. Co. v. Throop, 22 Mich., inquiries were made of the Concealment. 527 ings, the burning of which would necessarily endanger the prop- erty of the insured, if material to the risk, avoid the policy.^ So, if the property is located in the vicinity of buildings, in which, to the knowledge of the insured, extra hazardous trades are prose- cuted, or uses which materially enhance the risk, as a petroleum store-house, oil refinery, oil-cloth manufactory, powder mill, cab- inet shop, steam saw mill, or other similar establishments, there would seem to be no question that ordinarily, within the principle applicable to the concealment of material facts, the policy would be void. Proximity to what establishments would bring the in- sured within this rule cannot be stated, but it is believed to be safe to say, that if any trade or business is carried on in the im- mediate neighborhood of the property of the insured, that materi- ally affects the risk, in the respects previously stated, a conceal- ment of such facts would render the policy inoperative and void.^ Incendiary threats. Sec. 216. In order to avoid the policy upon the ground of incen- diary threats, the danger must be real and substantial, and such as materially enhances the risk, and which a person of ordinary pru- dence would not regard as mere idle talk or reports.^ The fact plaintiff whether incendiary attempts had been made to fire the property, to which lie answered, no ; but the evidence shows that such attempts had been made, of ■which he had notice. The court instructed the jury that such attempts to fire the huilding might not be material to the risk. Upon appeal this was held error, the court holding that, as matter of law, such attempts were material, and that if such threats had been made and the plaintiff failed to disclose them, he could not recover. The effect of neglecting to disclose incendiary threats or attempts to burn the property is necessarily material. ^ In Bufe V. Turner, 6 Taunt, 328, a fire broke out on Saturday, in a boat builder's shop, near the plaintiff's premises, and was apparently extinguished at about eight o'clock that evening. It was thought necessary to watch the premises, however, and on Monday the fire broke out again, and consumed a warehouse next but one to the premises that first took fire. On the Saturday evening, when the fire was apparently out, after the ordinary mart had been started, the owner of the ware- louse sent instructions for its insurance by an extraordinary conveyance, but failed to communicate the fact of the fire which had occurred. It was held on general principles, and without reference to the rules and conditions of the company, that this concealment rendered the policy void. 2 Bunyon on Fire Insurance, 65. In McFarland y. Peabody Ins. Co., 6W. Ya,. 425, an application was made for insurance upon the plaintiff's building, and a diagram was made showing the situation of other buildings in reference thereto. There was a building contiguous to the plaintiff's used for painting barrels, and in -which benzine was kept and used, and it was held that a failure by the plaintiff to communicate such facts to the insurer rendered the policy void, such fact being material to the risk. 1 McBride v. Bepublic Ins. Co.. 30 Wis. 562. 528 MiSEEPBESENTATION. that the property is in a section of country where desperate meas- ures for the gratification of private revenge are sometimes resorted to, and that the assured is very unpopular, or that those having the custody of the property are so, need not be disclosed, as the insurers are presumed to know the condition of society in commu- nities in which they insure property,^ and it is a well-settled rule that a party is not bound to communicate facts which the law pre- sumes the other party knows,^ and if the insurer knew the facts, which he complains were concealed, from any source at the time he made the contract, a fraudulent concealment cannot be predi- cated thereon, as, where the insurers had previously directed a. policy upon the same risk to be canceled, because of incendiary threats to destroy it, it was held that the fact that the insured did not state the fact, was not a concealment of a material fact ; ^ at least the point was made by the defendant in the last named case, and the court did not deem it of sufficient importance to notice it in their opinion. If inquiries are made, even in reference to mat- ters about which the insurer has knowledge, he is bound to dis- close all material facts.* Interest need not be particularly stated, unless called for. Sec. 217. In the absence of anything in the contract calling therefor, it is not obligatory upon the insured to state his interest in the property insured ; ^ the existence of a mortgage ; ^ that he holds only as lessee ; ''' that the property had been levied upon and is held by assured as attaching creditor ; ^ that litigation is pend- ing concerning the title of the property ; ^ that the property has 1 Keith V. Globe Ins. Co., 52 lU. 518. 2 Norris v. Ins. Co. ofN. America, .3 Teates (Penn.) 84 ; Belonguemere v. N. T. F. Ins. Co., 10 John. (IST. Y.) 120. 3 Fish V. Cottinett, 44 N. Y. 538. * Green v. Merchants' Ins. Co., 10 Pick. (Mass.) 402. ^ Turner v. Burrows, 5 Wend. (N. T.) 541. s Kemochan v. N. Y., etc., Ins. Co., 17 N. T. 428 ; Delahy v. Memphis Ins. Co., 8 Humph. (Tenn.) 684 : Cumberland, etc., Ins. Co. v. Mitchell, 48 Penn. St. 374. ' Fletcher y. Com. Ins. Co., 18 Pick. (Mass.) 419. 8 Columbia Ins. Co. v. Cooper, 50 Penn. St. 331. > Hill y LaFayette Ins. Co., 2 Mich. 465. Concealment. 529 been set off on execution,^ or that the assured holds it as mort- gagee.^ It is not enough if an insurable interest exists, unless the policy requires the real title to be stated.^ May be -waived. Sec. 218. While, however, upon general principles, irrespective of any provisions or conditions in the application or the policy issued thereon, the fraudulent concealment of material facts ren- ders the policy void, yet the insurer may, by his conduct, waive all such considerations and do that which will estop him from setting up such concealment as a ground for avoiding his liability under the contract. As where the facts are known to him as well as to the assured,* or where they are a matter of general knowledge, of 1 Clapp V. Union etc., Ins. Co., 27 N. H. 143. ^ Norwich F. Ins. Co. y. Boomer, 52 111. 442. ^Fletcher v. Com. Ins. Co., ante; Gilbert v. N. American Ins. Co., 23 Wend. (N. Y.) 13 ; Ins. Co., v. Marseilles Manuf. Co., 6 111. 236. * Green v. Merchants' Ins. Co., 10 Pick. (Mass.) 402. In an application which provided that questions not answered should be construed most favorably to the risk, the applicant left unanswered a question whether there was any livery stable in the vicinity. In an action on the policy, of which this application was made part, the jury were instructed that, if there was a livery stable in the vicinity at the time of the application, they were to determine what was the meaning of the question and of the word " vicinity," and whether there was a livery stable in that vicinity, having reference to the situation of the building in which the property in- sured was situated, the situation of other buildings, and the locality, as ascertained from the contract and evidence. It was held that the defendants had no ground of exception'. Haley v. Dorchester, etc., Ins. Co., 12 Gray (Mass.) .545. In the same case it was also held that, in an application made part of a policy on property in the second story of a large building, and providing that the description therein given shall be a full and true description of the property to be insured, and of all circum- stances in relation thereto, material to the risk, and that the questions not answered shall be construed most favorably to the risk, an omission in answer to the question, " Who occupies it ? " to state the occupation and occupants of all the rooms, does not avoid the policy, if the jury are satisfied that those not disclosed make the risk less hazardous than it would have been if the whole building had been occupied as stated in the answer. A policy issued on an oral promise, innocently made, that the premises insured would be occupied, is not avoided by the non-fulfilment of such promise. Kimball v. JEtna Ins. Co., '■) Allen (Mass.) 540. The concealment of the fact that a ship, upon which a policy of insurance is effected, is in command of a master who sails her at halves, manning and victualling her and paying her port charges, does not avoid the policy. Buks v. Waldo etc., Ins. Co., 52 Maine, 187. A policy issued by an agent is not void for failing to state that the interest of the insured was that of mortgagee, when his title was fully known to the agent, and no written application was made, although a condition of the policy was that, if the property was held by any other than an absolute title, ' ' it must be represented to the company, and expressed in the policy in writing ; otherwise, the insurance as to such property to be void." The insured may recover upon such a policy, in case of loss, to the extent of his interest in the property. Emery v. Pvicataqua, etc., Lifs. Co., 52 Maine,' 322. A mortgagee of a part of certain buildings may recover the amount of his loss, although his policy covered his interest as mortgagee of the ■whole properly. Fox v. Phoenix, etc., Ins. Co., 52 Maine, 333. From the answer to 34 530 MiSREPEESENTATION. which he is bound to take notice.^ Neither can they set up such matter in defence when they issue the policy upon the knowledge of their agent, and not upon information derived from the assured,^ unless the information, the concealment of which is complained of, was peculiarly within the knowledge of the assured, and not known to the agent, or likely to be discovered by the person sent by them to examine the premises.^ If the insurer chooses to send its own agents to examine the risk and ascertain its nature and extent, it cannot complain of tSe concealment of any matter which a person of reasonable prudence, by the exercise of reasonable dil- igence would be likely to discover.* So, if the policy is issued a question in an application, that the factory insured is "worked usually" certain specified hours in the day time " in the summer," and certain specified hours "in the winter — short time now," it may be inferred that it was expected at times the factory would be run nights. North Berwick Co. v. New England, etc., Ins. Co., 52 Maine, 336. 1 Norris v. Ins. Co. of N. America, 3 Yeates (Penn.) 84. 2 Continental Ins. Co., v. Kasey, 25 Gratt. (Va.). This question was considered in Morrison v. The Universal Marine Ins. Co., L. E. 8 Exchq. 40, in which the plaintiff's insurance broker effected an insurance with the defendants on the char- tered freight of the plaintiff's ship Cambria, without disclosing to the defendants certain information in his possession, which it was material that they should know. (October 10.) In so doing he acted in good faith, supposing, from inquiries that he had made, that the information was incorrect. After initialing the slip, but before executing the policy, the defendants (October 13) became possessed of the information which the broker had not disclosed ; and they afterward executed and delivered out the policy without any protest or any notice that they would treat it as void. (October 14 or 15.) Upon receiving news of the loss of the vessel, they gave notice to the plaintiff that they did not consider the policy binding on them. (October 20.) On the trial of an action upon the policy, the judge directed the jury, in substance, that the defendants were bound to make their election within a reasonable time after they became aware of the concealment, and left it to them, without expressing any opinion, whether the defendants had elected to go on with the policy. Held (Cleasby, B., dissenting), a misdirection, on the ground (by Maktin, B.), that if the conduct of the defendants in delivering out the policy would induce the plaintiff to suppose that he had a valid policy, they were estopped from denying it (by Beamwell, B.) ; that delivering out the policy with knowledge of the concealment was pn»ia/ade an election, and threw on the defendants the burden of showing circumstances to explain it. The information not disclosed by the broker had appeared in Lloyd's List, which is a daily newspaper containing hundreds of entries relating to shipping in all parts of the world, and circulating among ship-owners, underwriters, and insurance brokers ; the defendants were in facts subscribers to this newspaper. Held, that the broker was not entitled to assume a knowledge by the underwiters of the contents of Lloyd's List. s Safford V. Vt. Mut. Ins. Co. ^ Continental Ins. Co., v. Kasey, 25 Gratt. (Va.) 268 ; or if the company was hound to examine the risk and did not, Satterthwaite v. Ins. Co., ante; or if the concealment relates to a matter which the insurer is presumed to know, Norris v. Ins. Co. of N. America, ante ; or which by fair inquiry or reasonable diligence it would have known, Friere v. Woodhouse, ante ; or when the agent of the company knew the facts Gerhauser v. Ins. Co. 8 Xe\ . 174. Concealment. 531 -upon the knowledge of the agent, without any application in writ- ing by the insured, or inquiries made of him in reference thereto, the insurer cannot complain that it has been misled or deceived by the assured, and must submit to the consequences of its own folly. By pursuing such a course, the insurer is thrown off his guard, and has a right to presume that the agent can determine the nature of the risk to the satisfaction of his principal. But, if there are facts or circumstances material to the risk, which the agent would not be likely to discover from a reasonably careful examination of the property, the insured is bound to communicate such facts.^ The fact that the assured does not make known to the assured — no inquiries in reference thereto being made — that the building insured was vacant, is not a breach of a condition ■ making the policy void for an assurer to state every fact material to the risk.^ Concealment cannot be charged, when the matter is covered by a warranty. Sec. 219. The rule does not apply to the concealment of facts that are covered by a warranty, express or implied. In all such cases the policy can only be avoided by establishing a breach of the warranty itself,^ although in such a case, if & false representation is made, the policy is void.* Kule when insurer knew the facts. Sec. 220. Whether there has been a fraudulent concealment or misrepresentation in a matter material to the risk, is essentially a question of fact for the jury ; ^ and, even though the misrepresent- ^ Hartford Protection Ins. Co., v. Harmer, 20 Ohio St. 452; Clement v. Phoenix Ins. Co., 6 Blatch. (U. S.) 481 ; of course the assxired cannot be required to communi- cate facts not known to him, Greenwellv. Nicholson, 1 Jur. 285; mere rumors having no settled foundation need not be disclosed, Durrell v. Bederly, Holt N. P. L283; the names nor pursuits of tenants need be disclosed unless called for, Lyon v. Commercial. Ins. Co., 2 Rob. (La.) 266; in any event the fact concealed must have Ijeen material to the risk, Gates v. Madison, etc., Ins. Co., 2 N. Y. 43; Protection Ins. Co., V. Hall, 15 B. Men. (Ky.) 411. ^Browning v. Hann. Ins. Co., 71 N". Y. 508. ^Bidkley v. Protection Ins. Co., 2 Paine (U. S.) 82; Se Wolf -v. Fireman's Ins. Co., 20 John. (N. Y.) 214; Silloway v. Neptune Ins. Co., 12 Gray (Mass.) 73; Pop- ■lestony. Kitchen 3 Wash. (U. S. C. C.) 1.38; Walden v. N. Y. Fire Ins, Co, 12 -.Tohn. (ISr. Y. ) 128 Gates y. Madison, etc., Ins. Co., ante. * Bulkley v. Protection Ins. Co. , ante. ^ Clark v. Union Ins . 40 N. H. 333 ,• Hartford Protective Ins. Co. v. Harmer, 2 •Ohio St. 4.52; Mutual Ins. Co- v. Deale, 18 Md. 26. 532 MiSBEPKESENTATION. ation or concealment is material, yet if the insurer or its agent had knowledge of the true state of the matter, from any source, at the time when the contract was entered into, the policy will not be thereby avoided, as a warranty cannot be held to cover matters which the other party knows do not and cannot exist.^ And even though the by-laws of the company, or the policy, provides that the agent of the insurer, or the person who takes the application or survey, shall be the agent of the insured in respect thereto, yet he is to be considered as the a'gent of the insurer also, and the in- surer is bound by his acts. Consequently if he, in filling up the application, without any fraud or fault on the part of the assured, misstates the facts, the insurer is estopped from setting up such misstatements or omissions in defense to an action for a loss under the policy .2 ^ Patten V. Merchants' Ins. Co. 40 N. H. 375. ^ Clark V. Union Ins, Co. , 40 N. H. 333. In Bartholomew Y. Merchants' Ins. Co., 25 Iowa, 507, the court say that, if the insured knew the provisions of the appli- cation, and had reason to know that the authority of the agent was limited to the taking and forwarding of the application, and that such application is the basis ilpcn which the risk is taken, he is bound to see that his statements and representations are correct. But if there is nothing to put him upon inquiry as to the agent's authority, and the agent furnishes and undertakes to fill up an application, and if in so doing he was correctly informed respecting an incumbrance on the property, and if the applicant was misled by the acts and conduct of the agent into supposing that the agent had taken down his answers truly, and that the application was cor- rect, and if, through the fault of the agent, he did not know the contrary, the com- pany, having received the premium cannot successfully set up the existence of the incumbrance as a defense to an action on the policy. Ames v. N. Y. Union Ins. Co., U N. Y. 2.53; Alexander v. Germania Ins. Co., 5 T. & C. (N. Y.) 208; Rowley V. Empire Ins. Co., 36 N. Y. 550. In Combs v. Hannibal Savings and Ins. Co., 43 Mo. 148, an application for a policy of insurance contained questions and answers, by whicli it appeared that the title to the property was represented to be an imen- cumbered fee simple. A loss having occurred, the plaintiffs proved that R. , the de- fendant's soliciting agent, had at the time full knowledge of the true state of the title, that he filled up the application in his own language, and assured the plaintiffs that it was all right ; that they, believing it to be so, signed without luiowing the contents as to title; and it was held, that, under the circumstances, the fact that the plaintiffs' title was only an encumbered equitable one, constituted no defense. • In Bldwell v. N. Western Ins. Co., 24 N. Y. 302, insurance was eifected " upon the whole body," etc., of a ship, "warranted" by the insured to be "free from all liens." Evidence was offered to show that the insured interest was the equity of re- demption of the insured party, and that the insurers at the time of application for and making of the policy knew such to be the interest of the insured, and that it was subject to two prior mortgages. Held, that this evidence was admissible, and if satisfactory, the existence of the mortgages was not a breach of the warranty. In Hodgkins v. Montgomery, etc., Ins. Co. 34 Barb. (N. Y.) 213, it was held that where the agent of the insurers writes out the application which the assured signs, no mis- statement in the written application is fatal, if the assured disclosed the facts traly to the agent. In this case, the conditions in the policy provided that "when ap- plications were filled out by the agent of the company, the company would- be bound by the survey, that if the applicant should mistake his interest in the property ■ the policy should be void; " the applicant was in possession under a contract to buy but having paid only a part of the price was not entitled to a deed ; he showed his Concealment. 533 In a recent Maine case ^ plaintiffs made their application through one Holman, believing him to be the agent of the company. He assumed to act as its agent, wrote the application, sent it to the company with his name as its agent upon it ; the company re- ceived it, acted upon it, issued the policy in pursuance of it, wrote Holman's name upon the back of it, sent it to him for delivery, and received the premium through him. Upon this proof the lower court ruled that Holman was the agent of the company. The testimony showed that the application contained a misrepre- sention as to the contiguity of other buildings ; and that an alter- ation of the building insured was afterward made, causing a ma- terial increase of the risk. Holman knew of the misdescription in the application written by him, and that the alterations were made with his knowledge and consent. The court below ruled, that notwithstanding the misdescriptions, the company was bound ; and that Holman's verbal consent to the alterations were obligatory upon the company under the statute and this ruling was sustained. contract and stated the facts to the agent, who wrote in the apphcation signed by the plaintiff that the applicant owned the premises. Held, that he had not mis- stated his interest. In Peoria Ins. Co. v. Hall, 12 Mich. 202, where by the provisions of the policy, it was provided that the keeping of gunpowder on the insured prem- ises, " without written permission in the policy," should render the policy void. Held, that if the insurance agent knew that it was kept, and to be kept, the keeping ■of it would not render tne policy void, whether the j'ermission was indorsed, or in- tended to be indorsed on the policy or not. In the case of Roberts v. llie Continen- tal Ins. Co., decided by the Supreme Court of Wisconsin, on the 20th of March, 1877, and not yet reported, it was held tliat if the agent of an insurance company -emijowered to take risks and issue policies, knows, when he issues a policy that there is other insurance upon the property, his failure to write the company's consent thereto in the instrument will not defeat an action thereon, although the policy ilself declares that it shall be void in case the assured " shall have or shall hereafter make a,ny other insurance upon the property without the consent of the company written herein; " and also declares that "the use of general terms, or anything less than a distinct, specific agreement, clearly expressed and indorsed upon the policy, shall not be construed as a waiver of any printed or written restriction therein." The Supreme Court of Pennsylvania, in a recent case, Lycoming^ Fire Ins. Co. v. Wood- worth et al., not yet reported, pass upon some interesting points arising in an action upon a fire insurance policy. The company named, through one Miller, who was represented as agent or surveyor, contracted for a policy of insurance with the de- fendants in suit. Iix the court below, the company denied the right of the agent to make such contract, as was claimed to be made in this case, for them. Miller was called to define his power, and it was held that he was both agent and surveyor. The Supreme Court says that while it is true that one insuring in a company formed on the mutual plan is bound to inform himself of the rules and regulations of such •company, it is also true that, as to those outside of it, such a company occupies no other or better position than one organized on the stock plan. As to one dealing for insurance, the company is bound by the representations of its agent in the act of making the contract, for it cannot assume the advantages of his act and avoid the disadvantages. After enjoying the benefits of insurance, a member of the company is estopped from alleging fraud in bar of payment of assessments. '^Packard v. Dorchester Mu. F. Ins. Co., (Maine), 1 Eastern Eep. 138. 534 MlSEBPEESENTATION. The mere fact that a person signed the application as agent is not enough to show him to be the company's agent.^ But that fact, carried home to the company's knowledge by sending to it the application with his assumed official signature thereon, combined with its subsequent acts, including the indorsing of his name on the policy, might well be construed by the plaintiffs as an official recognition of his assumed character. ^ If the company could have written assent to the material alterations ^ in the absence of any known restrictions of authority the agent could do the same. The authority of an agent comprises not what is expressly confer- red, but also as to third persons, what he is held out as possessing. Therefore the principal is frequently bound by the acts of his. agent performed in excess or even in abuse of his actual authority ; but this is only true as between the principal and third persons who believing, and having a right to believe, that the agent was acting within the scope of his authority, would be prejudiced if the act was not considered that of the principal.* This doctrine is established to prevent fraud, and proceeds upon the ground that when one of two innocent persons must suffer from the acts of a. third, he shall sustain the loss who has enabled the third person to- do the injury.^ Of course, when restriction of authority is brought home to the knowledge of those with whom he deals, his acts in ex- cess of such restricted authority will not bind the principal.^ Thus,, where one of the express conditions of a policy was that " no officer, agent, or representative of the company shall be held to have waived any of the terms and conditions of the policy, unless such waiver shall be indorsed hereon in writing," it was held that this limitation of power of the agent to waive the conditions was brought to the knowledge of the insured by the policy itself, and 1 Campbell v. Mon. F. Ins. Co., 59 Me. 430. "Dunn V. G. T. By., 58 Me. 187; 4 Am. Kep. 26'7; Ins. Co. v. McCain, 96 TJ. S. 84. 8 Adams v. McFarlane, 65 Me. 152; Wood v. Poughkeepsie Ins Co., 32 N. T. 619. *-^«™«''<^ ^- Wheeler, 24 Me. 412, 418; Clark v. Metropolitan Bank, 8 Duer, « Story, Ag, § 127. « Ins. Co. V. Wilkinson, 13 "Wall, (U. S.) 222. Concealment. 535 any attempted waiver otherwise than therein stipulated was not binding upon the company. In a New Jersey case.^ the policy contained a stipulation " that the insurer should not be liable by virtue of this policy or any re- newal thereof for any loss that may occur before the premium had actually been paid to this company." The policy was sent to P., an agent, for delivery, whose duty it was to deliver the policy and receive the premium. The agent testified that the rule of the company was for the agent to report once a month ; that he always held the funds for a month and sometimes longer. His commis- sions were deducted from the premiums when he made his remit- tances. The agent delivered the policy and took the note of the assured with an indorser, payable at a bank, for the premium. He had the note discounted and the proceeds placed to his credit in the bank before the loss occurred. It was held, that a condition in a policy " that if any broker or any other person than the as- sured has procured this policy he shall be deemed the agent of the assured and not of the company," did not debar the company of the power to appoint agents and clothe them with such authority — general, special or limited — as might be advisable ; and the delegation of such authority will carry with it such powers and consequences as are incident to the relation of principal and agent within the scope of the authority conferred. That P. was consti- tuted the agent of the company for the purpose of receiving pre- miums on policies negotiated by him, and that payment of such premiums to him was payment to the company; and that the pre- mium on this policy was paid when the note was discounted and the proceeds passed to P.'s credit in the bank.^ A stipulation in a policy that "no agent of this company is authorized ill any respect to change the terms and conditions of this policy, and they shall neither be changed nor waived except in writing signed by the president or secretary of the compan}'-," applies only to those conditions and provisions in the policy which relate to the forma- tion and continuance of the contract of insurance and are essential to the binding force of the contract while it is running, and does 1 Beach v. Humboldt Ins. Co. , 35 N. J. L. 429 ; Bullock v. Ins. Co. , 26 IST. J. L., 268; Trustees v. Brooklyn Ins. Co., 19 N. T. 305; New York Central Ins. Co. v. National Ins. Co., 20 Barb. (N. T.) 469; Chickering v. Globe Ins. Co., 116 Mass. 321. 2 Walsh V. Hartford F. Ins. Co., 73 N. T. 5, 9. Vibgin, J., in Packard v, Dor- chester Mu. F. Ins, Co., ante. 536 MiSEEPEESENTATION. not apply to those conditions which are to be performed after the loss has occurred in order to enable the assured to sue upon his contract. After the loss has happened conditions in the policy with respect to notice of loss and preliminary proofs may be waived by parol though the policy contain such a stipulation as is above referred to.-' After insurance had been effected upon a building in several companies, the insured made an addition to the building containing the insured property, and made an arrangement with all the com- ptuiico except one to extend the insurance to the property in the aduillon. In the case of one company permission was given to erect the addition " all policies concurrent " and it was known to the agent who indorsed the permission on the policy, at the time, that the other policies had been extended to cover the property in the addition. It was held that all the policies covered the prop- erty ^ But the knowledge of the insurer of the agent must be shown by the insured, and must be of a fact then existing. The fact that he is aware of changes made after the policy is issued, does not aid the insured if such changes operate as a breach of the contract. Thus, where a condition of a policy was, "unoccupied premises must be insured as such, or the policy is void,"' and when the pre- mises are insured as occupied, " the policy becomes void when the occupant personally vacates the premises, unless immediate notice be given to the company and additional premium paid." The policy was silent as to the occupancy of the building insured, but the agent who issued the policy knew the building was then occu- pied. The occupant moved out, no notice was given to the com- pany, -and afterwards the building was destroyed by a fire of un- known origin. It was held that the company was not liable for the loss.^ But the doctrine is well established that an agent, authorized to make contracts of insurance, has authority to waive conditions in the policy, and that his knowledge of the real and true state of the 1 Franklin Fire Ins. Co. v. Chicago Ice Co., 36 Md. 102; 11 Am. Eep. 469; Blake V. Exchange Ins. Co., 12 Gray (Mass.) 265; Priest v. Citizens^ Ins. Co., 3 Allen. (Mass.) 602. " Butterworth v. Western Assn. Co., 182 Mass. 489. « Wustrwn v. City F. Ins. Co ., 15 Wis. 138. Concealment. 537 risk is the knowledge of the company. This doctrine lias been lecognized by a large number of authorities, and is consistent with the principles underlying the relation of principal and agent. Thus, in a recent case in New York,i the policy contained a pro- "vision that, " if the premises are at the time of insuring, or during the life of this policy, become vacant, unoccupied, or not in use, and remain thus for over ten days, whether by removal of the owner or occupant, or for any cause without this company's con- sent indorsed thereon, this insurance shall be void and of no effect." The agent who effected the insurance hneio that the house was Tacant before the contract was consummated, and the court held that they were thereby estopped from setting up the fact that they were vacant to defeat their liability upon the policy. MlLLER, P. J., in passing upon this question, pertinently said : " The com- pany had notice of the insurance from Barns ; received the pre- mium, and is not, I think, in a position to claim that Barns had no authority to waive the condition as to vacant buildings. Concede that Barns acted beyond the territory assigned to him, yet as the defendant sanctioned what he had done, and reaped the fruits of the transaction, it has no ground for complaint, and is estopped from denying his authority. As he was authorized and did not exceed his powers, it would be doing violence to the cases which hold that the agent may waive conditions of this character, now to decide that the company is exonerated from liabilit)'. Whatever may have been the course of decisions in other States, the whole tendency of the courts here has been to sanction the right of the agent to waive strict conditions in the policy where there has been uo fraud, and the insured has acted in good faith in dealing with the agent, and it appears to me that such a tendency is in accord- ance with the adjudicated eases which uphold the spirit and sub- stance of a contract without giving to either party the advantage of mere technical rules, so long as no principle of law is violated.^ 1 Cone V. Niagara F. Ins. Co., 5 T. & C. (N. Y.) 33; affd. 60 K T. 619. ' North Berwick Ins. Co. v. N. E. F. tfc M. Ins. Co., 52 Me. 482; Carrugi v. Atlantic etc., Ins. Co., 40 Ga. 135; Coombs v. Hannibal, etc., Ins. Co., 43 Mo. 148. In Murphy v. Southern Life Ins. Co., the Supreme Court of Tennessee has recently leld, that where a local agent of a life insurance company waired the forfeiture of a policy arising from the payment of only a portion of an annual premium when •due, the waiver was binding on the company, although he was acting in excess of his special authority and in violation of his instructions, such waiver being within the apparent scope of his employment as agent. This case was distinguished from 538 Misrepresentation'. Misdescription, when policy avoided by. When not. Sec. 221. In order to avoid the policy for a misdescription as to the situation, condition or location of the property insured, it Bouton V. The American Mut. Life Ins. Co., 25 Conn. 342, where the court denied the authority of the agent to waive payment of premium in advance before the policy took effect, because there was no other evidence than the terms of tlie policy as to his agency, In Markey v. Mxit. Benefit Life Ins. Co., 103 Mass, 78, it was- held that the authority of an iusuranc%agent must be determined by the nature of his business and the apparent scope of his employment. The general tendency of the cases is that officers and agents of insurance 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, and if the assured is allowed to act upon the confidence of such waiver, the insurer is estopped from denying the fulfilment of the condition. See Baptist Church v. Brooklyn F. Ins. Co., 19 N. Y. 30.5. la Alexander v. Germarda. F. Ins. Co., 5 T. & C. (N. Y.) 208 the defendant issued a. policy of insurance to plaintiff on a house in Suffolk county for one year. The house shortly thereafter burned down. It had been occupied as a dwelling by a Mrs. Mowbray until about a month before the insurance was effected, but at th& time of the insurance was unoccupied, and remained so until the fire. The appli- cation was taken by Henry Brewster, who for three years had solicited business, filled out applications, received premiums, taken surveys, and made descriptions of buildings for defendant. Mr. Brewster, knowing the house was unoccupied, applied to plaintiff to insure it. After some hesitation, plaintiff consented. Brewster made out the application, wrote all the answers which were written to the questions proposed; plaintiff signed it, and it was sent to the defendant, and upon it the policy in question was issued. In this application there is contained the fol- lowing question: " Occupation— For what is the building used, and how many tenants are there ?" To this the answer written by Brewster was "dwelling." It was held that the agent's knowledge of the fact that the house was vacant, estopped the defendants. Babnabd, P. J., said: "It is now claimed that the policy thus issued is void, for the reason that plaintiff, by the application, made a warranty as to the occupation, which was broken when made, and thereby the policy was of no effect. This presents two questions for examination: What was the warranty in question ? What effect had the knowledge of Brewster that the house was unoc- cupied upon the defendant ? The question of warranty would not be free from, doubt if the application had been filled out by plaintiff. The insured premises had been a dwelling until a few weeks before the fire — was a dwelling-house in ordinary and accurate language at the time of issuing of policy, having no tenant, and was- expected to be tenanted as a dwelling in the near future. A general question as to mode of occupation might be answered as it was answered, " dwelling." All doubt Is removed as to the question when the additional fact is considered that Brewster solicited and filled up the application himself. He was defendant's agent acting within the scope of his authority. He was told nothing by plaintiff, but wrote the company answer to the question with a full personal knowledge of the facts. Brews- ter cannot be held to have intended to deceive either his own principal or the plaintiff. In view of these facts and of the fact that that part of the question as to number of tenants is unanswered the legal intendment ]nust be that the company have only a covenant that the building was a dwelling-house and when used thereafter should be used as a dwelling. Assuming that the legal construction of the question and answer to be that the house was, at the date of the application, actually occupied as a dwelling, Brewster knew the fact to ' be otherwise, and prepared the application for plaintiff to sign. As has been already stated, ordinary men would make the answer in question in reference to an unoccupied dwelling-house. The defendant ought to be estopped by the knowledge of its agent when the acts and declarations of the agent induced the contract of insurance. This seems to be the doctrine of the Court of Appeals on this subject. Ames v. N. Y. Union Ins. Co., 14 N. Y. 253; Rowley v. Empire Ins, Co., 36 id. 550." A contrary doctrine is held in Massa- chusetts where the policy in express terms provides that " every insurance agent, broker, or other person, forwarding applications or receiving premiums, is the agent of the applicant and not of the company." It has been held that a misstate- ment of the title, in the application, although the true state of the title was known Concealment. 539 must be an actual material misdescription. If it is correct in substance, although not literally so, and does not materially change the risk, the policy will stand. ^ If a building is described as a grist mill, cotton factory, school-house or dwelling-house, if it was built and vised for that purpose, there is no misdescription although it is not at the time occupied for any purpose.^ to the agent, avoids the policy. Abbot v. Hhaiomut etc., Ins. Co., 3 Allen (Mass.) 213; Tebbetts v. Hamilton Ia. that the mere appropriation of an insured building to illegal pur- poses did not avoid the policy.* Falsa demonstratio non nocet. Bryoe v. Lorillard Ins. Co. Sec. 222. If, either from the face of the instrument or from ex- assumed the risk. Van Schoick v. Niaqara Ins. Co. , 68 N. T. 434 ; Cone v. Niagara Ins. Co., 3 T. & C. 33; S. C, 60 N. Y. 619. The stipulation requiring notice of non-occupancy and indorsement under such circumstances is waived. There is no inconsistency between this result and the eases Chase v. Hamilton Ins. Co., 20 N. Y. .52; Alexander v. Germania Ins. Co., 66 id. 464; Walsh v. Hartford Ins, Co., 32 id. 5. 1 Chase v. Hamilton Ins. Co. 20 N. Y. 52. 2 Lawrence v. National Ins. Co., 121 Mass. 557. ^ Johnson \. Union Ins. Co., 127 Mass. 555. * Behler v. German Mut. Fire Ins. Co., 68 Ind. 347. Concealment. 541 trinsic facts, the true and the false description can be made to ap- pear, that which is false must be rejected.^ Thus a policy was issued to the plaintiff upon a building situate " upon the corner of Charles street and Western avenue. A cabinetmaker's shop is in the building." The building was located as stated, but there was no cabinetmaker's shop in it, and the court held that the Avords "a cabinetmaker's shop is in the building" might be rejected, and then the policy would attach to the building intended to be in- sured.2 But, if the misdescription is entire, so that, after casting out all that is false, there is not enough left to clearly point out the risk, the maxim falsa demonstratio non nocet cannot be in- voked and the polic}^ is void. Thus, where a policy on merchan- dise was described as behig in section lettered " C," Patterson stores. South Front, below Pine street, Philadelphia, when in fact the goods were in section "A," both at the time of insurance and of the loss, it was held that the policy was void, and there was no risk to which it could attach.^ In the last case cited, Folger, J., in a very able opinion, re- viewed the principles, as well as the authorities, relating to the question, and his review of the subject is so able and thorough that I incorporate it as a part of the text. He says : " The claim of the plaintiff, that the contract of insurance was erroneous through mistake, and should have been reformed, is not tenable. The mistake which will warrant a court of equity to reform a con- tract in writing must be one made by both parties to the agree- ment, so that the intentions of neither are expressed in it ; or it must be the mistake of one party, by which his intentions have failed of correct expression, and there must be fraud in the other party in taking advantage of that mistake and obtaining a contract with the knowledge that the one dealing with him is in error in regard to what are its terms. The findings show that the defen- dant made just the contract which it, from the first, intended to make, and just the one which it understood the plaintiff's assignor meant to make. "Whatever may have been the intention of the insured or his agenr, there is nothing in the findings, nor in the evidence, which shows or has a tendency to show that defendant ^ Loomis V. Jackson, 19 John. (N. Y.) 449. ^ Heath v. Franklin Ins. Co., 1 Cush (Mass.) 257. 2 Bryce v. Lorillard Ins. Co., 55 N. Y. 240. 642 MiSEEPEESENTATIOir. or its agent purposed anything else than to insure property in sec- tion C of the Patterson stores. Such being the case, it is not in the power of the court to reform the instrument, for thereby vio- lence will be done to the intentions of the defendant. Nor is there fraud in the defendant or its agent. Nor is there evidence which would warrant such finding. The case cited by the plain- tiff ^ is not analogous to this. That was the case of a mistake in the attempt by the vendor to perform, by the execution of a con- veyance, a pre-existing contract* for the sale of land. The assignee of the vendee, knowing that the conveyance did not contain an exception stipulated for in the contract, and that the vendor was in an error in omitting it, still accepted the deed and refused to correct the mistake, intending to reap the profit of it. The con- veyance was there reformed, on the ground of the fraud of the as- signee of the contract, and on the ground that it was an erroneous performance of a contract, as to the terms of which there was no dispute. These two conditions cannot be predicated of the con- tract in the case in hand. This case is unlike an earlier one in this court.2 There the chancellor refused to enforce a contract for the pur- chase of land resting in parol, on the ground that the vendee did not understand and intend it as the vendors did. The vendors were seeking to enforce a contract, as they claimed it to be against one who had denied the making of that contract, and averred that he made another and a different one. Specifia performance was refused, because the doubt was so great whether both parties un- derstood alike the agreement to be implied from defendant's bid. To allow this contract of insurance to be reformed and then en- forced would be to do just what the court there refused to do ; for here as there, the defendant did not understand the terms of it, as they are claimed by the plaintiff to have been, and to impose upon them in those terms would be to make a contract for them which they did not intend to enter into. The policy of insurance is, then, to be taken as the contract of the parties. It was, then, a contract to insure property ' contained in letter C, Patterson stores. South Front, below Pine street, Philadelphia.' And that descrip- tion of the place of deposit of the property, written into the pol- • Welles V. Yates, 44 N. T. 525. 2 Coles T. BL.ioeys, 10 Paige, 534. Concealment. 543 icy in accordance with the application of the insured, was a warranty by him of its particular location, and the truth of that warranty became a condition precedent to any liability to him from the defendant. And it was a warranty and a condition pre- cedent, not to be avoided by the fact that the truth of the descrip- tion was not essential to the risk, nor an inducement to the defend- ant to enter into the contract. This rule is so well estabhshed in the law of insurance, as that it must be adhered to, though it may work hardship in a particular case. Nor does it depend upon its freedom from a susceptibility to a double interpretation, that a description is a warranty. Whatever is expressed, whether with perspicuity or obscurity, that is what is warranted. Other rules then come in to assist in the discovery of what the language means. If there be latent ambiguity, that may be removed by testimony. And here there is latent ambiguity. The language used is the language of the parties. It does assert, and therefore warrant, that the property is ' contained in letter C, Patterson stores', etc. The phrase ' letter C,' taken by itself, has a meaning. But, by reason of collateral matter and extrinsic circumstances, an ambi- guity arises. It had an especial or technical meaning to those en- gaged in the business of putting property on storage in the Penn- sylvania warehouse, and to those who solicited and wrote insur- ance upon it. When the testimony gives that meaning it indicates but one thing — that part of the Patterson stores, which is desig- nated to owners of property, and to insurers of it, as the section •or division C thereof. It is impossible to say, in the light of all the circumstances disclosed by the pleadings and the testimony, that letter C of the Patterson stores is not section C thereof, and that a description of property, as that ' contained in letter (7, Patterson stores,' does not mean pro- perty deposited in that division of that warehouse known and de- signated as letter C. It is impossible to say that it does mean property mentioned in a book C, of the proprietors of that building as plaintiff contends. The doctrine maintained in The Western Insurance Co. v. Cropper,^ and Franklin Fire Insurance Co. v. Updegraff,^ will not aid the plaintiff. Those cases hold that if the clauses of a 1 22 Penn. St. 351. 2 43 id. 351. 544 MiSREPEESENTATION. policy be obscure, it is the fault of the insurer, for he it is who has penned the language ; so that if it be capable of two interpretations, that must be adopted which is most favorable to the insured. There is not room here for but one interpretation, 'Letter C, Patterson stores,' has but one meaning. The latent ambiguity prevents that being seen on the bare reading of the phrase. When that ambi- guity is done away with by the testimony, there is no difficulty in interpreting the words and reaching their sense. The plaintiff in- vokes the aid of the maxim, '■faho demonstratio non nocet.'' It may be conceded that there is a false description of the location of the property. But that is not enough to bring into operation the rule embodied in that maxim. There must be in the description so much that is true, as that, casting out that which is false, there is still enough left to clearly point out the place in which is the pro- perty. Indeed, an authoritative definition states and qualifies the rule more narrowly than this, viz. : ' As soon as there is an adequate and sufficient definition, with convenient certainty of what is in- tended to pass by the particular instrument, a subsequent erroneous addition will not vitiate it.' (Broom's Leg. Max. 464, 605.) But it needs not so to restrict in the case in hand. The phrase, ' letter C,' as meaning the place of storage of this property, is a false show- ing. If that phrase is rejected, then the whole description is con- tained in the words, ' Patterson stores, South Front, below Pine street, Philadelphia.' These words do, as far as they go in mean- ing, tell the truth as to the situation of the property. They do not, though, tell the whole truth, nor, the whole essential truth. The word ' Philadelphia,' alone, would tell the truth, but not the whole of it. To be made certain as to the exact place of deposit of the property, for the purposes of this contract, it needed not only to know what city it was, and on what street therein, but in what building on that street. And if that building was so constructed as to be of many divisions, practically separate, each from the other for safety from fire, and treated as distinct in making contracts of insurance, certainty of description needed some expression of Avhat division it was in. This was the office of the phrase, 'letter C If that phrase be rejected, and no other truthful phrase be inserted, the description fails to show just wherein the Patterson ..tores the property was placed. That phrase, though false, might harm, for it pointed the description-to the-w-rong place, and some equivalent for it was needed to complete a truthful description. Concealment. 545 The evidence taken against the objection of the plaintiff was competent. It was to show that tliis part of the description, though wrong, was harmful, and therefore not to be rejected. It was to show that though there was a warehouse known as the_ Patterson stores, it was one made up of several divisions, as distinct, for the purposes of storage of property and of the insurance of it against fire, as the dwelling-houses is in a block ; and that to know the place of the property, needed the naming of the section of the building in which it was, as much as if the risk had been on household goods. Their situation would not have been pointed out short of the ex- pression in the description of the number of the house in the block. We are of the opinion that the defendant established a strictly legal defense to the action of the plaintiff. As we sit here to de- clare the law, and not to propound a code of morals, we must sustain it." lonides v. Pacific F. & M. Ins. Co. Sec. 223. In a late English case ^ the plaintiff's clerk applied for insurance on a lot of hides, onboard the Socrates. There were two ships named in the register, one named Socrate and the other Socrates. The defendants' manager directed the clerk's attention to this fact, and asked him if it was the Socrates. The clerk re- plied that he thought it was, and the policy was so made. The hides were in fact, shipped upon the Socrate, and were lost. In an action to recover for the loss, the court held that the misdescription was entire and fatal to a recovery. American Central Ins. Co. v. McLanathan. Sec. 224. In a late case in Kansas, ^ it was held that, where the misdescription is not entire, and there is enough left after reject- ing the false description to fix the situs of the property, the policy can be enforced without being reformed. Thus, in that case, the policy covered a ' two-story frame dwelling, occupied hy him, sit- uate on south-west corner of Second and Vine streets, Leavenworth, Kansas,' and 'on frame barn in rear of same.' The premises were, in fact, situate upon the south-west corner of Mm and Sec- 1 lonides v. Pacific F. & M. Ins. Co., L. E. 6 Q. B. 674. 2 American Central Ins. Co. v. McLanathan, 11 Kan. 533. 35 546 MlSEEPEESENTATION. ond streets, as the agent who wrote the policy knew. The court held that this was not a case of entire misdescription, because the insured did not occupy the buildings on the south-west cor- ner of Vine and Second streets, either at the time of the insurance or of the loss, and from these extrinsic facts the true situs of the property could be ascertained. Policy can only attach according to its terms. Sec. 225. When the policy Covers property, described as being in a certain place, the risk only exists while the property is in such place, and does nat cover the same property in another place. The policy can only be held to cover the property while kept in the place described, unless otherwise provided in the policy.^ The policy can only attach according to its terms, and if the in- surance is desired to cover it in different locations, it must so appear in the policy itself, and when it so appears, the risk con- tinues wherever the property may be within the limits imposed. Thus in one case ^ the plaintiffs, as trustees of a railroad company, effected a policy of insurance with the defendants " on any proper- ty belonging to the said trust company, as trustees and lessees as aforesaid, and on any property for which they may be liable, it matters not of what the property may consist, nor where it may be, provided the property is on premises owned or occupied by the said trustees, and situated on their railroad premises in the city of Racine, Wisconsin." It was held, that a dredge-boat belonging to 2 In Annapolis E. B. Co. \. Baltimore F. Ins. Co., 32 Md. 37, a policy taken out by the plaintiff described a portion of the property insured as follows : " $2,250 on two Murphy & Allison passenger cars, say SI, 125 on each, one of them being used as a baggage and passenger car, contained in the car-house marked No. 1 ; and $3,000 on locomotive engine J. H. Nicholson, contained in the engine-house marked No. 2." After the insurance one of the Murphy & Allison cars was en- tirely destroyed, and the engine greatly damaged by fire, while on the line of the railroad making a regular trip. Upon an action brought by the railroad company against the insurance company for the injury thus done to the car and engine, it was held, that the words " contained in " were not intended merely to describe the car and engine covered by the policy, but were designed to limit the risk of the in- surance company to the time during which the car and engine were actually in the car and engine-houses, and that, having been injured when out of the car and en- gine-liouses, no recovery could be had on the policy. In North American Fire In- surance Company y. Throop, -p. 146, 22 Mich., it was held, that a policy of insui- ance on " the stock, lumber and goods manufactured and in process of manufacture in said building," will not cover property in the yard adjoining the building ; also, when the insurer writes out the application from the oral statement of the applicant, the latter, in a controversy arising thereon, may introduce parol evidence to show that he stated the facts truly, and that the conduct of the insurer was such as led him to believe that such as were omitted were immaterial. * The Farmer's, etc., Trust Co. v. The Harmony, etc., Ins. Co., 51 Barb. (N. Y.) 84. Concealment. 547 the plaintiffs, in their employ in the city of Racine, and attached to their wharf \^here the road terminated, was thereby in the plaintiff's possession and annexed to the railroad premises, and therefore covered by the policy. Where a stock of goods of a certain class, as dry goods, are in- sured, the policy will not cover goods afterwards bought by the insured and not embraced in that class ; neither will an insurance "upon household furniture, linen, wearing apparel, etc., cover fur- niture linen, or wearing apparel subsequently bought and kept for sale.^ -General rule. - Sec. 226. It is a first principle of the law of insurance, that when a thing is warranted to be of a particular nature or descrip- tion, it must be exactly such as it is represented to be, otherwise the policy is void ; therefore, where a mill was insured, as being of one class, and turned out to have been of another at the time it was insured, it was held that an action on a policy could not be sustained, as, whether the misrepresentation was in a material point or not, or whether the risk was equally great in the one class as in the other, was wholly immaterial ; the only question being, whether the building was de facto that which was insured !But even in a case of warranty, it is a good answer that the mis. take or misrepresentation is attributable solely to the insurers themselves or their agent ; ^ but it is held otherwise in New York if the policy makes the agent the agent of the insured. Tlius, in Alexander v. Germania Ins. Co.,^ the owner of an unoccupied ■dwelling-house, at the solicitation of defendant's agent, took out a policy of insurance thereon in defendant's company. The applica- tion was filled out by the agent, who knew all the circumstances, including the fact that the house was unoccupied. One of the ^ In Watchom v. Langjord, 3 Camp. 422, the plaintiff, a coacli-plater and cow- keeper, insured his stock in trade, household furniture, linen, wearing apparel and plate. Subsequently, he purchased a large stock of linen drapery goods on specula- tion. A fire oocumng, he claimed to recover therefor. Lord Ellestborough said: " I am clearly of opinion that the word Zi'iieii in the policy does not include articles of this discription. Here we may apply ' noscitur a sociis. The preceding words are ' household furniture,' and the succeeding, ^wearing apparel.' The linen must be household linen or apparel." 2 Newcastle F. Ins. Co. v, MacMorran, 3 Dow. 255 ; Benedict v. Ocean Ins. Co., 1 Daly (N. r.C. P.) 9 ; aff'd, 31 N. Y. 389. 8 5 T. & C. 208 ; 2 Hun, 655. 648 MiSKEPKESENTATION. questions in the application was, " For what is the building used ? " to which the answer was, " Dwelling." The application also pro- vided that the statements should be warranties, and further, " thai any person other than the assured, who may have procured this in- surance to he taken, shall he deemed to he the agent of the assured, and not of the company, under any circumstances whatever^ The building having been burned, the defendant alleged breach of warranty, in that it was unoccupied when insured. It was held, reversing the judgment below, that the statement that the build- ing was occupied as a dwelling was a warranty, and the breach thereof avoided the policy ; that the agent's knowledge did not bind the company ; that the provision making the person procur- ing the insurance the agent of the assured, was operative, and estopped the plaintiff from claiming that the company was bound by the knowledge of the agent.^ In a New York case,^ the application described the building upon which insurance was sought, as a stone dwelling, and omitted to state that there was a frame addition thereto, used as a kitchen, and the court held that this was such a misdescription as invali- dated the policy ; but in a recent case in Massachusetts,^ the policy described the property insured as " contained in three-story granite building." The front of the building was granite, one end and the rear of brick, the other end granite up one story, and brick above that, and the roof of slate. The plaintiff's store ran through the three-story block, and then through a one-story building, having a sky-light in its tinned roof, and then into a three-story hrick huild- ing; the sides of the entire store were flush, and were the whole way from front to rear, one side and the rear of brick, the other side, for most of the way and perhaps all, of lathing and plaster, and the front of granite. The referee having found, as a matter of fact, that such a building might ordinarily and legally he de- scribed in an insurance policy as a granite building, the court held that there was no misdescription.* These cases demonstrate that. 1 See also, Bohrback v. Oermania Ins. Co., 62 N. T. But, where the insurer re- quires the application to be filled out by its agent, the company is bound by his errors or fraud. Sprague v. Holland Pat. Ins. Co., post. 2 Chase v. Hamilton, 20 N. T. 52. 8 Medina v. Builders', etc., Ins. Co., 120 Mass. 225. * See also Cox v. .Mtna Ins. Co., 29 Ind. 583, where, in answer to a question : Concealment. 549 in all cases where a misdescription is alleged, the question is, whether the description is such as is ordinarily or usually applied to the class of proper insured, and whether the insurer knew, or had reason to know, that the description was not to be taken literally. In the New York case, the court went to an unwarranted length in invalidating the policy, because it appeared that the defendant's agent knew that there was a wooden addition to the building, and, under the rule as now held, that, of itself, would have estopped the defendants from setting up the misdescription in defense.^ But where the description is radically erroneous, the policy is void. As, where the goods covered by the policy were described as being "contained in a two-story frame h.oxxs.e filled in with brick," and in point of fact, the house was not filled in with brick, the policy was held void.^ "Are the outside walls wood or brick?" the assured replied "brick," when ia fact they were part wood. It was held that this fact of itself did not avoid the policy. 1 Emery v. Piscataqua Ins. Co., 52 Me. 322. In Columbia Ins. Co. v. Cooper, 50 Penn. St. 331, where an applicant for insurance on machinery in a mill, when in- quired of as to incumbrances upon the property, answered that there were none, adding, however, that there were judgments on the land, but he did not think them liens on the property insured, in which opinion the agent concurred, and transmitted "the application to the company with the answer that there were no incumbrances, it was held that such mistaken answer was not a covenant ; that the assured might prove the circumstances under which the answer was sent by the testimony of the agent ; and that the assured was not responsible for the mistake of the agent, not- withstanding a stipulation in the policy that if any agent should assume to violate its conditions, such violation should be construed to be the act of the assm-ed, and Tender the policy void. It was also held that the fact that a small portion of the property insured belonged to a tenant of the assured, upon which the latter had a lien as landlord ; that he was not guilty of fraud in not disclosing such tenant's Interest when making his application for insurance. Where a party applies to the agent of a company for injsurance, and at the same time mentions that he already has other insurance on the same property, and the agent neglects to enter the fact in writing on the policy, the assured will not suffer by reason of such neglect. Id. ; N. E. Fire, etc., Co. v. Schettler, 38 111, 166. If a local agent of an insurance com- pany, who took an application for insurance, was informed by the assured of the true condition of the ownership of the property, and failed correctly to take down the facts stated, and the policy wasreceived by the assured in ignorance of any mis- statement or omission, and if the agent had the power to pass upon, and did pass upon, the risk, and issue the policy without forwarding the application or submitting the matter to the company, the company cannot defeat a recovery, on the ground that the agent did not correctly state in the policy the facts concerning the title or interest of the assured. Ayres y. Home Ins. Co., 21 Iowa, 185. The rule is, that trhere the agent knows the facts, and that there is no intention on the part of the insured to deceive or defraud the insurer, the misstatement of facts by the agent will not avoid the policy. 2 Fowler v. ^tna Ins. Co., 6 Cow. (N. Y.) 673. 550 MiSEEPEESENTATION. Oral misrepresentations. Distinction 'when they apply to future, rather than present facts. Sec. 227. A statement of an opinion, by the insurer, as to the future use or condition of the property, cannot be construed as a warranty that such use of condition shall exist. It is to be treated as a mere representation that does not avoid the policy, unless fraudulently made. Thus, where the insurer stated orally that a. dwelling-house, then vacant, would be occupied, that he had a man in view who was going to occupy it, upon the faith of which the policy was renewed, it was held that this, if it could have any effect upon the contract, being oral, could not be construed as a promissory warranty that the house should be occupied, but only as an expression of an opinion that it would be.^ Oral statements or representations made by the assured, unless embodied in the policy itself in reference to the future use or con- dition of the property, cannot be shown to alter or vary it, or to control its application or effect,^ unless they are shown to have been fraudulent and made to mislead the defendant and induce the taking of the risk, or to take it at a lower premium than they otherwise would have done.^ Bat an oral misrepresentation as to a, present fact, as to the ti tier situation, use or condition of the property material to the risk, may be shown to avoid the contract. Not to alter or vary it, but to show that, by reason of the fraud, it never had any vitality as an operative contract.* "If," says Geay, J.,^ "representations, whether oral or written, concerning facts existing when the policy is: ^ Kimball V. ^tna Ins. Co., 9 Allen (Mass.) 540; Herriek v. Union, etc., Ins. Co., 48 Me. 5.58; Carter y. Boehm, .3 Burr. 1911; Pawsonv. Watson, Cowp. 785; Whit- ney V. Haven, 13 Mass. 172; Bryant v. Ocean Ins. Co., 22 Pick. (Mass.) 200; Bice V. N. E. Ins. Co., 4 id. 442; Higginson v. Dall, 13 Mass. 99. 2 Weston V. Ewes, 1 Taunt. 115; Edwards v. Footeur, 1 Camp. 580; Alston \. Mechanics' Ins. Co., 4 Hill (N. T.) 329, reversing the judgment given in the same case in 1 Hill (N. T.) 510, where a contrary doctrine was held. Allegre v. Mary- land Ins. Co., 2 G. & J. (Md.) 136; Undelock v. Chenango Ins. Co., 2 N. T. 221; Flinn v. Headlam, 9 B. & C. 693; Flinn v. Tohin, M. & M. 367. ' Shaw, C. J., in Bryant v. Ocean Ins. Co., ante ; Kimball v. -^Etna Ins Co., 9 Allen (Mass.) 551. * AUop V. Coit, 12 Mass. 40; Dennistoun v. Lillie, 3 Bligh, 202; Vanderheuvel y. Church, 2 John. Cas. 173, n; Van Tungeln v. Dubois. 2 Camp. 151 ; Feise v. Park- inson, 4 Taunt. 640; Bowden v. Vaughn, 10 East, 415; PawsonY. Watson, Cowp. 786. ' Kimball v. .^tna Ins Co., 9 Allen (Mass. ) 542. Concealment. 551 signed, are false, it never has any existence as a contract, unless it contains in itself, terms which expressly, or hy necessary implication waive or supersede the previous representation. If the representa- tions are positive, and not of mere opinion or belief it matters not whether they are made at or before the time of the execution of the policy, nor whether they are expressed in the present or future tense, if they relate to what the state of facts is, or will be, when the policy is executed and the risk of the underwriter begins. If the facts are there materially different from the representations, the whole founda- tion of the contract fails, the risk does not attach, the policy never becomes a contract between the parties. Representations of facts ex- isting at the time of the execution of the policy, need not be in- serted in it, for they are not necessary parts of it, but, as is some- times said, collateral to it. They are its foundation ; and if the foundation does not exist, the superstructure does not arise. False- hood in such representations, is not shown to vary or add to the contract or to terminate a contract which has once been made ; but to show that no contract has ever existed. But a representation as to some fact which does not exist when the policy is made, but which is to exist thereafter, is a part of the contract itself, and if the insurer relies upon, and intends to secure its enforcement, he must incorporate it in the policy as apart of the contract, or be able to show that it was fraudulently made, with the view and purpose of inducing an acceptance of the risk, or its taking at a lower rate of premium. It cannot be shown as a part of the contract, nor as a defense thereto, except it is tainted with the vice of fraud, and relates to a matter material to the risk.^ The mere fact that the condition of things to which the representation relates, does not transpire, does not operate as proof that it was fraudulently made ; fraud in fact, must be established. The insurer takes the burden of showing that it was not honestly made, in good faith, or with an expectation that it would transpire. Human expecta- tions, seemingly well founded, fail, and because they do so the person indulging them, cannot, therefrom, be charged with dis- honesty. 1 LoED Mansfield, in Carter v. Boehm, ante; Geay, J., in Kimball y. ^tna Ins. Co., 9 Allen (Mass.) 543; Lord Mansfield, in Pawson\. Watson, 2 Cowp. 785. " Kimball y. ^tnalns. Co., ante. 552 MlSEEPEESENTATION-. Rule in Paw^son v. Watson. Sec. 228. In an English case ^ it was represented to one of the underwriters that the vessel sought to be insured— the Julius Cffisar — " mounts 12 guns and 20 men," but to the defendant it was only generally represented as " a ship of force." There were neither guns or men on board at the time of the insurance, and at the time of her capture she had less than twelve carriage guns, and less than twenty able men, but so many swivels and boys as to be stronger than if she had that dumber. The question was, whether the instructions shown to the first underwriter, were to be con- sidered as warranties, the same as though inserted in the policy, or as representations that would only avoid the policy if fraudu- lent. Lord Mansfield instructed the jury that " it was a col- lateral representation, and if the party had considered it as a warranty, they should have had it inserted in the policy, also, that if the instructions were to be considered in the light of fraudulent misrepresentation, they must be both material and fraudulent." A verdict having been rendered for the plaintiff, upon a rule to show cause, the verdict was upheld. Lord Mansfield, in a masterly opinion, reviewed the questions involved in all their aspects, and, as his opinion is a leading case upon these questions, and may often be useful, I give the main portion of it here. He said: " There is no distinction better known to those who are at all con- versant in the law of insurance, than that which exists between a warranty or condition which makes part of a written policy, and a representation of the state of the case. Where it is a part of the written policy, it must be performed : as, if there be a warranty of convoy, there must be a convoy. Nothing tantamount will do or answer the purpose. It must be strictly performed, as being part of the agreement ; for there it might be said, the party would not have insured without convoy. But as, by the law of merchants, all dealings must be fair and honest, fraud infects and vitiates every mercantile contract. Therefore, if there is fraud in a repre- sentation, it will avoid the policy, as a fraud, but not as a part of the agreement. If, in a life policy, a man warrants another to be in good health, when he knows at the same time he is ill of a fever, that will not avoid the policy ; because by the warranty he takes the risk upon himself. But if there is no warranty, and he says. 1 Pawson V. Watson, Cowp. 785. CONCEALMBIS^T. 553 * the man is in good health,' when in fact he knows him to be ill, it is false. So it is, if he does not know whether he is well or ill ; for it is equally false to undertake to say that whicli he knows nothing at all of, as to say that is true, which he knows is not true. But if he only says, ' he believes the man to be in good health,' knowing nothing about it, nor having any reason to believe the contrary, there, though the person is not in good health, it will not avoid the policy, because the underwriter then takes the risk upon himself. So that there cannot be a clearer distinction, than that which exists between a warranty which makes part of the wrritten policy, and a collateral representation, which, if false in a point of materiality, makes the policy void ; but if not material, it can hardly ever be fraudulent. So far from the usage being to consider instructions as a part of the policy, parol instructions were never entered in a book, nor written instructions kept, till many years ago, upon the occasion of several actions brought by the insured Tipon policies, where the brokers had represented many things they ought not to have represented, in consequence of which, the plaintiffs were cast ; I advised the insured to bring an action against the brokers, which they did, and recovered in several in- stances ; and I have repeatedly, at Guildhall, cautioned and rec ommended it to the brokers, to enter all representations made by them in a book. That advice has been followed in London ; but it appeared lately, at the trial of a cause, that, at Bristol, to this hour, they make no entry in their books, nor keep any instruc- tions. The question then is, ' whether, in this policy, the party insuring has warranted that the ship should positively and literally have twelve carriage guns and twenty men f ' That is, ' whether the in- structions given in evidence, are a part of the policy ? ' Now, I "will take it by degrees. The two first underwriters before the <30urt are Watson and Snell. Says Watson, 'it is part of my agree^ ment, that the ship shall sail with twelve guns and twenty men ; and it is so stipulated, that nothing under that number will do. Ten guns, with swivels, will not do.' The answer to this is, * read your agreement ; read your policy.' There is no such thing to be found there. It is replied, yes, but in fact there is, for the instructions upon which the policy was made, contain that express stipulation. The answer to that is, that there never were any in- structions shown to Watson, nor were any asked for by him. What color then has he to say, that those instructions are any part 554 MiSEEPEBSENTATION. of his agreement. It is said, he insured upon the credit of the first underwriter. A representation to the first underwriter has nothing to do with that which is the agreement, or the terms of the policy. No man, who underwrites a policy, subscribes, by the . act of underwriting, to terms which he knows nothing of. But he reads the agreement, and is governed by that. Matters of intel- ligence, such as that a ship is or is not missing, are things in which a man is guided by the name of a first underwriter, who is a good man, and which another will th^re fore give faith and credit to ; but not to a collateral agreement, which he cahknow nothing of. The absurdity is too glaring ; it cannot be. By extension of an equita- ble relief in case of fraud, if a man is a knave with respect to the first underwriter, and makes a false representation to him in a. point that is material, as where having notice of a ship being lost, he says she was safe, that shall affect the policy with regard to all the subsequent underwriters, who are presumed to follow the first. How then do Watson and Snell underwrite the ship in question ? Without knowing whether she had any force at all. That proves the risk was equal to a ship of no force at all ; and the premium was a vast one — eight guineas. So much, therefore, for those two cases. The third case is that of Ewer, who saw the instructions, with the representations which they contained. Did the number of guns induce him to underwrite the policy ? If it did, he would have said, ' put them into the policy ; warrant, that the ship shall depart with twelve guns and twenty men.' Whereas, he does nO' such thing, but takes the same premium which Watson and Snell did, who had no notice of her having any force. What does that prove ? That he is paid and receives a premium, as if it were a. ship of no force at all. The representation amounts to no more than this : ' I tell you what the force will be, because it is so much the better for you.' There is no fraud in it, because it is a repre- sentation only of what, in the then state of the ship, they thought would be the truth. And in real truth the ship sailed with a larger force ; for she had nine carriage guns beside six swivels. The underwriters, therefore, had the advantage by the difference. There was no stipulation about what the weight of metal should be. All the witnesses say, ' she had more force than if she had had twelve carriage guns, both in point of strength, of con- venience, and for the purpose of resistance.' The supergargo in particular says, ' he insured the same ship, and the same voyage, for the same premium, without saying a syllable about the force.' Concealment. 555 Why then it was a matter proper for the jury to say, whether the representation was false ? or whether it was in fact an insurance, as of a ship without force ? They have determined, and I think very rightly, that it was an insurance without force. Ewer makes an objection that the representation ought to be considered as inserted in the policy ; but the answer to that is, he has deter- mined whether it should be inserted in the policy or not, by not inserting it himself. There is a great difference, whether it shall be considered as a fraud. But it would be very dangerous to per- mit all collateral representations to be put into the policy." ^ Actual fraud need not be shown. Sec. 229. But where the conduct of the assured, either by acts of omission or commission, are such as influence the insurer in either or any of these respects, it in law is fraudulent, even though, the insured did not know that his conduct was of that character, or did not intend did mislead the insurer.^ It is not essential that the conduct of the assured in these regards should be such as in- dicate bad faith on his part. The matter does not depend so much upon the question as to whether the act is fraudulent, as, whether it is a violation of an implied contract on his part, to re- veal everything material to the risk, or to state everything truly, that he undertakes to state, that influences the underwriter in taking or rejecting it, or in fixing a higher or lower premium. Where the assured does not undertake to state the matter charged to be false, as a matter of positive knowledge on his part ; as, if he states it as his opinion or belief, if untrue, the policy will not be avoided. The insurer is thereby put upon his inquiry, and if he chooses to enter into the contract without more definite or posi- tive information, he cannot charge the consequences upon the as- sured. He is treated as having waived more definite information, and can only avoid the policy, if the assured, knowing the fa.cts, misstated or suppressed them, or states a fact as of positive knowl- edge, when he did not know whether it was true or false.^ If he 1 See also Blze v. Fletcher, 1 Doug. 285 ; MacDowell v. Fraser, 1 id. 261 ; Weston V. EiiieK, 1 Taunt, 115; Flinn v. Headlam, 9 B. & 0. 693. 2 Caty enter v. Am. Ins. Co., 1 Story (U. S.) 57. ' Evans v. Edwards, 13 C. B. 77; Liberty Hall Ass'n v. Housatonie, etc., Ins. Co., 7 Gray (Mass.) 261. In Clark v. Hamilton Ins. Co., 9 id. 148, a failure to disclose 556 MiSKEPEESENTATION. says " I believe," " I liave been informed," " I have reason to suppose," etc., he cannot be held chargeable for the truth of the repeated incendiary attempts to bum the property was lield not such a suppression of facts as avoided the policy, when such attempts were made after the policy was issued, although the policy provided that all changes increasing the risk should be communicated. In Haley y. Dorchester Mut. F. Inn. Co., 12 Gray (Mass.) 545, an action was brought upon a policy, by which the plaintiff was insured " against loss or damage by fire, under the conditions and limitations expressed in the by-laws ' ' of the defendants, annexed to the poltcy, on his " stock in trade, being mostly chamber furniture in sets, and other articles usually kept by furnitm'e dealers, con- tained In second story of the building known as Gerrish Market, in the city of Boston, on Portland street, corner of Sudbury street." Among the by-laws an- nexed was the following: "Unless the applicant for insurance shall make a true representation in writing of the property on which he requests insurance, and of his title and interest therein, of its situation, and of all other matters materially affect- ing the risk, also all incumbrances, the policy shall be void." " All applications shall be approved by two directors, and no director shall approve an application for insurance on property in which he is in any way interested. The application was for insurance " on household furniture in the second story of the Gerrish Market, being my stock in trade, mostly chamber furniture in sets; " and provided that " all the questions must be answered," and that " the answers to the following interro- gatories shall form the basis of the contract for insurance, and the applicant warrants them to be entirely true, and will be bound by them." " Is cotton waste, or any explosive or highly inflammable matter kept near or in the premises on which this insurance is applied for ? " Answer. " Not to my knowledge." " Are there any other circumstances material to the risk, if so, what are they ? If there be a livery or steam engine in the vicinity, state how near the risk." Answer. " There ' is a small steam engine in the fourth story." "Who owns the building to be in- sured, or v/hich contains the property to be insured?" Answer. "Market-stall men; Self; White & Co., polishers; Barnard & Dillingham, painters; Sanborn, Carter, & Bazin, bookbinders, and one ornamental do." And the said applicant hereby covenants and agrees with the said company, the description herein given is a full and true description of the property to be insured, and of all circumstances in relation thereto, material to the risk, and that the estimated valuation shall not be conclusive upon the company; but in case of loss, the true value at the time of loss may be inquired into and ascertained ; the questions not answered above shall he construed most favorably to the risk; and that said applicant shall be bound by the provisions of the constitution and by-laws annexed to the policy, and all laws of the Commonwealth of Massachusetts in relation to the premises, as a part of this con- tract for insurance." It appeared that the Gerrish Market building was a very large building, in which a great variety of business was carried on under a great number of tenants; that, from the time of the application for insurance to that of the fire, the premises occupied by the plaintiff consisted of a large hall or salesroom and three rooms adjoining, a paint room, varnish room and store or packing room; the furniture was made at another establishment or manufactory, sent up to the salesroom " in the white," or unpainted, and varnished, painted and trimmed in the rooms adjoining the salesroom; and a quantity of varnish, oils and paints were kept in the premises, for use in finishing the furniture. There was no evidence of any intention on the part of the plaintiffs to conceal or neglect to make inquiries about the occupation. The whole stock was consumed by fire on the 12th of April, 1856. There was evidence tending to show that it m as usual for furniture dealers in Boston to keep varnish as part of their stock, and that varnish was a highly combustible matter. The plaintiff introduced evidence, tending to show that var- nish kept in casks was not a combustible or highly inflammable material, and also that some furniture dealers sold furniture " in the white," to other dealers, to be painted, varnished and sold by them. The defendants objected that the policy covered only the stock of furniture fin- ished, and did not extend to the paints and varnish, or any other articles ; and introduced evidence that several of llie answers in the application were not true, and that some questions were not fully answered, and others not answered at all. The judge ruled " that the contract of insurance covered the furniture of a fur- niture dealer, and such other articles as were proved to be usually kept by fur- Concealment. 557 fact stated, but only for the bona or mala fides of the statement made by him.^ The insured is not bound to state every fact ma- terial to the risk. He must not misrepresent or designedly con- ceal any material fact. He must, in good faith, answer all inqui- ries put to him, and having done that, unless the fact not communis cated could not with reasonable diligence he discovered hy the insurer, or anticipated as a ground of specific inquiry, it is not a conceal- ment that invalidates the policy .^ But it should be remembered that a broad distinction exists he- niture dealers and necessary to the pursuit of the plaintiff's business ; and that it was not confined to household furniture, mostly chamber furniture in sets, as the defendants contended, but might include the other articles usually kept by furniture dealers, as stated in the body of the policy ; that, in order to recover for the varnish and oil destroyed, the plaintiff must show that such articles were usually kept by furniture dealers ; that the jury were to inquire to what amount they were usually kept ; and that the plaintiff would not be entitled to recover more in value than the usual amount, taking into consideration the nature and extent of the plaintiff's business and the quantity of furniture on hand ; that the declarations, representations and statements in the application, so far as they related to the risk, if untrue, whether from design, ignorance or mistake, it would be fatal to a recovery by the plaintiff ; that they were to be read fairly, and not captiously ; that, so far as no answers were given to questions in the application, they might find that the company waived such answers, but that the company must have the benefit of the provision in the contract that such emission should be construed most favorably to the risk ; and, if there was any material conceal- ment, or concealment of a material fact, it would avoid the policy ; that, as the answers given to specific questions, the meaning of the language as to both was to be determined by common use and acceptation, and by all the other provisions of the contract touching the same subject-matter, and by the different answers themselves ; that, if a misstatement could have no possible relation to the risk, it would not affect the policy ; that the clause as to explosive substances would not be violated in having on hand so much varnish and oil as were necessary in carry- ing on the business of a furniture dealer, and in such quantities as were usually kept, under the former limitations ; and that the jury, in determining whether this question was answered truly, might refer to the answers made, to another question as to the occupation of the building ; and that, as to the answer relating to the livery stables, the jury were to inquire whether it was proved that there was a livery stable in the vicinity at the time of the application (the plaintiff con- tending that the evidence did not apply to that time, but to a subsequent period) ; and that, if it was so proved, they were to determine what was the meaning of the question, and of the ' vicinity,' and whether there was a livery stable in that vicinity, having reference to the situation of the building in which the property was situated, the situation of other buildings, and the locality, as ascertained from the contract and evidence." As to the question in regard to the occupation of the building, there being evidence tending to show that, at the time of the application, there were occupants in one or two room of the building not named in the answer, besides the general instructions given, the jury were also instructed " that, if there were such occupants, not mentioned in the answer, the omission would not necessarily avoid the policy, if the jury were satisfied that, by such occupation, the risk was less hazardous than it would have been if the occupation and occupants were all such as stated in the answer ; and that the purpose of the inquiry was to be born in mind." 1 Arnould on Ins. 300 ; Dennistoun v. Idllie, 3 Bligh, P. 0. 202 ; Lexington Ins. Co., V. Powers, 16 Ohio, 324. 2 Hartford Protection Ins. Co., v. Rarmer, 2 Ohio St. 452. 658 MiSEEPKESENTATION. tween statements made in answer to inquiries put hy the insurer, and those stated hy the insurer voluntarily and not in response to in- quiries hy the insurer. In the one case the answers are made mate- rial hy the act of the assured, whether they are so in fact or not, while in the other case, even though the statements are made a part of the policy, they are not efficacious as warranties unless material in fact?- No distinction between effect of concealment and misrepresentation of facts. Sec. 230. The effect of a concealment and of a misrepresenta- tion of facts relating to the risk are the same, and their effect npon the rights of the parties are tested by the same rules, to wit : ■whether they relate to matters material to the risk, or influence the insurer either in taking or declining the risk, or in fixing a less rate of premium than he would otherwise have charged therefor? The concealment or representation of untrue matters that are not mate- rial to the risk does not avoid the policy, because they do not in- fluence the insurer in the respects previously named. Thus, if the assured states the situation and occupancy of the premises to be more hazardous than it in fact is, the insurer cannot complain be- cause he has not been damnified thereby. He would have taken the risk if the true facts in reference to those matters had been known to him? Insured bound to ansiver all inquiries truly. Sec. 231. But, as to all matters inquired about by the insurer, as preliminary to the contract, he must, at his peril, answer truly.* Failure to disclose proximity of other buildings. Sec. 232. Thus, if required to state all the buildings within ten 1 Wilsonx. Conway F. Ins. Co., 4 R. I. 141 ; Dennisony. Thomastim, etc., Ins. Co., 20 Me. 125 ; Frisbie v. Fayetteville Ins. Co., 27 Penn. St. 32.5 ; Waldronv. N. y. Fireman's Ins. Co., 12 John. (N. T.) 128 ; Boardman v. N. H. Ins. Co., 20 N. H. 551 : Wall v. Howard Ins. Co., 14 Barb. (N. T.) 383 ; Farmers? Ins. Co v. Snyder, 16 Wend. (IST. Y.) 681 ; Clark v. Hamilton Ins. Co., 9 Gray (Mass.) 148. ^ Columbian Ins. Co. v. Lawrence, 10 Pet. (TJ. S,) ; Bogs v. American Ins. Co., 30 Mo. 63 ; Hartford Protection Ins. Co., v. Harmer, 2 Ohio St. 452. ^ Haley v. Dorchester Mut. F. Ins. Co-, 12 Gray (Mass.) 545. * Jacobs V. Eagle, etc., Ins. Co., 7 Allen (Mass.) 172 ; Handy v. Union Ins. Co., 4 id. 217 ; Huntley v. Perry, 38 Barb. (N. Y. ) 569. Concealment. 559 Tods, or any other distance, an omission to state all of them although it occurred by mistake, will avoid the policy,^ but this does not require that the insured should state the existence of erections for temporary purposes not coming fairly within the term buildings, unless used for hazardous purposes. Thus, in answer to an inquiry, " What is the distance and direction from each other and from other buildings within a hundred and fifty feet, and for what purpose are said buildings occupied?" it was held that the •omission of the assured to state the existence of a temporary structure of rough timber, 45 feet by 12, and about 18 feet high, Tvithin the distance named, made for the use of the carpenters em- ployed to erect the building insured, did not invalidate the policy, unless the jury found that it was used for purposes that materially ■enhanced the risk.^ The presiding judge at the trial instructed the jury " that, if there was upon the premises of the plaintiff, and within one hundred and fifty feet of the building insured a car- penter shop, adapted and used for that purpose, which shop was shown xo belong to a more hazardous class, and one which would have required a greater premium to be paid for insuring the semi- nary building ; and the existence of said shop was not disclosed to the insurers in the answers in the application, but wholly omitted therefrom ; such omission would invalidate the policy." A verdict xinder this ruling was rendered for the plaintiff, which was sus- tained upon appeal. Tailure to disclose true state of the title. Sec. 233. Where the application calls for the true state of the title of the assured in the property, a failure to set it forth truly, whether the mistatement resulted from design or mistake, will avoid the policy.^ Thus, where a deed was executed by A. to B., absolute in form, to indemnify B. against loss from certain liabili- ties that he had assumed for A., and he executed to B. an agree- ment to reconvey the premises to him when released from such liabilities, and B. procured an insurance upon the buildings in his 1 Huntley v. Perry, 38 Barb. (N. Y.) 569 ; Day v. Conway Ins. Co., 52 Me. 60. 2 Bichmondville, etc., Seminary v. Hamilton Ins. Co., 14 Gray (Mass.) 489. ^Hutchinsv. Cleveland, etc., Ins. Co., 11 Ohio St AIT ; Reynolds y. State, etc., ins. Co., 2 Grant's Cas. (Penn.) 326 ; Mutual Assn. Co. v. Mahon, 5 Call (Va.) 517 ; Mrmimjham v. Empire Fire Ins. Co., 42 Barb. (N. Y.) 457. 560 MiSEEPEESENTATION. own name ; and the policy contained a condition that property held in trust, to include that held as collateral security, must be so in- sured ; it was held that the policy was void, because he did not set forth the fact that he held the property in trust.^ An applicant for insurance had only an undivided half interest in the property, having transferred the other half to his son, who had mortgaged it to his mother, and afterwards assigned it for the benefit of credi- tors. The applicant went to the assignee and to the mortgagee to obtain their interests, and they told him that he could have them, and upon these assurances he had the property insured. It was held, that the policy was void, because it stipulated that it should be so if the interest of the assured were other than " the entire, unconditional, free, and unencumbered ownership." ^ But where a policy declared that it should be invalidated by any omission to make known a material fact respecting the condition, situation, value, or occupancy of the property, and the assured was not asked, by the printed form of application or otherwise, whether there were incumbrances on the property, it was held, that his mere omission to volunteer a statement of the fact that there was a lien on the property to a large amount for taxes, or to disclose that he had entered into an oral executory contract to lease the property, would not invalidate the policy,^ nor on an application for insurance, a warranty of ownership of the premises is not broken by the incumbrance of a mortgage.* But where the assured noti~ fies the company or its agent of the exact state of the title, it is, immaterial that it is not stated in the policy, and this is so, although the policy contains a printed clause that it shall be void in such case and that no agent has authority to waive its conditions, and the assured may testify that he did not read the condition- and therefore that he had no knowledge of it. If the beneficial interest in an estate is in the assured, the fact that the naked legal title is in another does not amount to a mis- description of his interest or vitiate a policy which provides that it 1 Miller v. Amazon Ins. Co., 46 Mich. 463. A description of the interest of the assured who has merely a leasehold interest as " his " avoids the policy when the ground of his representation Mens v. Franklin Ins. Co., 68 Me. 127. See also ^tna Ins. Co., V. Besh. 40 Mich. 241. 2 Alkan v. N. H. Ins. Co., 58 Wis. 136. s Carson v. Jersey City Fire Ins. Co., 43 N. J. L. 300 ; 39 Am. Kep. 584. Sam- mel V. Queen Ins. Co., 54 Wis. 72. * Miaghan v. Hartford F. Ins. Co., 24 Hun. (N. Y .) 58. Concealment. 561 shall be void if the assured is not the entire unqualified and sole owner for his own use " and benefit." ^ The insurer is bound to take notice of extent of risk. Sec. 234. Where the description in a policy and the purposes to which the building is dedicated indicate the nature of the articles to be kept there, and the business to be prosecuted, the fact that such business or such articles are hazardous or extra hazardous will not invalidate the policy. ^ Thus, where a policy was issued upon a stock of drugs, chemicals and other medicines, hazardous and ex- tra hazardous, it was held that the policy was not invalidated by anything done by the plaintiff incident to the business, however hazardous such act might be, as the placing of five gallons of a highly explosive mixture called ointment upon a stove to warm, by means of which the property was burned. In such cases, the act being incident to the business, the insurer is presumed to have been acquainted with the business, and to have contracted in refer- ence to all its hazards, and if he desires or intends to make any ex- ceptions, they must be clearly and definitely stated in the policy ; ^ and, even though the particular use is not an usual incident of the business, yet, if it is a use that the insured has practiced, or that a previous occupant of the building has practiced, to the knowledge of the insurer, and nothing has been said or done by the insured to indicate that any change in that respect will be made, the insurer is presumed to have anticipated and contracted with reference to such special use, and the insured may show the facts to sustain the policy.* In New York v. Hamilton Ins. Co., 39 N. Y. 45, an action was brought to recover upon a policy issued on the building known as the " crystal palace," the policy described it as "the one lately owned by the association for the exhibition of the industry of all nations," and the defendants were aware that it had been used exclusively for the purpose of exhibitions. The court very 1 American Basket Co. v. Farmville Ins. Co., 3 Hughes (U. S. C. C.) 251. ^Day V. Charter Oak Ins. Co., 51 Me. 91. ^Jffew York y. Brooklyn Fire Ins. Co., 41 Barb. (N. T.); 231. Smiths. The Me- chanics,' etc,, Ins. Co., 32 N. Y. 399. ' Brown v. Kings County Fire Ins. Co., 31 How. Pr. (N. T.) 508 ; New York v. Hamilton Fire Ins. Co., 39 N. Y. 45. * New York v. Exchange Fire Ins. Co., 9 Bos. (N. Y.) 424. 36 562 MlSEEPEESENTATIOSr. properly held that the defendants must be deemed to haye been acquainted, when they issued the policy, with the use to which it was appropriated — the nature of the objects exhibited, and the means employed to exhibit them, and to have intended to include the proper management of such business in their risk ; and that the keeping of a restaurant, with liquors and cigars, supplied with a kitchen with ovens, are a part of the necessary concomitants of an exhibi- tion, and pass under the insurance. Misrepresentation of value. Over- valuation. Sec. 235. A misrepresentation of the value of the property to be insured, when the policy is valued, is material to the risk, and avoids the policy,^ but it must be a fraudulent or intentional mis- statement thereof, and not a mere error of judgm'ent. In order to establish fraud in such a case, the mere fact that the property is worth less than the amount stated, is not sufficient ; it must either be shown that the insured knew that it was worth less, or the actual value of the property must be so much less than that stated, as to warrant a presumption that the error was intentional, rather than an error of judgment, and in this, the burden is upon the insurer to establish the fraud.^ In order to make misrepresen- tations as to value material, the policy must be valued, or the representation must be incorporated into the policy as a warranty. If the insurer, by the terms of the policy, is only liable for the actual cash value of the property, the amount of insurance, or the 1 Lycoming Ins. Co., v. Rubin, 8 Chi. Legal News, 150. In Carpenter v. Ameri- can Ins. Co., 1 Story (U. S.) 57, the plaintiff represented that there was other in- surance to the amount of $ 15,000 on the property. The insurers declining to take the risk, he then represented that about $ 10,000 had been expended in additions to the property after the other insurance was made. In fact, only S700 had been added, and it was held that the policy was void, although the plaintiff honestly sup- posed that his statement was true. 2 Cushman v. U. S. Life Ins. Co., 4 Hun. (K. Y.) 783 ; Continental Ins. Co., v. Kasey, 25 Gratt. (Va.) 268; Hodgson-^- Marine Ins. Co., 5 Cranch. (U. S.) 100; Franklin F. Ins. Co. v. Vaughan, 92 U. S. 516. National Bank v. I^is. Co., 95 IT. S. 673. A fraudulent over-statement of the value of the property destroyed, avoids a policy which contains a condition to that effect. Sibley v. St. Paul P. & M. Jji.and did not defeat the insurance. Under the usual provision in a policy of insur- 596 Alteeatioks. hoarding-house without invalidating the policy, unless boarding- ance that the conditions annexed are "to be resorted to in order to explain the rights and obligations of the parties thereto, in all cases not herein otherwise specially provided for," such conditions do not define the rights and obligations of the parties under any contingency provided for in the body of the policy. Hence, where a clause in the body of the policy provides that the insurance shall be sus- pended during any increase of the risk from specified causes, and tlie conditions an- nexed provide that the policy shall become void by any increase of the risk, an increase of risk, such as is !ecified in the clause in the body of the policy, does not avoid but merely suspends the policy. " Mliere," said Kobertson, J., " a policy of insurance specifies the uses to which the premises are applied, a mere increase of risk does not avoid the policy, unless it arises from something else than their appropriation to the uses which are contemplated and covered by the policy." See also, N. Y. v Ex- change Ins. Co., 9 Bos. (N. Y.) 424, where it was held that where a building was constructed and used for tlie purposes of an exhibition of industry or fair, and ike defendants, knowing its use, had several time insured its owners, or lessees, in re- spect to it, and the plaintiffs, subsequently becoming its owners, procured the defen- dants to insure them in respect to it, the plaintiffs had a right, after obtaining such insurance, to occupy and use the building for the same purposes ; but it seems tliat the use must he an incident of the building, or such as the insurer, under the circum- stances, is bound to know will be continued. Thus, where the insurer had previously insui-ed a building, and knew that tliere were no gas fixtures in it, and tliat the ten- ant at that time used spirit gas, it was held that they were not thereby bound to know that another tenant would also use spirit gas because the use was not neces- sarily an incident of the risk. Mlnzesheimer v. Continental Ins. Co., 5 J. & S. {N. Y.) 332. See also, Robinson v. Mercer Co., etc. Ins. Co., 27 JS". J. 134. So, too, if there is an application, the description of the use to which the premises are to be put, contained therein, will prevail over a previous use. State, etc., Ins. Co., v. Arthur, 30 Penii. St. Sl.'j. In Lounsbury v. Protection Ins. Co., 8 Conn. 439, a policy was issued on a building occupied as a manufactory of liat bodies, and " on the privilege for all the process of said business." The conditions specified, among oc- cupations denominated extra-hazardous, "carpenters, in their own shops, or in buildings erecting or repairing." It was held that the use of a room in the building as a shop, for the purpose of repairing the machinery necessary for the business of making hat bodies, was protected by the policy. In Washington, etc., Ins. Co., v. Mechanics' etc., Ins. Co., 5 Ohio St. 4.'jU, it was held tliat where a policy of reinsur- ance was on the stock of flour, grain and cooperage contained in the stone and brick steam flouring mill, with cement roof, detached from other buildings, and the policy prohibited the buildings or any part from being used for any trade declared hazar- dous, among which were mills and manufactories and mechanical operations requir- ing fire heat ; and it was claimed that the use of a kiln-drying corn-meal mill, re- quiring fire lieat in the building, avoided the policy ; it was held that, whether a kiln-drying corn-meal mill toas an ordinary incident or usual appendage of the busi- ness of a stemn flouring mill, was a proper question of fact for the jiu'y, and was not to be determined by the court, and that if such kiln-drying apparatus in a corn- meal mill is not a necessary incident to the ordinary mode of carrying on a steam flouring mill, carrying on such a business in such flouring mill would avoid the policy. The court also held that the underwriter, in entering into a contract of insur- ance on a mechanical establishment, can be presumed to insure only against risks arising from the usual mode of carrying on such establishment ; and )/ an invention materially increasing the risk is introduced into the building, it will avoid the policy. The rule is well expressed in HrUl v. Ins. Co. of N. America, .58 N. Y. 292, in which it was held that where a policy is issued upon the materials used in a business, it in- cludes and authorizes the use of all such materials as are in ordinary use in the business, although by tlie printed clauses of the policy the keeping or use thereof upon the premises is prohibited, and although other materials might be substituted therefor. Langdony. Equitable Ins. Co., i Hall (N. Y.) 226; Duncan v. Sun. F. Ins. Co., 6. Wend. (N. Y.) 488 ; Franklin, etc., Ins. Co. v. Brock, .57 Penn. St. 74 ; Stetson V. Mass. Ins. Co., 4 Mass. 330: Peoria F. & M. Ins. Co. v. Hall, 12 Mich, 202; Harper v. Albany City Ins. Co., 17 N. Y. 194; Steinback v. Lafayette Ins, Co., 54 N. Y. 90; Wood v. Protection Ins. Cn. 3 Conn. 533; 2 Ben F. I. C. 24; Moore v. Protection Ins. Co., 29 Me. 97 ; United States Ins. Co. v. Kimberly, 34 Md. 224 ; Inceeasb op Risk. 597 houses are classed as hazardous ; ^ and so, generally, unless the policy stipulates expressly against a certain use of the premises, if the use is a usual incident of the property for the purposes for ■which it was insured, or if it was necessary or proper for the pro- tection of the property, the policy'is not thereby invalidated. Ij the particular use is stipulated against expressly,, of course it is pro- hibited.2 Condition an independent one. Sec. 254. The condition in reference to an increase of risk is an Independent one, and in no measure dependant upon the list of hazards annexed to the policy, or the conditions in reference thereto. If tTie risk is increased in any manner, the condition is violated. Thus, in a Louisiana case,^ the plaintiff insured his stock of groceries, wines and liquors, and to the extent of $500 on his fixtures and furniture, all contained in a frame shingle building in the town of Carrollton. Eight months afterward the premises were entirely destroyed by fire, causing the total loss of his stock in trade, furniture, etc., Avhich, as alleged, were worth, at the time the fire occurred, over $2,500. The defendants, being the insurers, were sued on the policy of insurance for $2,500, with interest, etc. The defense was, that Dittmer, after he had effected the insur- ance, stored in the premises a quantity of unbaled hay, and kept it there until the fire, thereby acting in bad faith, and materially increasing the risk of the defendants, in violation of the contract by which he was insured, rendering, according to its conditions,