(Snrttell IGaui &rlnrol iCibrarg Cornell University Library KF1164.R51 A treatise on the law of insurance :f ire 3 1924 019 359 003 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924019359003 A TREATISE ON THE LAW OF INSURANCE FIRE, LIFE, ACCIDENT, MARINE With a Selection of Leading Illustrative Cases AND AN APPENDIX OP STATUTES AND POEMS BY GEOKGE EICHAEDS OF THE NEW YORK BAR AND LECTURER ON INSURANCE LAW IN THE SCHOOL OF LAW OF COLUMBIA COLLEGE NEW YORK AND ALBANY BANKS & BROTHERS, LAW PUBLISHERS 1892 UXis Copyright, 1892, * By GEORGE RICHARDS. PKEFACE. This book was designed primarily for the class-room, and is the result of an effort to combine the advantages of the two more prominent methods in use for teaching law, commonly- known as the text-book ajid case systems, the comparative merits of which have recently aroused wide-spread and thoughtful attention. The appearance of Langdell's Select Cases as a substitute for Parsons on Contracts, at Harvard Law School, in the year 1871, and the subsequent abolition o^&est-jpooks from their curriculum by the law faculty or that gr4|at university, marked a conspic- uous departure from pre-existing methods of legal instruction, and gave impetus to an exchange of views among those interested in education which has continued with increased earnestness. By the old method, the student is expected to acquire a knowledge of the elements of the law by memorizing the pages of a general treatise, which, in the estimate and according to the views of its author, contains a compendium of the whole body of law upon the given subject. By the other method, the student is made acquainted with original sources of legal au- thority ; namely, leading decisions and opinions by the courts upon the given subject, together with the precise statement of facts upon which the opinion in each case is based, substantially as recorded in the official reports. These selected cases, edited, arranged, and printed in a book for this purpose, are put into the hands of the class, and are made the subject not only of study and recitation, but also of a free discussion in the class-room under guidance of an instructor, with a view to evolving, illustrating, and emphasizing the im- portant principles established by them, and also other analogous »nd closely allied principles which may at the same time be conveniently considered. The former method gives a synopsis or brief outline of many iv Preface. oases ; the latter sets forth with exact detail a few selected cases upon leading points illustrative of essential principles. The former method is more synthetic and abstract, the latter more inductive and concrete. The former is more theoretical, and, in a sense, more scientific ; the latter, while embracing a narrower range of decisions, is, with respect to the particular adjudications and principles which it includes, more definite, practical, and thorough. Each of these methods, no doubt, possesses points of superiority over the other; and either is, in my judgment, for purposes of giving instruction in most branches of jurisprudence and for the average American stu- dent at law, immeasurably preferable to a lecture system. A scientific presentation of a subject in its entiretj^ by a competent master, must be of value to a student. "Within the broad scope of a general treatise, principles can be concisely defined and conveniently arranged, not only for purposes of study in the first instance, but also for subsequent reference and review ; the relations of different cases to one another can be explained, decisions seemingly inconsistent can be harmon- ized, historical developments can be briefly but adequately summed up, and many particulars and distinctions of greater or less importance, which could not possibly be touched upon within the bounds of any selection of isolated cases, can be enumerated or brought within the reach of general rules. For example, within pages 133 to 196, inclusive, of this vol- ume, the meaning and legal effect of every clause of the New York standard fire policy are considered with some degree of comprehensiveness, together with numerous citations of authori- ties. Little of this matter probably could be omitted to ad- vantage ; and yet, to enforce or illustrate all the propositions of the text contained in these sixty-four pages with actual cases reported in full would increase the length of the work to sev- eral volumes, making it altogether too bulky and expensive to meet the more immediate aim of the book. If, then, the student's memory were absolutely infallible, and if extent and variety of legal formulas were the only desidera- tum, and provided the general treatise were a sufficiently good one, the text-book system might well claim to be without a rival ; and, as it is, it offers, I think, characteristic advantages which nothing else can supersede. Preface. v But, on the other hand, it is to he observed, in the first place, that a good text-book upon a given subject is not always available, and especially is this apt to be the case if the branch of law to be considered — like insurance law, for instance — is one which is in process of rapid development. Owing to the large number of independent tribunals in the different States, and the enormous multiplication of reported cases, involving decisions more or less inharmonious with one another, it is a harder task to write a scientific treatise upon a general branch of American jurisprudence than it used to be in former years, when, with a limited field to traverse, the learned juridical author led rather than followed the courts. Accordingly, as is well known, the cautious practitioner of modern times uses his text-book as an index or digest of cases and subjects, rather than as a safe and final exposition of the law, and is seldom satisfied without supplementing its perusal with a resort to the more relia- ble sources of authority to be found in the reports themselves. But, in the second place, the solution of the question of ways and means how most effectively to inculcate legal principles may not turn altogether upon the excellence of the text-book that happens to offer itself for use ; since at best a text-book is only a reflection from the law, and not the law itself. It is, for the most part, as has been remarked, nothing but a collec- tion of actual decisions from many cases. Here the abridg- ment is not in the number of cases, but in the form and sub- stance of every one ; and in order to bring the reports of all the adjudications cited in the text within the compass of a vol- ume, each case must be condensed to a point almost beyond recognition. Its title and individuality must be sacrificed. The exact and concise statement of material facts, prepared with all the experience and skill of the official reporter, without a careful examination of which no judge or lawyer would ven- ture to estimate or pass upon the validity or significance of the decision, must be seriously curtailed or altogether dropped, for lack of room. For the same reason the opinion of the court, although it may be a monument of legal learning and profound thought, and may offer a most concise model of sound and con- vincing logic, and although presumably it was deemed neces- sary for the elucidation of the decision or else it would not have been written, must likewise be omitted. vi Preface. In place of the statement of facts and the course of reason- ing by which the conclusion of the court is explained and sup- ported, the author of the text-book puts into a few words of his own what he considers to be the pith and point of the case; and this is all that is furnished to the student for his edification and instruction. Indeed, without a proper book of selected cases this is all that the instructor can furnish to his class, for it would be fruitless to refer them to a reported case without supplying copies of it, and without making it the subject of examination and discussion in the recitation room, since it is evident that a large class cannot all gain access to the same volume in the library on the same day, and experi- ence proves that they would seldom have the inclination to do so if they could. One difficulty with these summarized transcripts from ad- judicated cases, as they appear in the text-book, is that they must be more or less inaccurate as compared with the originals from which they are taken ; another conspicuous disadvantage inherent in them is that their meaning is frequently obscured by the mutilation which they have undergone, and especially to the apprehension' of a student, for the reason that their abbre- viated form presupposes a much greater knowledge of the sub- ject than the ordinary reader possesses ; and a third cause for unfavorable criticism is their abstract character as compared with complete reports. An actual, well-established, never- changing case, the full details of which have been made familiar by private study and open discussion, appeals to the imagina- tion and fastens itself upon the memory ; but an abstract generalization, read from the pages of some particular edition of a text-book and recited by rote, produces an impression of uncertainty and dissatisfaction, and quickly fades out of remem- brance. The student who has gained all his knowledge of law from a perusal of general treatises, when he is subsequently con- fronted by practical problems in the course of his professional career, will often have a vague recollection that he has read or heard something or other upon the subject presented for his determination, but what the point of the decision was, or which way it went, or where it is to be found, he is unable to remember. What he wants to acquire from his two or three years in the laennsylvania as early as 1769, for the benefit of the families of 'resbyterian clergymen. But the business of life insurance did ot assume much importance until within a period of less than Lfty years. The first reported life insurance case in the United itates 1 shows the existence of a contract of life insurance as arly as 1809. It was in that case contended by the defendant hat no valid contract of life insurance could be made within the Itate of Massachusetts, inasmuch as the law of England in that egard, it was-said, had never been adopted in this country ; but he court sustained the contract on the ground that it was not epugnant to the general policy of the law or to good morals, nd that no reason had been given for condemning such con- racts, except by the French Courts which considered " that it 5 indecorous to set a price upon the life of a freeman which is bove all price " — a reason which was pronounced insufficient, specially as coming from France, " where," Chief Justice ^rker remarked, " freedom had never been known." Accident insurance, which is a branch of life insurance, is a [evelopment of later growth. Ordinary life insurance protects gainst the pecuniary loss arising to a man's family, or cred- bors, or others, by his death, whether that is caused by old ge, accident, or disease. But accident insurance protects only gainst losses caused by accident, whether resulting in death ir not. An important company was established in London in 1849 or insuring against the consequence of railway accidents — The lailway Passengers Assurance Company. In 1856 its business ras extended to embrace accidents of all kinds. The, com- lanies carrying the most extensive accident risks in the United Itates, and probably in the world, are the Travellers, of Hart- ord, and the Mutual Accident Association of New York City. In the United States, life insurance has attained a greater elative importance among financial institutions than in any ther country. During the years which immediately followed he close of the civil war, it grew with unparalleled rapidity ; new ompanies were established in great numbers ; new features of 1 Lord v. Dall, 12 Mass. 115. 14 Insurance : Fike, Life, Marine. § 10 insurance contracts were devised, and soliciting agents can- vassed the country from one end to the other. In the magni- tude of its transactions, no life insurance company in the world is able to make comparison either with the Mutual or the Equi- table, or the New York Life Insurance Company, all three of New York City. Each one of these colossal institutions ex- hibits an annual statement of assets greatly in excess of $100,- 000,000. It is to be observed that fire policies on the average are for a much shorter term than life policies, and that a life company is ordinarily obliged to accumulate for the payment of future losses a much larger amount of assets than is required in the conduct of the business of marine or fire insurance. § 10. Real Estate Title Insurance. — Passing notice must be given to a class of corporations which have of late years been organized in many large cities in the United States to insure real estate titles, and which generally unite with title insurance an extensive and rapidly increasing business of search- ing titles. Their policies obligate the insurers, in substance, to do three things for the protection of the insured : (1) to defend suits against the title at the expense of the insurers; (2) to pay judgments rendered ; (3) and if the insured contracts to sell or loan, and the title is refused, to test its validity in court at the expense of the insurers, and if defeated to pay damages and also to take the property where the insured has contracted to sell it. Of this class of corporations the Real Estate Title Insurance and Trust Company of Philadelphia, organized in 18Y6, was the pioneer. The Title Guarantee & Trust Company of New York City, incorporated in 1882, does an immense business in guar- anteeing titles ; and the Lawyers' Title Insurance Company of New York City is also an important company, though it gives precedence to its department for searching titles. The facilities of such permanent organizations for utilizing, arrang- ing, and recording the past results of their extensive and multi- plied examinations of titles are so great that it is becoming more and more difficult for individual attorneys to compete with their prices in this branch of legal work. §11. Classification of Bisks In fire and marine insurance, risks are classified according to the degree of hazard §11 Nature, Origin, and Growth of Insurance. 15 and the premiums graded accordingly. But in life insurance, as a rule, only healthy persons are accepted, and consequently the premiums are scaled according to age ; sometimes, however, special risks are taken involving a hazardous occupation, or an unhealthy location of residence, for which an extra premium is paid. In all branches of insurance the amount of the premium is made to depend more or less upon average results which have been arrived at after elaborate observations and careful col- lection of statistics bearing upon the subject. In accepting or rejecting a proposed risk, the insurers are governed by their familiarity with these general laws of aver- age. But it is also very important for them to gain a thorough acquaintance with the facts and circumstances relating to the particular case, to ascertain whether it falls within or outside the general law. The location ; the inherent nature and con- dition of the subject-matter ; the character of the insured for honesty or dishonesty, negligence or prudence ; the peculiar temptations to him in consequence of business embarrassment or over-insurance to cause the event insured against or be careless in preventing it — all these considerations are influential in induc- ing the insurers to accept or decline the proposal, or to accept it only at a special rate of premium. In life insurance the company desires to know the age of the applicant, his occupa- tion, residence, probable area of travel, his health present and past, and also the healthfulness and longevity of his parents and nearest relatives. An examination made by the company's medical examiner discloses with some degree of accuracy the condition of present health, but the other information is derived largely from the applicant himself, who is required to answer a series of printed questions detailed in a paper called an appli- cation, which he is required to sign. In fire insurance the com- pany generally desires to know — according to the subject-matter of the proposed insurance, whether dwelling-house, barn, store, factory, theater, church, railway cars, etc., or their contents — the location ; the materials and structure, whether wood, stone, brick, or iron ; whether the roof is slate, tin, tar, or shingles; the condition of flues and chimneys ; whether the building is fire-proof or not ; its relations and communications with adjoin- ing premises ; whether it has iron shutters and iron doors ; the inflammability of personal property ; the character of the use 16 Insurance: Feee, Life, Marine. §12 and occupation of the premises and surroundings, whether unoccupied or subject to careful supervision ; the facilities for extinguishing fire; the efficiency of the fire department, and many other particulars from which they may determine whether the risk is a good one, or whether it is hazardous, extra hazardous, specially hazardous, or undesirable at any price. Formerly much of this information was obtained from the insured by means of the written application containing such interrogatories as were appropriate to give the desired facts. But now the use of a formal application is for the most part confined to Western farm property. In the East, and especially in the cities, the insurers have come to rely very much upon their own means of examination ; and for use in the larger cities they have prepared careful insurance maps showing the character of the risk involved in every building. In marine insurance the rating of ships and statistics regard- ing them are to a Considerable extent a matter of record, but more or less information is often required by the insurers from the insured in relation to the proposed risk. They must be advised from some source of the ownership, quality, and nationality of the vessel, the course of the proposed voyage, the character of the captain, the nature of the commodity carried, the state of political relations, and in time of Avar whether the ship is to sail with convoy. In marine insurance the scale of premiums varies very greatly according to circumstances, and may sometimes well nigh equal the value of the insured property. The subject of insurance is sometimes insured "lost or not lost," provided neither party knows whether the risk has already terminated. § 12. Mortuary Tables.— The premiums to be charged for life policies are based upon calculations made from mor- tality tables, which are tabulated exhibits of the number of sur- vivors and the number of those dying each subsequent year among a given number of persons taken at various given ages respectively. A considerable number of such tables have been prepared at different times, the earliest of which are so rough and inaccurate that they possess only a historical interest. Of the more reliable tables which have been in use in recent times § 13 Nature, Origin, and Growth of Insurance. 17 may be mentioned the Northampton Table, which was con- structed by Dr. Thomas Price from the registers kept in the parish of All Saints, Northampton, England, for the forty- six years, 1735 to 1780. Another English table very exten- sively used by insurance companies was the Carlisle Table, con- structed by Mr. Joshua Milne from materials'furnished by the labors of Dr. John Heysham. These materials comprised two enumerations from the population of the parishes of Saint Mary and Saint Cuthbert Carlisle in 1780 and 1787, and the abridged bills of mortality of those two parishes for the nine years 1779 to 1787. Since then many mortuary tables have been prepared in England and the United States, based upon much more care- fully collected statistics and giving more accurate results. The mathematics of the business, of great practical consequence, are managed by actuaries. New York and other States have adopted the American Experience Table, with four and a half per cent, interest; while Massachusetts, Connecticut, and other States use the Actuaries or Combined Experience Table, with four per cent, interest ; but in New York the liabilities of the life companies are now valued by both standards. A net premium is the rate at which, according to the table of mortality and interest, an insurance could be effected. But to this must be added in practice an important percentage which is called "loading," or " margin," in order to defray the expenses of the business, and to provide for a possible excess of mortality. A gross or office premium is the net premium increased by the loading. § 13. Reserve. — That portion of the premiums of a policy with the interest thereon which is required to be reserved or set aside as a fund for the payment of the policy when.it becomes due is called the "reserve." The mean or average duration of the life of an individual after any specified age, according to a given table of mortality, is called the " ex- pectation of life." Statistical observations on the duration of human life point to the conclusion»that, after the period of extreme youth is passed, the death rate among any given body of persons increases gradually with advancing age ; and where the annual premium is fixed at a uniform rate during the life 18 Insurance : Fire, Life, Marine. § 14 of the policy, as is customary in life insurance, it is evident that if the policy is surrendered by the insured before its expi- ration, the insurers can generally afford to make a return of a portion of the premiums which have been paid. Of the reserve value which the policy is estimated to have at the time of surrender, a part called " the surrender value," the company offers to pay to the insured in return for the cancellation of the policy before its natural expiration. From these same considerations it appears, also, that in the event of the insolvency and winding up of a life insurance com- pany, there is a basis for calculating the present value of the unexpired policies, by which an equitable distribution of assets may be made to all the policy holders in accordance with the laws of priority. The test of solvency is the rule which the insurance de- partment is required to apply to determine the ability of a company to pay all losses which, according to the standard table of mortality and rate of interest, may occur. The liabil- ities of a company consist of its actual unpaid losses, its expenses and contingent obligations, for the payment of which its assets are held liable. The whole amount insured is really a contingent obligation, but in testing the present solvency of a company, this is regarded as a liability onjy to the extent of the reserve on each policy. ( § 14. Different Kinds of Policies. — The forms of printed policies of insurance in use are varied and numerous. They are filled up in writing to suit each particular case, and are often further modified by special clauses, which may be pasted or attached in the shape of printed riders to the more general form. A valued policy is one which expresses on its face an agree- ment that the subject of insurance shall be valued at a specified sum ; for example, a policy upon " the ship Argus, valued at $10,000." Policies upon lives are almost invariably valued. Policies upon ships are generally valued, but other kinds of policies not so universally. Certain States have valued policy laws, but these are not to be commended, because they impose too arbitrary a standard, and may be used as an instrument of fraud. § 14 Nature,- Origin, and Growth of Insurance. 19 An open policy is one in which the value of the thing insured is not agreed upon in the policy, but is left to be ascer- tained in case of loss ; for example, a policy upon a house for $10,000. The term " open policy " or " running policy " is also employed to indicate a very general fqrm of insurance frequently used where the insured is likely to effect many suc- cessive insurances from the same company. It covers such goods, at such amounts of insurance, in such storehouses and places, or, if a marine policy, in such ships, and at such rates of premiums, as from time to time shall be agreed upon and indorsed on the policy or in a book attached thereto, the pur- pose being to obviate the necessity of executing a fresh policy for every transaction. A floating policy is also a general form of insurance, but usually upon goods belonging to the insured within a certain specified area of territory, or otherwise designated, and is intended to cover property which cannot well be described specifically because of its fluctuating quantity and location; as, for example, merchandise in freight trains, warehouses, or lighters. The amount of goods covered by such a policy' is 1 ' ascertainable at the moment of loss only ; and if at the time of loss the amount of goods at the place of the fire exceeds the amount of insurance, it is generally provided, that, for the excess, the owner must be his own insurer, and share the loss pro rata with the insurer. The terms " open policy," " floating policy," and " blanket policy," are sometimes used indiscrimi- nately. A time policy is one in which the duration of the risk is defined at the beginning and at the end, by a fixed date ; as, for example, from noon of January 1, 1892, until noon of January 1, 1893. A voyage policy is one in which, irrespective of time, the duration of the risk is established by geographical termini ; as, for example, from New York to Liverpool, or from New York to Chicago. A life policy is one payable on the death of the person insured. A term policy is one taken for a limited number of years, the sum insured being payable only in case of the death of the insured during this period. A joint-life policy is one payable on the earliest death of either of two or more persons 20 Insurance: Fire, Life, Marine. § 15 insured. A survivorship policy is one payable on the death of the survivor of two or more persons. An endowment policy is one which is payable when the insured reaches a given age, or upon his decease if that occurs sooner. A tontine policy is one in which it is agreed that certain profits of the business shall be apportioned among those of the insured of a certain class surviving, at certain intervals ;* for example, every ten, fifteen, or twenty years. The lapsed policies of the class forfeit their reserve and dividends to the survivors. A tontine dividend is the distribution of such profits among the survivors who are entitled to it after the given period. A semi-tontine policy is one in which it is agreed that the dividends only shall be apportioned among the sur- vivors of the class. In the case of a mutual company or benefit society, the policy or certificate is at once evidence of the contract and of the fact of membership, and generally refers to the by-laws and condi- tions subject to which it is received by the insured. A specimen of the form of a certificate of a benefit society, and of its by- laws and rules, will be found in one of the late Connecticut cases already cited. 1 § 15. Reinsurance. — A feature of insurance business which has developed into great magnitude is the practice of reinsurance. Where a company finds itself in embarrassed circumstances, or for any reason desires to limit its liability, in certain classes of risks, or in certain localities, or under a particular policy, it secures, if possible, policies of reinsurance from other companies. The entire business of an insurance company is not infrequently absorbed in this way by some stronger competitor. § 16. Authority of Insurance Agents to Bind the Companies. — At least some general understanding of the agency system employed by insurance companies in the United States is a prerequisite to the intelligent consideration of the numerous legal questions to which it gives rise, and which, especially under the doctrine of waiver and estoppel, assume a peculiar importance in the law of fire and life insurance. 1 Lawler v. Murphy, 58 Qonn. 894 (1890). § 17 Nature, Origin, and Growth of Insurance. 21 The phraseology used by the companies or current in the trade to describe an insurance agent is of little significance in the law. The significant fact to be ascertained is this, namely, the real scope of the authority which has been granted to him as defined by the requirements of the act or the business which he has been employed by the company to do for it. Within the jurisdiction of many courts this fact is deemed more con- trolling over the contract rights of the parties than any general stipulation regarding the limit of the agent's authority con- tained in the printed policy, because the policy in any event is not the best evidence of relations existing between the insur- ance company and the persons employed by it ; and, moreover, the terms of the policy are often settled by the agent himself, who cannot by his own acts fix the extent of his powers ; and, finally, the contract is frequently closed and the premium paid before the company executes and delivers the policy. The practice of different companies is so varied, and the authority given to the particular agent not only by his written commission but also perhaps by an extended correspondence be- tween himself and his superiors, or by a course of usage recog- nized by the company, is often so ill-defined, that any brief classification must be regarded as rough and only approximately correct. In view of this consideration it is clear that the facts of every case as it arises must Teceiye careful attention. In this country the boards of directors of insurance companies, do not as a rule take an active part in the management of the details of making, altering^ cancelling, or renewing policies. of insurance, or in adjusting kisses, or in Instructing or superintend- ing the cohort of agents who arejocated outside of the home office. Consequently^such dutifes^and powers, subject to the laws of the land and to charter and by-law restrictions, must become vested in the officers. Of the officers, the president and secretary more particularly are'in most companies considered amply empowered with wide discretions in this regard, and are most frequently designated by the rules of the company as the proper officials to sign the policies of insurance. § 17. Agents of IiifeaCompanies.— Agents of Ameri- can life companies located/loutside the home office may for our present purpose be divided into two classes — general agents so 22 Insurance : Fire, Life, Marine. § 17 styled by the craft, and sub-agents. The first class are so called because they have the power to select and make contracts with sub-agents. General agents are employed by the company, and hold a contract from the home office authorizing them to can- vass for insurance. They periodically account to it for premiums collected. Their jurisdiction is generally more or less terri- torial. Their instructions do not permit them to pass upon applications or proposals for insurance, or to make, alter, or discharge policies, or to grant permits, or waive forfeitures, or compromise claims. So far as any control over the terms of the contract is concerned, the intention of the company evi- dently is to restrict their powers to those of a special agency. But the business of general agents, like that of other canvassing agents, is to solicit custom for the company ; and for this pur- pose they are furnished with blanks called applications, contain- ing a long series of questions relating to the risk, which are to be answered by the applicant over his signature. (See form of application in the appendix.) The agent is expected, on behalf of the company, to interview the probable applicant, to use all proper inducements to secure him, to explain what the com- pany requires, and also to write into the application the answers which the applicant almost always dictates orally. Sometimes through fraud, or carelessness, or error of judgment, the agent writes out the. answers in form and substance materially differ- ent from the language used by the applicant ; and the applicant, not knowing the error, or supposing that the agent understands best what the company wants, signs the paper as it is prepared. The application is then forwarded by the agent to the home office, and though if accepted it becomes an essential part of the contract, and all its statements are warranted to be true, it is not before the insured at the time the contract is closed, npr does he have any opportunity of comparing it with the policy. Local medical examiners have no authority to pass upon applications, but these are submitted to the medical director at the home office. Pending the action of the company, the agent is allowed to give the applicant, on payment of the first premium, a pro- visional memorandum called a binding receipt, which simply amounts to an agreement on the part of the company, that if § 17 Nature, Origin, and Growth of Insurance. 23 the application shall be accepted the insurance is to be con- sidered binding under the terms of the usual policy as of the date of the binding receipt, and that if the application is rejected the premium shall be returned. This practically pre- vents the applicant meanwhile from negotiating for the desired insurance with another company. The policy (see form of policy in the appendix) often provides that the contract shall not be binding until the first premium is paid in cash ; but the company is sometimes aware that the agent has a habit of giving credit for special reasons in certain instances, on deliver- ing the binding receipt, thus making himself responsible for the payment of the premium to the company. The general agent pays his own expenses, and receives or retains a com- mission on all premiums collected through his instrumentality, whether first or renewal premiums. Sub-agents are often appointed by the general agents ; hold a contract from them ; have a narrower territory to canvass ; have blank applications the filling up of which they, like gen- eral agents, superintend ; are not generally supplied with bind- ing receipts, but report any applications and bring any cash collected to the managing agent, though their contract gener- ally provides that they may pay and report either to the general agent or to the home office. They pay their own expenses and receive a brokerage, but only on the first premium. This pre- mium is ordinarily paid by the insured not to the sub-agent but to the general agent, and is turned in by him to the com- pany. There is nothing in the usual course of business as trans- acted by local agents of life companies, whether so-called general agents or sub-agents, from which any one dealing with them has the right to infer that they possess any authority to make or alter voluntarily the terms of policies, except, as above noticed, in some instances in regard to the method of paying premiums. But if the local agent of either class misstates answers given to him to be written into the applica- tion, and if the applicant cannot read, or without carelessness of his own is prevented from correcting the misstatement by conduct of the agent, the alleged breach of warranty based upon the misstatement is really the act of the company, and therefore the company is estopped, by what its agent has done 24 Insurance : Fire, Life, Marine. § 18 within the scope of his actual authority, from claiming that the insured is responsible for the misstatement. § 18. Agents of Fire Companies. — In fire insurance the business intrusted to agents is more complex. Three classes of agents will answer our present purpose: general managers, commissioned agents, and agents for soliciting only — that is, for receiving and forwarding proposals. The business of general managers does not resemble that of the canvassing general agents of life insurance companies, though the latter are sometimes styled managers. Many foreign companies, fire and marine, have general managing agents in this country, and domestic companies sometimes have a managing agency in a large center like Chicago or Boston, though such agents may be advertised as special agents. The managers hold a contract from the home office, have wide discretions, and in the matter of making, altering, cancelling, and renewing contracts of insurance, giving permits, and adjusting and compromising claims, are allowed to stand very much in the stead of officers within the territory where they have jurisdiction. In czfee of large losses they usually ask for instructions from the home office. The agents under them, in some instances, report to them, and in others report direct to the home office. Commissioned agents hold a written commission from the home office, granting them " full power to receive proposals for insurance in a certain place and vicinity, to fix the rates of premiums, to receive moneys, and to countersign, issue, and renew policies of insurance signed by the president and attested by the secretary (or signed by the manager), subject to the rules and regulations of the company, and to such instructions as may from time to time be given by the officers." Policies and renewal receipts signed in blank by the proper officers are furnished them, and printed forms of riders, to enable them to fix rates and close contracts in their discretion, without con- ference with the home office. They often close a contract of insurance orally, it being understood that the usual policy is to be subsequently delivered, and they often take the responsi- bility of giving credit to the insured for premiums, making themselves responsible to the company; and of this custom § 18 Nature, Origin, and Growth of Insurance. 25 the company has knowledge. The officers probably never give express instructions to their commissioned agents to waive conditions of the policy in any way, except as provided by the policy, to wit, by written agreement indorsed thereon (see form of policy in the appendix) ; but the courts generally hold that by virtue of their apparent authority, such agents may waive any of the provisions of the policy by parol, including the stipulation that prohibits waivers except in writing, unless a restriction upon their authority has been brought to the atten- tion of the insured. Where, however, by the written form of application, if one is used, or by the terms of the policy itself, notice is given to the* applicant that the agents have no authority to waive conditions of the contract except by written agreement, it is evident that, at any rate, after such notice is received by the insured, neither the osten- sible authority nor the actual authority of the ordinary commissioned agent is sufficient to enable him to effect a parol waiver of the conditions of the policy. In such a case, as a general thing, any disturbance of the contract can be accomplished by him only by a positive act on his part, within the scope of his agency, and while engaged in the business of the company, upon which an equitable estoppel against the company can be predicated under a rule of law which overrides the contract. But to prevent any misap- prehension, it should be added here, that, in spite of such a recital or stipulation in the application or policy of alleged lack of power on the part of any of the officers or other representatives of the company, it may still be the fact that officers and managers really have an authority sufficiently broad to enable them to waive any of the conditions of the policy inserted for the benefit of the company, including the very clause which purports to restrict their powers. The commis- sioned agents within the scope of the business intrusted to them are considered general agents, except as their power may be specifically restricted. Their commission does not usually, in express terms, authorize them to adjust losses or compromise claims, but as quick settlements, before the insured have thought or talked much about their damage, are best for the insur- ers, it is a fact that the commissioned agents are generally per- mitted to settle small losses in their discretion. They are paid 26 Insurance : Fuse, Life, Mabine. § 19 by deducting a commission from the premiums which they collect. Agents for soliciting only are sometimes appointed by gen- eral agents, but as a rule must be approved by the manager or home office. They have no express power to issue or alter pol- icies, but they are to submit the proposals received by them to the superior authority. Sometimes, however, they are allowed to give binding or interim receipts, which protect the property of the applicant under the terms of the usual policy until the application is accepted or rejected, and often they are allowed to collect premiums and give credit. Where a written applica- tion is used, the applicant generally answers the questions orally, and the agent is expected to fill in the blanks, and is, in fact, intrusted with some power and discretion in this regard, like other agents engaged in canvassing for the benefit of their principal ; thus questions of estoppel may arise like those already suggested. After this paper is signed by the applicant, it is forwarded by the agent to the proper office. § 19. Agents of Marine Companies. — Some marine companies require that all proposals for insurance shall be passed upon at the home office. Others grant this authority to their outside agents. The applicant often fills up the blanks of a short printed form with a few essential particulars describing the subject of the proposed insurance, and sends it to the company as a note of inquiry, with a request to the company to name a rate, and the statements contained in the note of inquiry sometimes serve as the representations upon which the insurance is based. Marine insurances are generally closed in this country by binding-slips, and often through the intervention of agents or brokers, or both. In London and in many other places the custom is for the broker to give a credit to the insured for the premium, and for the company to give credit to the broker. In that event the policy becomes binding upon its delivery, irrespective of the actual payment of the premium. In Great Britain, by the Stamp Act, a valid marine insurance can be effected only by a written policy ; but in case of alleged error in the policy, the binding^lip is admissible in evidence to shed light upon the probable intent of the parties. CHAPTER II. GENERAL PRINCIPLES. Nature of the Contract. % 20. Indemnity.— The controlling principle underlying the contract of insurance is indemnity. The agreement is aleatory or speculative in one sense ; that is, the parties may not know whether the event insured against will occur or not : but compensation and not profit must be aimed at, and consequently the party insured must have at least an appreciable pecuniary interest in the subject of insurance, or else the contract will be altogether void. 1 Hence, it follows that the sum named in the policy is not the measure but the limit of recovery, and this is true whether there are successive losses or only one loss under the policy ; and if the property is injured without total destruction, no matter how large the amount of insurance, the recovery is limited to the loss actually sustained. The principle that the contract of in- surance is one of indemnity is in practice subjected to various modifications and limitations, which will presently be noticed. Such modifications have been engrafted upon the general rule largely out of regard to convenience. Thus the parties are .per- . mitted to agree in advance upon the value a of the subject of insurance by a valued policy, which in case of total loss is then conclusive evidence of the value, in the absence of fraud or an intent to evade the law, although ' in fact the estimated value may be erroneous ; but this infringement upon the strict theory of indemnity is of great practical convenience, for often the 1 Halford v. Kymer, 10 B. & C. 725. * Irving v. Manning, 6 C. B. 391. Commonwealth Ins. Co. v. Sennett, 37 Valued policy conclusive unless fraud- Pa. St. 305; 78 Am. Dec 418. Eager ulent. Patapsco Ins. Co. v. Biscoe, v. Atlas Ins. Co., 14 Pick. 141 ; 25 7 Gill. & J. 293 ; s. c. 28 Am. Deo. Am. Dec. 363. 219. 28 Insurance : Fire, Life, Marine, . § 21 casualty which destroys the insured property destroys with it the best evidence of its value. Accordingly, some of the States have passed valued policy laws applicable to realty, which pro- vide that in the absence of fraud the value of the building writ- ten in the policy shall be taken to be its true value and the amount of loss where the building is wholly destroyed. These laws are not to be commended, however, although it is said that they are not intended to disturb the general doctrine of indemnity. 1 The rule requiring an insurable interest to give support to the contract is grounded upon the most important considera- tions of public policy, and has for many years been recognized as reasonable and expedient by all the courts. Wager contracts of insurance were at one time tolerated in England, but were forbidden by two statutes, applicable to marine and life policies respectively (19 Geo. II. c. 37 ; U Geo. III. c. 48). The preamble of the former statute is as follows : " Where- as it hath been found by experience that the making of assur- ances, interest or no interest, or without further proof of interest than the policy, hath been productive of many pernicious prac- tices whereby great numbers of ships with their cargoes have either been fraudulently lost and destroyed or taken by the enemy in time of war, and such assurances have encouraged the exportation of wool and the carrying on of many other prohibited and clandestine trades," etc. In most of the States of the Union there are statutes against wagering contracts, and no excuse can be found in our day for doing away with the wholesome rule that insurance must be for indemnity and not for betting, notwithstanding a recent writer advances the contrary view. 2 A wager policy is more to be condemned than an ordinary wager, for it is not only at variance with sound business ethics, but it also offers peculiar inducements to the insured to bring about fraudulently the event insured against. § 21. Insurance does not always Grant Full In- demnity.— Only such damages as are caused proximately by the specified perils are covered by the policy. This rule, ' Ampleman v. Citizens Ins. Co., 35 Mo. App. 308. s Cooke on Life Ins., §§ 58, 59. § 22 How Far a Contract of Indemnity. 29 also, is grounded upon considerations of utility, and ordinarily limits the scope of the contract because of the inconvenience of attempting to form an estimate after loss of the extent of remote, uncertain, and fluctuating elements of damage. Thus the incidental loss of trade, or of the use of a building or ship while being repaired, or of prospective profits, or any jpretium affectionis attaching to the property destroyed, is too remote, and is not supposed to enter into the calculation of the con- tracting parties. "Where, however, the parties do in fact ex- pressly take into their account these more remote items of damage, they may make them the subject of a valid insurance. Thus the loss of use and occupation or of expected profits may be specifically insured as such, and frequently is. In marine insurance profits are generally added in the shape of a per- centage to the value of the goods. "What results of fire and marine casualties are proximate, and what are remote, will be considered under the clauses of the policies. § 22. Insurance Grants Indemnity for Results of Negligence. — "Where the loss is caused proximately by the peril insured against, the fact that .the negligence of the insured or his agent contributed to the disaster will not deprive him of the protection of his policy ; because it is of the nature and purpose of insurance to grant indemnity for the results of' carelessness as well as of aocident. This rule, as originally adopted by the courts, was somewhat arbitrary, but is also eminently just and sensible. 1 In the case of fire insurance, for example, the security offered to the insured by his policy would be seriously impaired if it were open to the insurers to plead in defense contributory negligence on the part of the insured or his servants ; for many if not most fires have their origin in some act of carelessness. Accordingly the insured has the right to look to the company for indemnity notwithstanding any amount of carelessness in occasioning the loss, provided it does not involve an element of evil design, or illegality, or a violation of some contract •Mathews v. Howard Ins. Co., 11 Adams, 123 U.S. 67. Gore v. Far- N. Y. 21. Union Ins. Co. v. Smith, mers' Mut. Fire Ins. Co., 48 N. H. 41; .124 U.S. 405. Orient Ins. Co. v. 97 Am. Deo. 572. 30 Insurance : Fire, Life, Marine. § 23 obligation on his part, and provided the loss is the proximate result of the peril insured against. This consideration, however, will not avail to excuse a breach of warranty, imposed upon the insured by the contract, which has been brought about by the negligence of himself or his agent ; as, for example, a violation of the implied or express warranty that the ship must be seaworthy at the commence- ment of the voyage. JSTor will it relieve the insured from the obligation of any other engagements of the contract ; as where in the accident policy ;t is provided that the insurers shall be exempt for losses caused by voluntary exposure to unnecessary risk ; or where in the fire policy it is stipulated that the com- pany shall not be liable for loss caused by neglect of the in- sured to use reasonable means to save the property at and after a fire ; x ' § 23. Rule of Indemnity Qualified in Marine : Insured a Co-insurer. — In case of a partial loss, the rules of recovery applicable to fire and marine insurance, respec- tively, differ in a very important particular. In fire the in- sured recovers his damage up to the amount of the policy; but in marine, when the policy is not valued, the insured recovers only such proportion of the amount insured^ as the loss bears to the value of the whole interest of the insured in the property. This limits a recovery unless the property is fully insured. 2 Thus if a man takes out an open fire policy for $5,000 on his furniture worth $10,000, and a loss of $2,500 occurs, he will recover his loss in full; but if he has an open marine policy for $5,000 on his cargo worth $10,000, to which a loss of $2,500 occurs, he will recover only $1,250. Sometimes by the attachment of a co-insurance clause the fire policy is made to resemble the marine contract in that respect. Otherwise in fire insurance where the property is only partially covered by insurance, the insured recovers in case of partial loss under the policy as much as though he had 1 Richelieu & Ont. Navigation Co. * Nicolet v. Ins. Co., 3 La. 366; 23 v. Boston Marine Ins. Co., 136 U. S. Am. Deo. 458. 408. Whitney v. Ocean Ins. Co., 14 La. 485; 33 Am. Dec. 593. § 25 Subrogation. 31 been paying premiums for full insurance, whereas in reality he has only been paying premiums for part insurance. * § 24. Double Insurance Contribution. —Growing out of the doctrine of indemnity is another; namely, that where different policies exist on the same insurance, subject and risk, the co-insurers stand somewhat in the attitude of co- sureties toward one another, to this extent, that each insurer in fire insurance must contribute ratably toward the loss with- out regard to the dates of the several policies — assuming, of course, that the policies are subsisting at the time of loss. Except for the usual contract limitation called the pro rata clause, the insured might recover his loss in full against any of the co-insurers, but not exceeding the amount of the policy, leaving the insurers to apportion the loss by subsequent con- tribution among themselves.' The rule of double insurance contribution in marine insur- ance as applied in America is quite different, and is founded upon the theory that policies attach in the order of their date. This rule will be considered in discussing the clauses of the marine policy. § 25. Subrogation. — Another corollary incident to the doctrine of indemnity is that of subrogation. Upon paying the loss under a policy the insurer becomes subrogated pro tanto to such rights and remedies as the insured may have against any third persons who are primarily liable to him for his damage sustained. This rule likewise grows out of the principle that insurance i is designed to protect the insured from loss, and not to be the i occasion of gain to him. Otherwise the insured on pursuing j his double remedy might be indemnified twice over." The United States Supreme Court says : " In fire insurance, as in marine insurance, the insurer, upon paying to the assured the amount of a loss of the property insured, is doubtless sub- rogated in a corresponding amount to the assured's right of 1 Wigginr. Suffolk Ins. Co., 18 Pick. 381. Jackson Co. v. Boylston Mut. 145. Lucas v. Jefferson Ins. Co., 6 Ins. Co., 139 Mass. 510. Liverpool Cow. 635. Note in 28 Am. Dec. 121. & G. W. Steam. Co. v. Phenix Ins. 2 Caetellain v. Preston, 11 Q. B. D. Co., 129 U. S. 397. 32 Insurance : Fiee, Life, Marine. § 25 action against any other person responsible for the loss. But the right of the insurer against such other person does not rest upon any relation of contract or of privity between them. It arises out of the nature of the contract of insurance as a con- tract of indemnity, and is derived from the assured alone, and can be enforced in his right only. By the strict rules of the common law, it must be asserted in the name of the assured. In a court of equity or of admiralty, or under some State codes, it may be asserted by the insurer in his own name ; but in any form of remedy the insurer can take nothing by subro- gation but the rights of the assured, and if the assured has no right of action none passes to the insurer." 1 Thus if a common carrier carelessly starts a fire by sparks from a locomotive, which burns the property of the insured, the insurer upon paying the loss under the policy becomes sub- rogated to the right of recourse which the insured had against the common carrier. The latter must not be exonerated or released without the consent of the insurer. 2 A release given to the negligent party by the insured with- out the consent of the insurer will in such a case bar his right of action upon the policy. 3 If the wrong-doer pays the assured after the insurers have made a payment under the policy, it is a fraud upon the latter, provided the wrong-doer has knowledge of the fact, and will not protect him from liability to the insurers. If the insurers, after payment of the damage by the wrong-doer to the insured, voluntarily pay the policy, they cannot maintain an action against the wrong-doer ; and if the assured receives his damages from the wrong-doer before payment is made by the insurers under the policy, the amount so received will be applied pro tanto in discharge of the policy. 4 Inasmuch as the insurers are only entitled to such rights as are vested in the insured, there will be no subrogation in case the insured has stipulated in a bill of lading from the common carrier that the latter shall have the benefit of insurance ; and 1 St. Louis, I. M. & S. Railway Co. ' Dilling v. Draemel, 16 Daly, 104 v. Commercial Union Ins. Co., 139 (1890). Hall v. T>e Railroad Com- u - s - 235 - panies, 13 Wall. 367. a Newcomb v. Cincinnati Ins. Co., 22 * Conn. Fire Ins. Co. v. Erie By Ohio State, 382 ; sc. 10 Am. Rep. 746. Co., 73 N. Y. 399. § 26 Insurable Interest. 33 in case the insured has been so imprudent as to agree to give the insurers the benefit of subrogation, and has also made an inconsistent stipulation with the common carrier, he may find himself without security for his loss. 1 Similarly, where a mortgagee has taken out a policy for his own benefit, and not for the benefit of the mortgagor, upon the property of the mortgagor covered by the mortgage, it is held by the better authority, that, even in the absence of an express provision to that effect in the policy, the insurer upon paying the mortgagee the insurance money becomes subrogated pro tanlo to the mortgage security as against the mortgd§br. a But where the mortgagor has any interest in the policy, either by myment of premiums or by agreement with the mortgagee, then there will be no subrogation in fav or jg ithe insurers, for the latter take only such rights as the asllfed can give. 3 A mortgagee is not required to exhaust his remedy upon the mortgage before enforcing his policy, and he can maintain his action on the policy although the property after the fire is still equal in value to the amount of the mortgage debt. 4 In case the insured under a life policy is killed, or in case property of the insured under a fire policy is feloniously de- stroyed, no right of subrogation exists in favor of the insurers." § 26. Insurable Interest : Fire. — Every interest in property, or in relation thereto, or liability in respect thereof, of such a nature that a contemplated peril might directly damnify the insured, is an insurable interest. A learned justice of the New York Court of Appeals, who has made the subject of insurance law his profound .study, spates the rule in the following words: ( /jH».^'?^ A""v«-~ ) " It would seem, therefore, thjftrwhenever there is a real in- terest to protect, and a person is so situated with respect to the subject of insurance that its destruction would or might reason- 1 Piatt v. Richmond, Y.R. & C. R.R. ' Kernochan v. N. T. Bowery Fire Co., 108 K. T. 358. Fayerweather v. Ins. Co., 17 N. Y. 441. Louden v. Phenix Ins. Co., 118 N^Y. 324. Waddle, 98 Penn. State, 242.. 8 Carpenter v. The . Providence * Excelsior Fire Ins. Co. v. Royal Washington Ihs. Co., 16 Peters, 495. Ins. Co., 55 N. Y. 343. Contra, International Trans. Co. v. ' Ins. Co. v. Brame, 95 U. S. 754. Boardman, 149 Mass. 158. 34 Insurance : Fire, Lite, Marine. § 26 ably be expected to impair the value of that interest, an insur- ance on such interest would not be a wager within the statute, whether the interest was an ownership in, or a right to the possession of the property, or simply an advantage of a pecuni- ary character having a legal basis, but dependent upon the continued existence of the subject. It is. well settled that a mere hope or expectation, which may be frustrated by the hap- pening of some event, is not an insurable interest." * An insurable interest may be legal or equitable, vested or contingent. 2 It may be an existing interest — as, for example, the ownership in fee, or for life, or for years, or aright by mortgage or other lien — or it may be merely an inchoate interest, like a ship-owner's right to freight on goods laden on his ship, or the equitable right to a title under an executory contract of pur- chase, 3 or an interest in expected profits on goods consigned for sale. 4 A tenant by curtesy or dower may insure. 5 The interest may arise from some title to the property or from a mere liability in respect to the property. An insured owner of property does not lose his insurable interest by giving a lease or a mortgage, 6 or making an executory contract to sell the propert} 7 , 7 or even by a foreclosure, so long as any title or equitable right to the property remains in him. 8 And although his title to the insured property may be defective or voida- ble, it may still be the basis of a valid insurance. 9 But a mere contingent or expectant interest in anything, not founded upon an actual right to a thing, nor upon any valid con- tract for it, is not insurable. Lord Eldon illustrates this distinction in an elaborate opinion upon marine insurance, where the same general doctrine prevails. " Suppose A to be possessed of a ship limited to B in case A dies without issue ; 1 Eiggs v, Commercial Mut. Ins. b Franklin Fire Ins. Co. v. Drake, 2 Co., 125 N. Y. 12, by Andrews, J. B. Mon. (Kj.), 47. Williams v. Roger WilliariU' Ins. 6 Hubbard v. Hartford Fire Ins. Co., Co., 107 Mass 377. 1L 33 Iowa, 825. s Fenn t. New Orleans - SlMLlns. * Davis v. Quiney Mut. Fire Ins. Co., Co., 53 Ga. 578. Nat. Filteil|R)il 10 Allen, 113. Co. v. Citizens Ins. Co., lOGJlW. 535. "Strong v. Manufs. Ins. Co., 10 "Broaden v. Manufs. & ItMut. Pick. 40. Essex Savings Bank v. Fire Ins. Co., 15 Can. L. J. Slf .aitna Mericlen Fire Ins. Co., 57 Conn. 335 Fire Ins. Co. v. Tyler, 16 Wend. 385. (1889). 4 French v. Hope Ins. Co., 16 Pick. • Curry v. Commonwealth Ins. Co., 387. 10 Pick. 535. § 26 Insurable Interest. 35 that A has twenty children, the eldest of whom is twenty years of age ; and B is ninety years of age ; it is a moral certainty that B will never come into possession, yet this is a clear interest. On the other hand, suppose the case of the heir-at-law of a man who has an estate worth £20,000 a year, who is ninety years of age, upon his death-bed, intestate, and incapable from incur- able lunacy of making a will, there is no man who will deny that such an heir-at-law has a moral certainty of succeeding to the estate ; yet the law will not allow that he has any interest, or anything more than a mere expectation." 1 It would be difficult to enumerate all the classes of persons who may have an insurable interest in property their own, or held by them for others, or to which they have some rights Among them may be named owners, trustees and cestuis que trust, executors and administrators, co-partners, consignees, factors, agents, mortgagors and mortgagees, .lienors, vendors and vendees, lessors and lessees, sureties, indorsers, common carriers, warehousemen, wharfingers, innkeepers, pledgees, and depositaries generally, stockholders in property of the corpo- ration, and creditors and sheriffs in property attached. 2 A mere trespasser or intruder, or one who has no color of title to property, has no insurable interest in it ; 3 and it has also been held that a creditor atjarge, having no specific lien upon the property of his debtor, has no insurable interest in such property. 4 "Whether a judgment creditor has an insura- ble interest before an~a?tachment or levy upon his debtor's property, is open to question. On principle, as well as on the authority of a New York case, it would seem that he has. 5 But the question is probably of no great practical importance, for an insurer would not be apt to take such a risk. From the list just enumerated, the fact will be inferred that the same person may have different insurable interests in the same property, and also that different persons may have sepa- rate insurable interests in the same property. 6 "Where the 1 Lucena v. Craufurd, 2 B. & P. N. " Grevemeyer v. Southern Mut. Ins. K. 324. Co., 62 Pa. St. 340. 2 Strong v. Mfrs. Ins. Co., 10 Pick. • Eohrback v. Germania Fire Ins. 40 ; s. c, 20 Am. Dec. 507, note 510- Co., 62 N. T. 47. gig • Ins. Cos. v. Thompson, 95 U. S. 'SweeDy v. Franklin Ins. Co., 20 547. Carruthers v. Sheddon, 6. Taunt. Pa. St. 337. 14. 36 Insurance : Fire, Life, Marine. § 27 insured is jointly interested with others, as in the case of co- partners or trustees, or where he is intrusted with goods of other persons, as in the case of a common carrier or warehouse- man or factor, he may either insure his own interest, or his own liability in respect to the property, or he may insure the property to its full value for the benefit of all concerned. 1 § 27. Insurable Interest: Iiife. — Every person has an insurable interest in the life and health of himself, of any person on whom he depends wholly or in part for education or support, of any person under a legal obligation to him for the payment of money, or respecting property or services of which death or illness might delay or prevent the performance, and of any person upon whose life any estate or interest vested in him depends. 2 Thus a partner has an insurable interest in the life of a co-partner, 3 a creditor of a co-partnership in the life of each co- partner, 4 and all creditors in the lives of their debtors. 5 This is true, although the debt is voidable, 6 or not enforcible on account «of the Statute of Limitations. 7 A clerk has an insurable inter- est in the life of his employer, and a master in the life of his servant if he has a legal claim to his services. 8 A woman in the life of her fiance. 9 A surety on a bond in. the life of the principal. 10 A creditor of an infant for necessaries sold to the infant has an insurable interest in his life. 11 A voidable note given for a debt contracted during the minority of the debtor is sufficient to give an insurable interest, because the infant 1 Fire Ins. Asso. v. Merchants, &c, B Goodwin v. Mass. Mut. Life Ins. Trans. Co., 66 Md. 339. Waters y. Co., 73 N. X. 480. Assurance Co., S B. & B. 870. ■ Rivers v. Gregg, 5 Rich. Eq. 274. 2 Bevin v. Conn. Mut. L. Ins. Co , ' Rawls v. Amer. Mut. Life Ins. 23 Conn. 244. Morrell v. Trenton Mut. Co., 27 N. Y. 282 ; s.c, 84 Am. Dec: Ins Co., 10 Cush. 282. Baker v. 280. Union Mut. L. Ins. Co., 43 N. Y. 283. 8 Hebdon v. West, 3 Best & Smith, Thompson v. American, &c, Ins. Co., 578. 46 M". Y. 674. Warnock v. Davis, 104 • Chisholm v. National Capitol Life TJ. S. 775. Wright v. Mutual Ben. Ins. Co., 53 Mo. 213 ; s. c, 14 Am. ' Life Assn., 118 N. Y. 237. Rep. 414. 8 Conn. Mut. Life Ins. Co. v. Luchs, " Hebdon v. West, 3 Best & Smith, 108 U. S. 498. 579. Branford v. Saunders, 25 Weekly * Morrell v. Trenton Mut. L. and P. Reporter, 650. Ins. Co., 10 Cush. 282; s.c, 57 Am. » Rivers v. Gregg, 5 Rich. Eq Dec. 92. 274. § 28 Insurable Interest. 37 alone can avoid the note. 1 Ties of affection or kinship do not of themselves constitute an insurable interest. Thus an adult son has no insurable interest in the life of his father simply by virtue of the relationship. 2 Nor a nephew in the life of an uncle. 3 Nor a son-in-law in the life of a mother-in-law. 4 Nor a brother in the life of a brother. 5 But certain relationships are so apt to involve a legal claim to support or pecuniary ob- ligation or advantage that their existence is held to establish conclusively an insurable interest. 6 Thus a wife has an insurable interest in the life of her hus- band, and the validity of the policy will survive a divorce. 7 And the illegality of the. marriage will not defeat it. 8 And, ordinarily, at least, a husband has an insurable interest in the life of his wife. 9 And a father in the life of his minor son. 10 Any element of dependency coupled with the relationship will furnish the basis for an insurable interest. Thus where the brother had supported and educated his sister it was held that she .had an insurable interest in his life. 11 The interest which one has in his own life, being incapable of exact pecuniary estimate, may be valued at any amount which the parties agree upon, and so generally of all insurable interests which are founded upon relationship ; a but if a credi- tor takes out an insurance upon the life of the debtor greatly in excess of any loss that he could sustain by the death of the insured, the transaction may be held to amount to a wager. 13 § 28. Insurable Interest : Marine. — The same gen- eral principles are applicable as in fire insurance. Thus the 1 Dwyer v. Edie, Park on Ins. 432. " Equitable Life Ass. So. v. Pater- 2 Guardian Mut. L. Ins. Co. v. Ho- son, 41 Ga. 338 ; s.c, 5 Am. Rep. 535. gan, 80 111. 35 ; s. c. , 22 Am. Rep. 180. " Currier v. Continental Life Ins. » Mowry v. Home Life Ins. Co., 9 R. Co., 57 Vt. 496. I. 346. I0 Mitchell v. Union Life Ins. Co., * Rombach v. Piedmont & A. Life 45 Me. 104 ; s. c, 71 Am. Deo. 529. Ins. Co., 35 La. Ann. 233; s.c, 48 Am. " Lord v. Dall, 12 Mass. 115 ; s. c, Rep. 239. 7 Am. Dec. 38. * Lewis t. Phoenix Mut. Life Ins. " Bevin v. Conn. Mut. Life Ins. Co., 39 Conn. 10>. Co., 23 Conn. 244. * Corson's Appeal, 113 Pa. St. 438. 13 Fox v. Penn. Mut. Life Ins. Co., 7 Conn. Mut. Life Ins. Co. v. 4 Big. Ins. Cas. 458. Grant v. Kline, Schaefer, 94 U. S. 460. Baker v. 115 Pa. St. 618. Union Mut. L. Ins. Co., 43 N. Y. 283. 38 Insurance: Fiee, Life, Marine. §29 owner of a ship has in all cases an insurable interest in it, even when it has been chartered by one who covenants to pay him its value in case of loss ; and he also has an insurable interest in expected freight which he would have earned but for the intervention of the peril insured against. And the charterer of a ship also has an insurable interest in it. 1 The insurable interest of the owner of a ship hypothecated by bottomry is only the excess of its value over the amount secured by .bottomry. The lender on bottomry may insure his interest in the ship to the amount of the loan. 8 § 29. The Payee or Assignee of Life Policy need not have Insurable Interest. — If the insured has an insurable interest to support the policy when it is taken out, he may make it payable to any one, or, according to the weight of authority, he may subsequently assign it to any one, whether such transferee, has an insurable interest or not, unless the transaction from its inception is a mere cover to avoid the statute against gambling contracts. 8 § 30. When must Insurable Interest Exist. — In fire and marine insurance the insurable interest must exist not only at the commencement of the risk, but also at the time of lA ; but in life insurance it may cease at any time after the dng of the contract. A creditor, for example, who has sen a policy upon the life of his debtor, may, on the death of ^the insured, recover the full amount of the insurance, notwith- standing the debt may have been previously paid. 4 Thus it will be seen that the contract of life insurance is not one of strict indemnity, but is sufficiently controlled by that doctrine to prevent it from being a wager in its inception. The leading English case of Dalby v. India & London Life Assur. Co., 15 C. B. 365, which overruled Godsall v. Boldero, 9 East, 72, unquestionably gives the sound and sen- 1 Oliver v. Greene, 3 Mass. 133. * Dalby v. The India & London Life Barber v. Fleming, L. R., 5 Q. B. 59. Assurance Co., 15 0. B. 363. St. 'Robertson v. United Ins. Co., 3 John v. Am. Mut. Life Ins. Co., 13 John. Cas. 499. N. Y. 31. Scott v. Dickson, 108 Pa.' St. 3 Olmsted v. Keyes, 85 N. Y. 593. 6; s. c, 56 Am. Rep. 192. •Contra, Warnock v. Davis, 104 U. S. 775. § 32 Insurable Interest. 39 sible rule, though Porter endeavors to defend the doctrine of the latter case. 1 The rate of premiums in life insurance is based upon the supposition that the event upon which payment is to be made to the insured will certainly occur at some time or other, and if a creditor after paying premiums for a long term of years was likely to lose all the benefit of his insurance, it would practically prevent the use of this important kind of security. §31. Temporary Suspension does not Avoid. — If there is no provision in the contract prohibiting a change of interest}, a temporary suspension of the interest of the insured does not vitiate a policy of insurance, but only suspends its operation. 8 §32. Insurable Interest as Related to Measure of Recovery: Fire and Marine. 3 — The general rule is indemnity to the insured commensurate with his insurable interest at the time of loss, as shown by proof, or by appraisal, or as previously established by agreement in a valued policy. If the insured is the owner of the property destroyed, he is entitled to recover its market value at the time of the loss, without making any deduction for the amount of mortgage or other incumbrances upon it, for these incumbrances are held to be of no concern to the insurers. 4 A mortgagee recovers the amount of the mortgage debt existing at the time of the loss without regard to the value of the mortgage or other security which he may hold on account of the same debt. 5 Inasmuch as the right of subrogation which has already been described does not arise until the loss occurs, the policy of in- surance will not be affected by any release or disposition which the mortgagee may make of his other securities before the fire. 1 Porter on Ins., p. 15. Are insurance law prepared for the • 2 Worthington v. Bearse, 12 Allen, Yale Law School. 382. Lane v. Maine Mut. Fire Ins. " Columbian Ins. Co. v. Lawrence, Co., 12 Me. 44. 10 Pet. 507. 3 In this section I have followed, to B Sussex Co. Mut. Ins. Co. v. Wood- some extent, the arrangement given by ruff, 2 Dutch. (N. J.). 541 . Kernochan George M. Sharp, Esq., of the Balti- v. N. Y. Bowery Fire Ins. Co., 5 more bar, in his admirable synopsis of Duer, 1. 40 Insurance : Fire, Life, Marine. _ § 32 But after the loss has occurred any release of such securities will discharge the insurers pro tanto in case they are entitled to the right of subrogation. 1 "Where a common carrier, warehouseman, or other bailee, or a broker or factor, insures for his own benefit, he recovers the value of his interest in the subject of insurance, whether it be his commissions or profits or advances. If he has insured against his liability as bailee for the loss of the property, he will be entitled to recover its cash or market value at the time of loss ; and so, also, if he insures for the benefit of the owners of the goods intrusted to him as well as for his own benefit, he will be entitled to recover the full value of the property in- sured, holding any balance above his own interest as trustee for the owners. 2 A lessee is entitled to recover for the value of his term. 3 A lessor under a rent policy is entitled to recover the value of his rent, which is generally agreed upon in ad- vance by a valued policy, and such value in the absence of fraud is conclusive. 4 A vendee under an executory contract of purchase is entitled to recover the full value of the property insured by him, for the purchase price of which he is obli- gated. 5 A vendor under such a contract, having an insurable interest in the property of which he still holds the title, has a right to recover its full value unless the policy limits his interest. The court cannot assume that the executory con- tract will be completed, and the rights of the insured become fixed, at the time of the fire. 6 But in England it is held that after the vendor has received the amount of his purchase price the insurers can recover back the insurance moneys under the doctrine of subrogation. This decision carries' the doctrine of subrogation to an extreme limit, and it would appear that the views of Justice Chitty in the lower court 7 are more convincing than the opinion of the appellate court. 8 The position of the 1 Thomas v. Montauk Fire Ins. Co., western Ins. Co., 34 Me. 487. Kane 43 Hun. 318. v. Commercial Ins. Go., 8 Johns. 229. 1 De Forest v. Fulton Fire Ins. Co., 6 Bartlett v. Looney, 3 Viet. L. R. 1 Hall, 84. Home Ins. Co. v. Balti- Eq. 15. more Warehouse Co., 93 U. S. 527. ° Insurance Co. v. Updegraff, 21 Pa. 3 Nfblo v. North Amer. Ins. Co., 1 St. 513. Sandf. 551. 7 8 Q. B. D. 613. 'Carey v. London Prov. Fire Ins. 8 Castellain v. Preston, L. R., 11 Q. Co., 33 Hun. 315. Cushman v. North- B. D. 380 (1883). § 32 Insurable Interest. 41 latter is defended in learned and instructive opinions, delivered by Justices Brett, Cotton, and Bowen, which are too long for insertion among the selected cases of the second part of this book, but it is not easy to find in them any adequate reason for the conclusion at which the court arrived. Where a wrong-doer causes the loss to the insured, and the insurers pay it, their right to subrogation is plain. Where a mortgagee holds a mortgage as collateral security for the fiiy- ment of a debt, and the insurers pay the mortgagee under the mortgagee's policy, many courts, though not those of Massa- chusetts, regard the insurance and the mortgage as two securi- ties for the payment of the same loss in such a sense as to demand the application of the doctrine of subrogation in favor of the insurers ; though it may not be clear, upon principle, why the insurers should be subrogated to the mortgage, rather than the mortgagor to the insurance. But it cannot be main- tained that the purchase price arranged for in an executory contract of sale is in any respect the subject of the insurance already existing upon the land. It is rather the fruits or profits incidental to the ownership of the property which is still vested irr the insured. The contract of sale is altogether independent of the contract of insurance, and, unless prohibited by the terms of the policy, has no relation to it ; and this may be well illustrated by supposing that the purchase price under the executory contract is to be paid in services instead of money. In that event, it would seem almost grotesque to contend that, after a settlement and payment under the policy, from which the English court admitted there was no escape, the insurers may claim the benefit. of future services to be ren- dered to the insured by virtue of a contract made subsequent to the policy. No such agreement of recoupment ought to be read into the contract of insurance by the court, unless equity or public pol icy imperatively demands it. If the contract to sell violates one of the conditions of the policy, the insurers will be exonerated. If it does not, then they ought to pay according to their promise, and whether the insurance money ultimately remains with the vendors or the vendees depends upon con- tract relations with which the insurers are not in privity. A re-insurer is entitled to recover the amount which he is obligated to pay by the original insurance, and this he may 42 Insurance : Fire, Life, Marine. § 33 recover by reason of his liability before be has actually made payment thereof to the insured. 1 Under a policy for loss of use and occupation of a mill or other building while undergoing repairs or while being rebuilt after the fire, the amount of re-, covery is usually defined by the policy as so much per day ; and provision is often made for ascertaining by appraisal the amount of probable loss of time. • § 33. Contract is Personal. — A contract of insurance on property is personal ; that is, it does not pass to the new owner by virtue of a transfer of the title of the property. 2 Hence, upon closing a sale or conveyance, it is of consequence to the vendee to see that new policies are taken out, or that the proper indorsements consenting to the transfer are made by the insurers upon the old policies. This rule is reasonable ; for, as was explained in the intro- ductory chapter, the moral risk assumed by the insurers depends upon the character and circumstances of the insured. They have a right to know with whom they are contracting, and no new party can be thrust upon them without their consent. ■-'However important the policy of insurance may be to the owner, for the time being, of the property, it in no respects runs with the land or other property. § 34. Contract is an Entirety. — If the risk has not attached at all, the premium is returnable, unless the policy is avoided by fraud of the insured from the inception of the con- tract; but, if the risk has once attached, the premium is not to be apportioned, unless by special agreement. 3 § 35. Assignment of Policies. — Before loss a fire . policy is not assignable without the consent of the insurer; but in case of a marine or life policy the rule is otherwise, 4 ' Hone v. Mutual Safety Ins. Co., 1 747. Joshua Handy Works v. Ins. Co., Sandf. 137. 86 Cal. 348; s. c, 21 Am. St. Rep. 33 2 Powles v. Innes, 11 M. & W. 10. (1890). Ins. Co. v. Pyle, 44 Ohio St. Lett v. Guard. Fire Ins. Co., l'>5 19 ; s. c., 58 Am. Rep. 781. Heinely N. Y. 83. Raynor v. Preston, 18 v. So. Car. Ins. Co., 1 Mill, 153; s. c, Ch. D. 1. 13 Am. Dec. 633. 3 Blaeser v. Milwaukee Mut. Ins. 4 Earl v. Shaw, 1 Johns. Cas. 314; Co., 37 Wis. 31 ; s. e„ 19 Am. Rep. s. c, 1 Am. Dee. 117. § 36 Insurable Interest. 43 unless, as is customary, a clause of the policy forbids an assign- ment until the consent of the insurer is obtained and indorsed upon the policy. The assignability of the marine policy was early established by custom, and grew out of the demands of mercantile business, which overrode the theory that the con- tract is strictly personal. The value of a life policy, too, would often be seriously diminished unless the owner of it were able to make it the source of immediate benefit. Inasmuch as it is payable upon an event which sooner or later is certain to occur, it very much resembles an ordinary chose in action, and in most cases no just reason could be given why it should not be assignable, provided the insured is also the beneficiary. Under the New York Act of 1840, chap. 80, designed to secure to the wife and children of the insured the benefits of life insurance free of .creditors' claims, it was held that neither the insured nor his wife could assign or disturb the irrevocable interest thereby created. 1 But by the Act of 1873, chap. 821, provision is made for surrendering the policy in favor of a married woman or of her and her children ; also, if she has no children or issue thereof, for disposing of such policy by will or deed. 2 And by the Act of 1879, chap. 248, the wife or her legal representatives may, with her husband's written consent, assign any policy issued within the State upon his life for her benefit and use, to any person, or may surrender it to the insurer. The policy is assignable whether the wife have children or not, and the husband's assent is sufficiently shown by his joining with the wife in the assignment. 3 Similar statutes have been passed in other States (see appendix). § 36. Vested Interests : Life Insurance.— Where the insured designates another person as beneficiary, the right of the latter, as a rule, at once becomes vested so that it cannot be disturbed by assignment or will or in any way without his consent, unless the right to make a new appointment is re- served by the terms of the policy itself, or by the regulations 1 U. S. Trust Co. v. Mutual Benefit 'Frank v. Mut. Life Ins. Co., 102 Life Ins. Co., 115 N. Y. 152. Eadie N. Y. 266. v. Slimmon, 20 N. Y. 9. Brick v. 3 Anderson v. Goldsmidt, 103 N. Y. Campbell, 122 N. Y. 337. 617. 44 Insurance : Fire, Life, Marine. § 36 of the company subject to which the policy is issued, or by provision of law. 1 A different rule is adopted in "Wisconsin, where it has lately been held that one who has procured a policy upon his own life for the benefit of another, and has paid the premiums thereon, may dispose of the insurance money to the exclusion of the beneficiary named in the policy, during the lifetime of such beneficiary. 2 If a husband insures his life for his wife,, and pays all the premiums with money embezzled from his firm, the proceeds of the policy will belong to it ; but if the first premium is honestly paid by him, and subsequent premiums with money stolen from his firm, the proceeds of the policy will belong to the wife, charged with a lien to the firm for the amount of its money used for premiums. 3 If the beneficiary named in a policy of life insurance dies before the insured, the latter having taken out the insurance and paid the premiums, a new appointment may be made by the insured, provided the first appointment was purely gratui- tous^ especially if the insured has kept possession of the policy. 4 This rule proceeds upon the principle that the intent of the insured to benefit the person of his selection having been defeated by death, he ought to have the opportunity of decid- 1 In re King, 14 Ch. D. 179. Wash- dissenting justice wisely remarks: "The ington Cent. Bank v. Hume, 128 U. S. common Jaw, as well as truth, is al- 195. Garner v. Germania Life Ins. ways in harmony with itself. Assumed Co., 110 N. Y. 266. Fowler v. But- evidences of it in the shape of judicial terly, 78 N. Y. 68. Stilwell v. Mutual decisions may be in conflict, and some- Life Ins. Co., 72 N. Y. 385. Lemon times are. It is more important to v. Phenix Life Ins. Co., 38 Conn. 294. preserve the law in its integrity than Unity Mut., etc., Assoc, v. Dugan, 118 an erroneous interpretation of it. The Mass. 219. Norris v. Mass. Mut. Life repetition of an exposed error is more Ins. Co., 131 Mass. 294. Ricker v. destructive than the original. No de- Charter Oak Life Ins. Co., 27 Minn, cision should take rank as an evi- 193 ; b. c, 38 Am. Eep. 289. Glanz dence of law which is not in harmony v. Gloeckler, 104 111. 5W ;s.c.,44Am. with the logic of the law, especially Rep. 94. Be Eichardson, 47 Law when sanctioned by the great weight Times, N. S., 514. Butler v. State of authority." Mut. Life Assur. Co., 55 Hun. 296. s Holmes v. Davenport, 27 Abb. N. Phipard v. Phipard, 55 Hun. 4'!3. C. 341 (1891). 3 Estate of Breiton, 78 "Wis. 33(1890). 4 Bickerton v. Jaques, 12 Abb. N. But this case is in conflict with many C. 25. Shields v. Sharp, 35 Mo. adjudications by other courts, and the Appeals, 178. § 37 Insurable Interest. 45 ing whether the policy shall inure to the benefit of the repre- sentatives of the deceased, or shall go to some other benefici- ary. The decisions are somewhat inharmonious, but any rule depriving the insured of control, in such a case, over a policy taken out and kept alive by him, would not only be inequita- ble but also in many cases ineffective, for when the next pre- mium became due the insured might allow the policy to lapse. In case, however, a new appointment is not made by the in- sured before his death, the representatives of the deceased appointee, and not the representatives of the insured, will receive the proceeds of the insurance. 1 In case the insured, having an insurable interest in the life of another, takes out a policy upon that life, and pays the pre- miums for the benefit of himself, the policy belongs to him, and the life insured has no interest in it or control over it. The legislatures of some of the States have provided that a change of beneficiary may be made in certain cases by the insured without the consent of the payee first named, provided of course the first appointment was not founded upon any val- uable consideration moving from the payee (see appendix). § 37. Relations between Insurer and Insured : Life. — The policy holder is a creditor, and not a cestui que trust of the company, and hence he cannot call upon the com- pany, in the absence of fraud, to disclose to him their affairs in general, or to make an account to him for his share of divi- dends or profits ; 2 and he is not a partner in the company. 3 As soon as the risk attaches, the insured, under the usual form of policy, becomes debtor to the insurer for the first premium, if it has not been paid. But as to the future pre- miums payable in advance, the relation of debtor does not exist, for the contract does not contain a promise on the part of the insured to pay the premium, but the payment is simply made the condition of the continuance of the contract. 4 1 "Walsh v. Mutual Life Ins. Co., 61 ' People v. Security Life Ins., &c, Hun. 91 (1891). Continental Life Ins. Co., 78 N. T. 114. Co. v. Palmer, 42 Conn. 60. 4 Goodwin v. Mass. Mut. Life Ins. 2 Uhlraan v. N. Y. Life Ins. Co., 109 Co., 73 N. Y. 480. Worthington v. N.Y. 421. Matthew v. Northern Assur. Charter Oak Life Ins. Co., 41 Conn. Co., 9 Law Eep. Ch. Div. 80. 372 ; s. c., 19 Am. Kep. 495. 46 Insubancb : Fibe, Life, Marine. § 38 § 38. The Contract is a Property Right : Life- Being a chose in action, it is not subject to attachment or exe- cution, except as in New York by statute, 1 but may be reached by proper proceedings in equity, unless it is by statute secured to the beneficiary free from the claims of creditors. 2 Most of the States have passed statutes upon this subject, sometimes in protection of all classes of beneficiaries, and some- times for the benefit of the wife and children (see appendix). 1 Code Civ. Pro., sec. 648. 2 Bassett v. Parsons, 140 Mass. 169. CHAPTEE III. GSjNEKAL PRINCIPLES CONTINUED. Consummation and Construction of the Contract. The course of business in closing insurance contracts is . oftentimes so far sui generis, that it will be advisable to con- 1 " sider to what extent the ordinary rules of law are applicable to such a case. Many important classes of contracts have no validity at all unless evidenced by writing ; and whenever parties see fit to reduce their engagements to the form of a written instrument, whether required by law to do so or not, it is presumed that the contents of the document will correctly and conclusively record the final results of their negotiations, and that its execution and delivery will precisely define the time when the agreement goes into operation. But, in the act- ual conduct of their affairs, men do not always take the trouble to conform to any such preconceived notions, if their conven- ience or the exigencies of their business suggest a different course. Often a man wants to insure his house, or goods, or ship without delay. In most of the States of the Union there is no law preventing a valid oral contract of insurance, and so it frequently happens that fire and marine insurances are closed before the insured has seen his policy, or has been made acquainted with its conditions. In fact, the policy may never be delivered to him at all, or not until after the loss has occurred for which it was intended to grant indemnity ; * and, when the policy is received by him, he may find that its terms do not correspond with the oral agreement of insurance already entered upon. § 39. Requisites of a Complete Contract.— The requisites which must be specified to make a valid policy are » Thompson v. Adams, L.E., 23 Q.B.D. 361 (1889). 48 Insurance : Fike, Life, Maeine. § 40 the names or description of the parties, the rate of premium, the property or life insured, the risks insured against, and the term or duration of the insurance; 1 and to constitute a contract of insurance there must be, as in other cases, a meeting of the minds of the parties — that is, a mutual assent to all the terms of the agreement. 2 Thus, if both parties intend that the insurance shall cover a certain ship or a certain house, the contract will not necessarily be invalidated because by mutual mistake they misname it in the policy ; but if one party has*in mind one ship, and the other party has in mind another ship, although the two ships may have the same name, there is, speaking gener- ally, no contract. 3 § 40. The Particulars are sometimes Under- stood. — It is not necessary, however, that all the partic- ulars of a contract should be made the subject of express negotiation between the parties ; for it may well be under- stood, in the absence of any express declaration to the con- trary, that the usual form of policy is acceptable to both parties. 4 Even the essentials of the contract may often be agreed upon, inferentially, by reference to a prior course of dealing between the. parties. 5 Thus if A, whose policy is about to expire, goes to the office of the insurer, and requests a renewal for a year, and receives the answer from the proper representative of the company that he may consider his policy as renewed, and that the renewal receipt will be sent in the course of a few days, and that he may then pay the premium, the contract of renewal is complete and binding, whether the new policy or renewal receipt may chance to be delivered before the fire or not. 6 1 Boiee v. Thames & M. Marine Ins. * DeGrove v. Met. Ins. Co., 61 N. Y. Co., 38 Hun. 246. 602; s.c, 19 Am. Rep. 305. 2 Insurance Co. v. Lyman, 23 <• Winne v. Niagara Fire Ins. Co., 91 Wall. 85. Goddard v. Insurance N. Y. 190. Boice v. Thames & M. Ma- Co., 108 Mass. 56; s.c, 11 Am. Rep. rinelns. Co., 38 Hun. 246. Rugglesv. 307. Am. Central Ins. Co., 114 N. Y. 418. 3 Hughes v. Mercantile Mut. Ins. ' Angell v. Hartford Fire Ins. Co., Co., 55 N. Y. 265. Sanders v. Cooper, 59 ST. Y. 171 ; s. c, 17 Am. Rep. 3i2. 115 N. Y. 279. Eames t. Home Ins. Co., 94 U. S. 621. §42 Consummation of Contract. 49 § 41. Contract may be Closed by Parol. — An oral contract of insurance or an oral contract to issue a policy is valid, unless prohibited by statute as by the Civil Code of Georgia or sometimes by Stamp Laws, and will be binding from the time the oral contract is complete, although the loss occur before a policy is issued. 1 The statute of frauds is not applicable ; 2 and, although the charter of a company provides that the contract of insurance must be in writing, this requirement is by most courts held to be a direction to the company, and not binding upon an inno- cent party who has parted with value to the company in good faith under an oral contract. 3 But the representative of the company to bind it, by parol or otherwise, must be one having authority, and stipulations in the application or policy in restriction of his authority will, if true in fact, be binding upon the insured, at any rate after notice of them is received.* § 42. Contract to issue Policy is Governed by Terms of Usual Policy. — Whether the contract of insur- ance is,- closed by parol or by a preliminary binding receipt, the legal presumption is that the usual policy is to follow. Hence the stipulations and conditions of the policy are binding upon the insured from the moment-^of closing the contract, although the policy may not be received until after the loss, and although the insured, through ignorance of its conditions, may have forfeited his rights thereunder. 5 So, also, after delivery of the policy the insured is conclu- sively presumed to be acquainted with its terms and is bound by 1 Insurance Co. v. Colt, 30 Wall, State, 172. Palmer v. Hartford Fire 560. Fish v. Cottenet, 44 N. Y. 538 ; Ins. Co., 54 Conn. 488. s. c, 4 Am. Rep. 715. Ellis v. Albany * Walsh v. Hartford Fire Ins. Co., City Fire Ins. Co. , 50 N. Y. 402. Van 73 N. Y. 5. Ins. Co. v. Norton, 96 U. I/oan v. Fanners' Mut. Fire Ins. Co., S. 240. Kister v. Lebanon Mut. Ins. 90 N. Y. 280. Co., 128 Pa. State, £53 ; s. c, 15 Am. 8 Phoenix Ins. Co. v. Spiers, 87 St. Bep. 696. Ins. Co. v. Wilkinson, Ky. 286. Wiebeler v. Milwaukee, 13 Wall. 222. &c., Ins. Co., 30 Minn. 464. Ala. • De Grove v. Metrop. Ins. Co., Gold Life Ins. Co* v. Mayes, 61 Ala. supra. Lipman v. Niagara Fire Ins. 163. ' Co., 121 N. Y. 454. Sanborn v. Fire- " Parish v. Wheeler, 22 N. Y. 494. man's Ins. Co., 16 Gray, 448. Relief Lloyd v. West Branch Bank, 15 Pa. Fire Ins. Co. v. Shaw, 91 U. S. 574. 50 Insurance : Fire, Life, Marine. § 43 them, whether he has read the policy or not. 1 The delivery of a policy is not in itself so significant and controlling as the delivery of a deed or ordinary written instrument. 8 § 43. Certain Rules of Construction. — The general rules of law must be invoked to arrive at a proper construction of the insurance contract, but the more important of these rules in their relation to insurance law demand special notice. (1) The written contract, including almost always the appli- cation or survey, if there is one, is the only evidence of what the contract is as to all matters which it purports to cover. 3 Thus, for example, a pamphlet or prospectus issued by the in- surance company is not admissible in evidence to disturb the terms of the policy, although the insured may have incurred a forfeiture in consequence of reliance upon its representa- tions; 4 for all prior and contemporaneous negotiations, prom- ises and statements, whether written or oral, become merged in the written contract. That is still ostensibly the rule, but under the doctrine of waiver and estoppel, to be hereafter discussed, as applied to insurance contracts, it may be ques- tioned whether it should not be called the exception rather than the rule. It is to. be observed that the language of the policy is not in all cases conclusively binding and effective ; for grounds may sometimes exist for relief in equity. Thus, in a clear case of mutual mistake — that is, where it plainly appears by evidence outside the contract that the real agreement of the parties is not correctly evidenced by the policy — or where there is a mis- take on one side and fraud inducing it on the other, the written contract may in a proper case be reformed by equity to corre- spond with the real agreement. 5 S'raOligf) either party may obtain in equity a rescission of 'Allen v.German Am. Ins. Co., 123 5 Maher v. Hibernia Ins. Co., 67 N. Y. 6. JVlonitor Mut. Fire Ins. Co. N. Y. 283. Harris v. Columbiana v. Buffum, 115 Mass. 343. County Mutual Ins. Co., 1.8 Ohio 116; ' Xenos v Wiekham, L. R., 2 H. L. s. c, 5! Am. Dec. 448. Bui, juctaient -® 6 - on insurance contract is a bar toSae- 3 Ins. Co. v. Mowry, 96 U. S. 544. tion to reform it. Steinbach v. S$|ef Ins. Co. v. Lyman, 15 Wall. 664. Fire Ins. Co, 77 N. Y. 498; s. el$83 4 Fowler v. Metropolitan Ins. Co., Am. Rep 655 • ■ , 116 N. Y. 389. § 43 Construction of Contract. 51 the contract for fraud or mutual mistake with a reinstatement of the parties. 1 But it is important to notice that after a fire or marine loss, or after a loss under a life policy, unless the life policy has run for a large part of its anticipated duration, this form of relief would be unsatisfactory. (2) A court must not use its discretion to modify the con- ditions or provisions of the contract entered into by the parties in order to effectuate what it might consider a more equitable arrangement than that resulting from an enforcement of the strict terms of the policy. 2 This elementary proposition of law is not peculiar to insur- ance, but in the construction of insurance contracts it is pecul- iarly apt to be disregarded by some tribunals. (3) If there is any inconsistency between the written and the printed words of the policy, the former prevail, because they are framed and inserted with reference to the particular con- tract, and the parties do not generally take the trouble to revise or alter the formal printed conditions. 3 Thus, for example, where a furniture dealer insured his "stock in trade," the written description was held to cover paints, oils, and varnishes used to finish, though in answer to an inquiry it was stated that no explosive or highly inflamma- ble matter was kept on the premises.* In the same way, insurance " as a manufacturer of brass clock works " permits the use of all such articles as are ordi- narily employed in that manufacture, and the making of them for that purpose, if such be the ordinary course of the business, although the use of such articles be prohibited as extra- hazardous by the printed terms of the policy. 5 In an English case where the Lloyd's form of policy was filled up as a .time policy on the ship, it was argued from the various clauses not usually struck out, and in this case left standing, referring to a voyage, that certain conditions only 1 Union Cent. Life Ins. Co. v. Pott- La. 66 ; s.c, 23 Am. Dec. 458. Robert- ker,. 33 Ohio St. 459 ; s. c, 31 Am. son v. French, 4 East 130. Rep. 555. * Haley v. Dorchester Fire Ins. Co., 8 Allen v. German Am. Ins. Co., 12 Gray (Mass.), 546. 123 N. Y. 6. * Bryant v. Poughkeepsie Mut. Ins. 8 Harper v. N. Y. City Fire Ins. Co., Co., 17 N. Y. 200. i,2 N. Y. 443. Nicollet v. Ins. Co., 3 52 Insurance : Fibe, Life, Marine. § 43 applicable to a voyage policy applied to the ship in the case of the policy, though in terms a time policy ; but the court held otherwise, and said : " It has been suggested, that, by reason of the policy having been drawn up on a printed form, the printed terms of which are applicable in a voyage policy to goods as well as to the ship, the policy is something less or something more than a time policy ; but the practice of mercan- tile men writing into their printed forms the terms by which they desire to describe and limit the risk intended to be insured against, without striking out the words which may be applicable to a larger or different contract, is too well known and has been too constantly recognized in courts of law to per- mit any such conclusion." x Hence it is that in the familiar instance of words written in the margin or at the foot of policies, and especially marine policies, such written words are considered as applying indefi- nitely to the whole of the policy, and as controlling the sense of those parts of the printed policy to which they apply; so that by the word ship, or freight, or goods written in the margin, the general terms of the policy applicable to other subjects besides the particular one mentioned in the margin are considered as narrowed in point of construction to it. 2 So it has been held that the words restricting the liability of the insurers " against actual total loss only," written upon the margin, prevail over any inconsistent printed provisions in the body of the policy. 3 On the same principle, it is held that the special printed clauses or riders attached to the policy prevail over the more general terms of the ordinary printed form. 4 (4) If the language of the policy is ambiguous and fairly open to doubt, of which the court is judge, oral evidence is admissible to explain the real meaning of the parties. 5 (5) Evidence of a general and well-known custom of trade may be received in evidence as within the probable contempla- 1 Dudgeon v . Pembrook, 2 App. Cas. 4 Gunther v. L. , L. & Globe Ins Co. 28t 34 Fed. Rep. 501. ' Chadsey v. Guion, 97 N. Y. 333. * Daniels v. Hudson River Fire Ins 1 Burt v. Brewers and Maltsters Ins. Co., 12 Cash. 416 ; 59 Am Dec Co., 9 Hun. 383; affirmed in 78 N. Y. 192 400. 4:3 Construction of Contract. 53 v. tion of the parties, provided the custom is not inconsistent with the express terms of the policy, and the language of the policy is not clear. 1 Trade usage plays a particularly important part in the law of marine insurance. The law of merchants, consisting of certain principles which general convenience has established to regulate the dealings of merchants with each other in all countries, may be considered as a branch of public law. The courts take official cognizance of this where it has been established by a course of decisions. But a particular or local custom must be affirmatively estab- lished by evidence and shown to have been known to both parties and within the probable contemplation of the contract.' (6) The contract of insurance having been framed by the insurers in their interest, and the insured being compelled to accept the form offered in order to secure insurance, any am- biguity as to the intent or meaning of its terms, or what prop- erty was intended to be covered, or where situated, will be construed in favor of the insured, and with the purpose of granting him an indemnity for his loss. 8 (7) Forfeitures are not favored, and equivocal words or phrases, or provisions repugnant to one another, will be so construed as to give effect to the instrument rather than to avoid it. 4 The adoption of a standard form of fire policy has not changed the rules of construction previously prevailing in this regard. The object of the New York statute is declared to be to provide a uniform contract or policy of fire insurance — not to prescribe terms which should seem to the legislature reason- able. "WTien the act was passed, the form of policy had not yet been adopted. Its preparation was left to insurance men, to wit, the New York Board of Fire Underwriters, and by 1 Glendale Woolen Co. v. Ins. Co., v. Mtna, Fire Ins. Co., 61 N. Y. 21 Conn. 19 ; s. c, 54 Am. Dec. 308. 571. Mooney v. Howard Ins. Co., 138 Mass. * Phenix Ins. Co. v. Tomlinson, 125 375 ; 52 Am. Rep. 277. Ind. 84 ; s. c, 21 Am. St. Rep. 203. * Walls y. Bailey, 49 N. Y. 464. Baker v. Homestead Fire Ins. Co., 80 3 Kratzenstein v. Western Assnr- N. Y. 21 ; s. c, 36 Am. Rep. 570. anee Co., 116 K. Y. 54. Hoffman Statutes relieving the insured from v. Mtua, Fire Ins. Co., 32 N. Y. forfeiture in certain cases will be found 405 ; s. c, 88 Am. Dec. 339. Foot referred to and classified in appendix. 54 Insurance : Fire, Life, Marine. § 44 section 3 of the act it is provided that any policy made in terms inconsistent with the provisions of the act shall never- theless be binding upon the company. 1 § 44. What Law governs the Construction of the Contract. — Ordinarily the laws and usages of the place where the contract of insurance is made are to be applied in its interpretation and construction. 2 This rule is applied because in insurance there may be sev- eral places where the contract is operative — one place for the payment of premium ; another for the payment of loss, and a third for the location of the subject of insurance. But if the policy provides that the loss and the premiums are to be pay- able at the home office, the latter place would seem to be the place of performance, and its law to prevail in the construction of the policy. It is often important to determine by what law the validity and effect of the policy are to be governed, because the stat- utory provisions relating to the insurance contract vary greatly in the different States. If the policy provides that it will not be binding until countersigned at a certain agency, the agency is the place of contract. So if the policy is sent to the agent for delivery on receipt of the premium ; 3 but if the application is accepted at the home office, and the policy mailed from there to the appli- cant in another State, the home office will be the place of contract. 4 As a general thing the contract is considered made where the last act necessary to complete it is done. 5 The standard of seaworthiness of a ship is to be determined by the custom of the port and country to which the vessel belongs, rather than that of the place where the insurance is made. 6 § 45. Who Construes the Contract, Court or Jury.— This is an intensely practical question, because a court ' L. 1886, c. 488. 59 Am. Dec. 192. Cook v. Johnson, ! Equitable Life Assur. Society v. 3 Dutch (N. J.) 645; 72" Am. Dec. Clements, 140 U. S. 226. 3^9. 5 Thwing v. Great Western Ins. Co., a Northampton Live Stock Co. v. Ill Mass. 93. Tuttle. 40 N. J. L. 476. « Daniels v. Ins. Co., 12 Cush. 416; « Titania, 19 Fed. Rep. 101. § io CONSTE0CTION OF CONTRACT. 55 tries to enforce the contract according to its legal meaning and effect, whereas a jury is apt to consider an insurance an absolute contract of indemnity regardless of conditions, and will almost invariably find for the insured, unless his claim is characterized by some element of dishonesty or bad faith. The general rule is that the construction of the policy of insurance is a question of law for the court to determine, and warranties, as we shall see hereafter, must be strictly enforced regardless of their materiality ; but when the language employed to describe the thing warranted is not free from ambiguity, or when it is equivocal and its interpretation depends upon the sense in which the words are used in view of the subject to which they relate, the relation of the parties and the surrounding circumstances properly applicable to it, the intent of the parties becomes a matter of inquiry, and the interpretation of the language used by them is a mixed ques- tion of law and fact. Such a question is to be submitted to the jury under appropriate instructions. 1 If the testimony is undisputed, whether it amounts to a breach of warranty or not is generally for the court. 2 And if the facts are such that to the average mind only one inference is deducible from them, the court must make a decis- ion as matter of law; but otherwise questions of mixed law and fact properly belong to the jury. 3 Thus the "question, whether the risk has been increased, whether a man is ni good health, whether he is of temperate habits, or has used due diligence, or has exhibited good faith, whether his ship was seaworthy, whether the conduct of a duly authorized agent amounts to a waiver, and kindred issues, are usually for the jury, although the policy contains a warranty in respect to them. The Connecticut court says : " Extreme cases either way may be easily determined. Between them there is a wide belt of debatable ground, and cases falling within it are governed so much by the peculiar circumstances of each case that it is much better to determine the matter as a question of fact. " 4 1 Kenyon v. Knight Templars, 122 729. Appleby v. Astor Fire Ins. Co., N. Y. 247. Northwestern Life Ins. 54 N. T. 253. Co. v. Muskegon Bank, 1>2 U. S. 501. 3 Donahue v. Ins. Co., 56 Vt. 880. 8 Dwight v. Germania Life Ins. Co., * Lockwood v. Ins. Co., 46 Conn. 103 N. T. 341 ; s. c, 57 Am. Eep. 553. CHAPTEE IV". GENERAL PRINCIPLES — CONTINUED. Representations and Concealments. The contract of insurance is preeminently one requiring good faith between the parties ; and fraudulent dealing at any stage, either before or after the issuance of the policy, is fatal to the rights of the party responsible for it. The principle caveat emptor does not apply. The party wishing to effect an insurance is in duty bound to make a frank and honest dis- closure of those circumstances which are likely to affect the insurer's estimate of the risk, and particularly is this true in the case of marine insurance, where the means of information are apt to be peculiarly and often exclusively within the reach of the applicant. Equity requires that the two parties should contract pari, passu, which can only be the case when the knowledge of the assured is communicated. Hence, the question whether any fact should be communicated depends upon whether it is mate- rial, not upon the opinion of the proposer whether it is so. If he is himself ignorant of the material fact, he can of course be under no obligation to disclose it. Otherwise he would no longer contract pari passu with the insurers. §46. Concealment: Marine Insurance. — In marine insurance a concealment of a material fact by a party or his authorized agent, whether innocent or fraudulent, avoids the contract. 1 Thus a policy was effected on goods on board ship or ships from the Canary Islands to London by an agent of the assured, 1 Howe Machine Co. v. Farrington, Ins. Co. v. Lloyd, 10 Exoh. 523. 82 N. Y. 136. Proudfoot v. Monte- Blackburn v. Haslam, L. E., 21 Q. B. fiore, L. R..2Q.B. 511. North British D. 144 (1838). § 4:7 Repkesentations and Concealments. 57 it* who at the time knew that a portion of the goods to be insured was on board the President, and also that the President had been reported at Lloyd's as at sea, deep and leaky. He did not inform the underwriter that the President was one of the ships connected with the proposed risks, so that the underwriter had no means of applying the intelligence existing at Lloyd's. The court held that the suppression of this fact by the assured vitiated the policy, notwithstanding it turned out that the intelligence at Lloyd's was unfounded, the President not having been deep or leaky on any part of the voyage insured, and that she was lost not by perils of the seas at all, but by capture which occurred three weeks after the period referred to in Lloyd's " Intelligence." 1 To render the agent's concealment fatal he must be one who is so connected with the business at the' time of closing the contract that his concealment can fairly be said to be the act of the principal within the scope of the employment and before the agency is terminated. 2 § 47. Concealment : Fire and Life. — In regard to contracts of life and fire insurance it is generally laid down as the law in this country that the concealment of a material fact, when not made the subject of express inquiry by the insurers, must be intentional to avoid the policy ; and this is partly on the ground that insurers have for a long time been in the habit of propounding questions upon all points except those in respect to which they are content to rely upon their own independent means of information, and partly because life and fire policies generally make a multitude of particulars material to the risk. 3 But in England the rule is stated as applicable to all kinds of insurance, that the concealment of a material fact, whether intentional or unintentional, will avoid the contract. 4 Insurers are not generally inclined to press this matter of 1 Lynch v. Hamilton, 3 Taunt. 37. Harmer, 2 Ohio St. 452 ; s. c, 59 Am. 2 Blackburn v. Vigors, L. E., 12 App. Dec. 684. Clark v. Union Mut. Ins. Cas. 531. Ruggles v. General Ins. Co., 40 N. H. 333 ; s. c, 77 Am. Dec. Co., 12 Wheat. 408. 721. 3 Washington Mills Mfg. Co. v.Wey- * London Ass Co. v. Mansel, L. R., mouth Ins. Co., 135 Mass. 503. Mai- 11 Ch. D. 303. Moens v. Bey worth, Jory v. Travellers Tns. Co., 47 N. Y. 10 M. & W. 155. Carter v. Boehm, 52. Hartford Protection Ins. Co. v. 1 W. Bl. 593; s. c, Smith's Lead. Cas. 58 Insurance : Fiee, Life, Marine. § 47 innocent concealment too far, nor would it be good policy for them to do so ; for the rule works both ways, and in reality it might appear that with his profound expert knowledge of the situation the insurer is acquainted with many important facts of a general character bearing upon the risk which he does not trouble himself to disclose to the insured. Neither party is bound to volunteer information of matters which the other knows, or which in the exercise of ordinary care the other ought to know, and of which the former has no reason to suppose him ignorant, or those of which the other waives communication. 1 Each party is bound to know matters of general intelligence or of public notoriety, including general usages of trade which are open to his inquiry equally with that of the other. 8 But the insurer is not presumed to know the contents of Lloyd's Lists. 3 Matters of mere opinion or belief need not be stated. 4 "Where the insurer makes special inquiries, as by requiring the execution of an application, it may generally be assumed that the information asked for is all that is required. 5 Other matters relating' to the risk, and particulars about the title, not asked for, need not be volunteered. 6 This, in practice, con- stitutes an important modification of the general rule requiring a full disclosure of all material facts, inasmuch as a written application is almost invariably made the basis of a life policy, and the fire policy by its own terms provides for certain dis- closures ; but even then the applicant must evince good faith, and would be guilty of a wrongful concealment if he withheld intelligence which would clearly affect the judgment of the insurer. As, for example, that serious attempts had lately been made to set fire to his house, or that his ship was already ' in distress. 7 1 Dilleber v. Home Life Ins. Co., 69 Ins.' Co., 2 G. & J. 136; s. c, 20 Am. N. Y. 2i6 ; s. &, 25 Am. Rep. 182. Ar- Dee. 424. menia Ins. Co. v. Paul, 91 Penn. St. 'Browning v. Home Ins. Co., 71 520; s. c, 3i! Am. Rep. 676. jl X 50 8. ■ Carter v. Boehm, 3 Burr. 1903. " Wytheville Ins. Co. v. Stultz, 87 3 Morrison v. Universal Marine Ins. Vir. 62!) (1891). Co., L. R., 8 Exch. 40. ' Green v. Merchants Ins. Co., 10 4 Smith v. The Columbia Ins. Co., Pick. 402. Bebee v. Hartford Co. Mut. 17 Pa. St. 253; s. c, 55 Am. Dec. Fire Ins. Co., 25 Conn. 51; s. c, 65 546. Allegro's Adrars. v. . Maryland Am. Dec. 553. § 48 Representations and Concealments. 59 So if a person effected an insurance upon a building as a private house, but omitted to mention that its windows over- looked a petroleum store or floor-cloth manufactory, or some other equally dangerous structure, the policy would be void for concealment. 1 § 48. Representations. — A representation is an oral or written statement of facts or circumstances made at the time of or before the contract relating to the proposed adventure, and upon the faith of which the agreement is made. A material misrepresentation of fact by a party or his authorized agent, whether innocent and unintentional or fraudu- lent, avoids the contract. Representations must be substantially complied with. 8 Thus positive representations of the day on which the ship has sailed, or will sail, or on which she was last seen in safety ; of the kind of armament she is to be fitted out with ; the num- ber of men with which she is to be manned, and the nature of the cargo she is to carry — will, if false, avoid the policy, Unless * the assured can show that the underwriter was in no respect influenced by them. For example, where an insurance was effected on ship and cargo at and from Genoa to Dublin, the adventure to begin from the loading to clear for the voyage, Lord Mansfield held that these words plainly implied a representation that the vessel had loaded or would load at Genoa ; and as it appeared she had not done so, but at Leghorn, his lordship considered the policy void for misrepresentation and concealment. 8 So in case of an insurance on goods, where the words " to return five per cent for convoy and arrival " were inserted in the policy, Lord Eld on was of opinion that these words clearly amounted to a representation that it was probable the vessel would sail with convoy; and as it appeared that the assured knew, when the policy was effected, that the ship had actually sailed without convoy, the contract was avoided. 4 A policy on ship and goods from Nassau to the Clyde was ' Wedderburn v. Bell, 1 Camp. 1. ' Hodgson v. Kichardson, 1 W. Bl. * Smith v. -ffitna Ins. Co., 49 N. Y. 463. 211. Continental Ins. Co. v. Kasey, * Eeid r. Harvey, 4 Dow. 97. 25 Gratt. 268 ; s. c, 18 Am. Rep. 681. 60 Insurance : Fire, Life, Marine. § 49 effected on the 18th of June, 1814. The broker showed the underwriters a letter, dated April 2, in which it was stated, the Brilliant, the ship insured, " will sail on the 1st of May." In fact, the ship had sailed on the 20th of April, and on the 11th of May had been captured by an American privateer. These facts were wholly unknown to the parties by whom the repre- sentation was made, yet it was held that the policy was avoided for misrepresentation. 1 And where a representation was made some time before the ship sailed, to the effect that she was to sail with convoy and a certain armament, Lord Ellenborough held, that, as it had not been substantially complied with, it avoided the policy, though made without moral fraud. 2 The insured innocently represented that he had two hun- dred thousand dollars of other fire insurance upon his property, whereas, in fact, there was only thirty thousand dollars of other insurance : the court was of opinion that this under- estimate was material, and that, though unintentional, it would avoid the contract. 3 - In the last case attention was also called to the fact that the rule against misrepresentations and concealments is more strict in marine than in fire insurance. § 49. Mere Opinion not generally Fatal. — Misrep- resentations of fact must be distinguished from erroneous ex- pressions of opinion or belief or exaggerated estimates of value. These usually are not fatal, unless made in bad faith. 4 "Where a broker, in proposing an insurance upon certain vessels engaged in the African trade, stated that they were expected to leave the coast of Africa in November or Decem- ber, when in fact they had all left in May, it was held that this statement having been made without intent to deceive, though material to the risk, was a mere expression of opinion, and that the contract was not void. 5 And where a broker, employed to effect a policy on goods for a party who had no interest in the ship, represented that 1 Dennistoun v. Lillie, 3 Bligh. P. C. a Armour v. Transatlantic Fire Ins. 203. Co., 90 X. Y. 450. ■' Edwards v. Footner, 1 Camp. * Nat. Bank v. Ins. Co., 95 U. S. 673. 53 <>- Barber v. Fletcher, 1 Doug. 306. § 51 Repkesentations and Concealments. 61 the ship, which was then at Lisbon, was to sail in a. few days, and the ship did not in fact sail for a month, Lord Ellen borough held that this statement, though material to the risk, but made by the owner of the goods, who had no control over the time of the ship's sailing, must be regarded merely as the expression of a probable expectation, which, as it appeared to have been made bona fide, would not avoid the policy. 1 § 50. Test of Materiality.— The materiality of a con- cealment or representation of fact depends not on the ultimate influence of the fact upon the risk or its relation to the cause of loss, but on the immediate influence upon the party to whom, the communication is made or is due in forming his judgment at the time of effecting the contract. The party thus sought to be influenced is generally the insurance company. Though the loss should arise from causes totally disconnected with the material fact concealed or misrepresented, the policy is void, because a true disclosure of the fact might have led the com- pany to decline the insurance altogether or to accept it only at a higher premium^ § 51. Refers to what Time. — The closing of the con- tract is the time to which a misrepresentation or concealment must be presumed to refer, and any material facts coming to the knowledge of either party pending the negotiations must be communicated, even after the written proposals have been submitted, and the customary methods of rapid transmission of news must be employed. 3 Until the completion of the con- tract, representations may be withdrawn or qualified, but not afterwards without consent.* In England, after the terms of the contract have been virtually settled by the execution of the slip, subsequently acquired knowledge need not be com- municated before execution of the policy, although a marine insurance is not valid by their law until the policy is executed. 5 1 Bowden v. Vaughan, 10 East, * Snow v. Mer. M. Ins. Co., 61 N. Y. 415. 160. 8 Curell v. Miss. M. & F. Ins. ' Freeland v. GloTer, 7 East, 462. Co., 9 La. 163; s. c, 29 Am. Dec. • Ionides v. Pacific Ins. Co., L. R., 439. 6 Q. B. 685. th- CHAPTER V. GENEKAL PRINCIPLES CONTINUED. Warranties. § 52. What is a Warranty. — An express warranty is a statement of fact or promise of performance, relating to the sub- ject of insurance or to the risk, inserted in the policy itself, or by reference expressly made a part of it, wh^ch must be literally true or strictly complied with, or else the contract is avoided. 1 A representation, as has been observed, is a collateral induce- ment outside the contract, and need be only substantially com- plied with ; that is to say, if it is immaterial in the judgment of the jury its falsity will not constitute a forfeiture. The warranty may be inserted in the body, margin, or at the foot of the policj T , but it must appear somewhere upon its face. 3 An indorsement upon the back is not sufficient, unless it is expressly made a part of the contract. 3 No-particular form of words is necessary to create a war- ranty, and it may relate to the past, present, or future. War- ranties form the basis of the insurers' obligation, and it is only upon condition of their complete fulfillment that they promise to make payment. § 53. Warranty must be Strictly Performed.— In case of a condition or warranty, it is of no consequence whether the fact stated or the act stipulated for be material to the risk or not, or whether the insured acted in good faith or not : the warranty must be strictly and literally performed. 4 1 Thomson v. Weems, 9 App. Cas. ! Wood v. Hartford Ins. Co., 13 671. Cushraan v. U. S. Life Ins. Co., Conn. 544 ; s. c, 35 Am. Dee. 02. 63 N. T. 404 Clark v. Union Mut. 3 Murdoek v. Chenango Co. Mut. Ins. Co., 40 N. H. 333 ; s. a, 77 Am. Ins. Co., 2 Comst. 210. Dee. 721. * Pitch v. American Popular Life Ins. Co., 59 N. Y. 557; § 53 Warranties. 63 Thus a broker, in offering a risk to the underwriter, showed the latter his written instructions, which comprised a statement respecting the vessel, that " she mounts twelve guns and twenty men : " in point of fact, the vessel had not this precise force on board ; but she had an armament of guns and swivels, with a crew of men and boys, which in both particulars were equivalent to, though not identical with, the force specified. It was held that the statement made to the underwriter, being a represen- tation, was satisfied by the substantial fulfillment, though had it been a warranty nothing less than a strict and literal fulfill- ment would have sufficed. 1 In another case, the words " in port 20th July, 1776," were written in the margin of the policy. The ship was proved to have sailed on the 18th of July, and Lord Mansfield held this to be a breach o£ warranty, though the discrepancy of two days might not make any material difference in the risk. 2 In another case, the description of the vessel as " the good American ship called the Rodman'''' was held a warranty that the vessel was American. 3 So if the insured by his fire policy warrants that there is no other insurance upon the property, the statement, if untrue, will avoid the policy, though made by the insured in ignorance of the fact, and though wholly immaterial in influencing the insurers. 4 So, also, if he omit to state one of the incumbrances upon his property, in answer to a question in the application calling for them, the policy will be vitiated if the. answer is warranted to be full, although the jury find the fact to be immaterial. 5 \ And if by his contract of life insurance he war- rants that he was not engaged in selling liquor, the validity of the policy will depend upon the truth of the statement. 6 If, however, the insured warrants that his building is " used for the storage of ice," that may be quite true, although at the time of the commencement of the risk there is no ice there.' Many illustrations of this doctrine will be considered in con- nection with the clauses of the policies. ' Pawson v. Watson, Co wp. 785. 6 Bowditch Mut. Ins. Co. v. Winslow 5 Bean v. Stupart, Doug. 12 (note). 3 Gray (Mass.), 415. 3 Barker v. Phoenix Ins. Co., 8 John- ° Dwight v. Germania Life Ins. Co., son> 307. * 103 N. Y. 341 ; s. c, 57 Am. Rep. 229. * Allen v. German-Am. Ins. Co., 123 ' Dolliver v. St. Joseph's Fire and ■jj # y. 6. Marine Ins. Co., 131 Mass. 45. 61 Insurance : Fiee, Life, Marine. § 54 "Warranties are in effect made representations by statutory provisions in some of the States, as shown in the appendix. It ought to be observed, however, that in making prac- tical application of the doctrine of warranty, it sometimes happens that the alleged breach consists in honest errors or misstatements in their character so trivial and irrelevant to the risk as to fall within the rule de minimis non curat lex. The court, perhaps, relied upon this maxim with more regard to common sense and justice than to the letter of the law in the following case, where a vessel was registered as captained by A, in order to comply with the requirements of the registry laws which forbid an alien to register ; but in point of fact the vessel was really under the management of another person, B, who was an alien, but a competent and experienced captain, whereas A had had no nautical experience : it was held that the representation of A's captaincy contained in the registry would not avoid the contract. 1 Similarly, in another case, the same court held that a fire policy was not avoided by the existence of a small building within seventy-five feet of the storehouse insured, which did not affect the risk, although the insured had warranted that the storehouse was detached from other buildings by at least one hundred feet. 2 § 54. Inability to Perform the Contract no Ex- cuse. — The inability of the insured to comply with the requirements of his warranties offers no excuse, unless the insurers are in some way responsible for the omission. The insurers have promised to pay only upon condition that the insured shall fulfill the contract upon his part, not upon condition that he shall find it convenient or possible to do so. 8 This rule is applicable to the payment of premiums when made a condition precedent, and also to all the other warran- ties in the policy. But the requirements of the policy regard- ing the form and particularity of the proofs of loss, while 1 Draperv.Com.Ins.Co.,21N.T.378. 3 School District v. Dauchy, 25Conn. ' Burleigh v. Gebhard Fire Ins. Co., ^30. Evans v. U. S. Life Ins. Co., 64 90 N. Y. 220. Baldwin v. Citizens N. Y. 304. Fire Ins. Co., 60 Hun. 389 (1391). § ZQ Warranties. 65 imposing an absolute obligation upon the. insured to furnish proofs unless the company excuses it, are held to mean only such reasonable proofs as the circumstances of the case will permit. 1 Sickness, insanity, death, 2 and, according to some authorities, even war 3 will furnish no excuse for the violation of a condi- tion in. the policy. But the United States Supreme Court and other courts have adopted the rule, that a war overrides the- ordinary obligations of the policy, and simply suspends them until the war is terminated. However reasonable this rule may be, considered logically, it is inconvenient and difficult to apply. 4 * Various classes of statutes which have been passed by the legislatures of different States to relieve from technical forfeit- ures are given in the appendix. § 55. Papers Referred to in the Policy. — A state- ment in a paper merely referred to in the policy is not a war- ranty ; but if the policy, as it almost invariably does, makes the application plan or survey a part of the contract, then the statements of fact therein contained, whether relating to the past, present, or future, become warranties. 6 § 56. Statement of Present Use. — A statement of the nature of the present use of the property, if it does not go to the essential nature of the subject of insurance, is not gen- erally considered a warranty of continuance. For example, in a late case the United States Supreme Court were of opinion that a warranty in a contract of fire in- surance, that smoking was not allowed on the premises, if true when the representation was made, would not be broken though the assured or others smoked afterwards on the prem- 1 Burastead v. Dividend Mut. Ins. Wall. 158. Cohen v. Mut. Life Ins. Co., 12 N. Y. 81. Co., 50 N. Y. 610. N. Y. Life Ins. Co. 8 Thompson v. Ins. Co., 104 F. S. t. Statham, 93 U. S. 24. 252. Carpenter v. Centennial Mut. .' Cushman v. U. S. Life Ins. Co., 63 Life Ins. Co., 68 Iowa, 453. Howell N. Y. 404. Pitch v. Amer. Popular v. Knickerbocker Life, 44 N. Y. 277. Life Ins. Co., 59 N. Y. 557 ; s. c, 17 8 Worthington v. Charter Oak Life Am. Rep. 372. Dwight v. Germania Ins. Co., 41 Conn. 401. Life Ins. Co., 103 X. Y. 341 ; s. c, 57 4 Semmes v. Hartford Ins. Co., 13 Am. Efip. 729. 66 Insdeance : Fiee, Life, Marine. § 57 ises. 1 So also where the policy of insurance described the property insured as being a two-story frame building used for winding and coloring yarn and for the storage of spun yarn, it did not warrant that such building was to continue to be thus used. 8 But a warranty that a house was of stone when in reality it was partly stone and partly wood, or that the building insured was a dwelling house, or occupied as a dwelling, when in fact it was not, would avoid the policy. 3 If the warranty were simply that the house was a dwelling, that would not neces- sarily mean that it was occupied as a dwelling at that time. 4 In marine insurance the rule is particularly strict that any statement relating to the property insured appearing upon the face of the policy will be regarded as a warranty. 5 §57. Questions unanswered or partially an- swered. — If a question in the application is not- answered at all, or if the answer is not false in any respect, but upon its face is only incomplete, there is no breach of warranty, pro- vided the insurer accepts the application without objection ; for, if not satisfied, the company should demand fuller informa- tion. So, also, to avoid forfeiture, equivocal answers are con- strued most strongly against the company, but notwithstand- ing this, the applicant ^must answer in good faith and not attempt to evade, conceal or mislead. 6 § 58. A Breach avoids though not Connected with the Loss. — Although the breach of warranty or the misrepresentation or intentional concealment of a material fact may not contribute to or cause the loss, nevertheless the policy is avoided, for the risk becomes a different one from that which the insurer undertook to bear. 7 1 Hosford v. Germania Fire Ins. Co., 6 London Ass. Co. v. Mansel, L. R., 127 U. S. 399. 11 eh. D. 363. Phenix Life Ins. Co. 2 Smith v. Mechanics and Traders v. Eaddin, 130 V. S. 183. Dilleber v. Fire Ins. Co., 32 N. Y. 399. Home Life Ins. Co., 69 N. Y. 256 ; s. 3 C'hasev. Hamilton Ins.Co., 20 N. Y c, 25 Am. Rep.182. Carson v. Jersey 52. Alexander v. Germania Fire Ins. City Fire Ins. Co., 43 N. J. L. 306. Co., 60 N. Y. 464 ; s.c, 23 Am. Rep. 76. Higgins v. Phcenix Mut. Ins. Co., 74 4 Browning v. Home Ins. Co., 71 N. N. Y. 6. Y - 508 - ' Bank of Balston Spa v. Ins. Co., 50 s Thomson v. Weems, 9 App. Cas. N. Y. 45. Ripley v. Mtna, Ins. Co., ^ 30 N. Y. 136 ; s. c, 86 Am. Dec. 362. § 62 Warranties. 67 § 59. Breach avoids though only Temporary.— If a breach of warranty occurs during the life of a policy and continues temporarily only, by the weight of authority and reason it avoids and does not merely suspend the policy, 1 un- less the insurer or its duly authorized agents, with knowledge of the forfeiture, revive the contract by some unequivocal act of confirmation ; as, for example, by the acceptance of a pre- mium or assessment, or by the delivery of the policy or a renewal receipt, or by an express waiver of the forfeiture by consent. 2 § 60. To avoid Fdrfeiture, Contract made Sev- erable. — Where several items of property are insured for separate amounts, either at separate rates or for a single pre- mium, and the breach of warranty affects a portion of the items only, then, according to the weight of authority, the con- tract is severable unless it contains words as in the case of the New York standard fire policy, showing distinctly that the entire contract is to be avoided by the breach. 3 § 61. Void means "Voidable. — Though the contract is said to be avoided by the violation on the part of the insured of any of the conditions or warranties inserted for the benefit of the insurers, this means that the contract is voidable at the option oi the insurers. 4 § 62. Election once made is Final. — If with knowl- edge of the forfeiture the insurer elects to revive the contract, and evinces his election by an unequivocal and positive act of confirmation, he cannot thereafter insist upon the past breach. 5 ' Kyte v. Commercial Union Ass. Ins. Co., 73 N. Y. 459 ; s. c, 29 Am. Co., 149 Mass. 116. Fernandez v. Rep. 184. Contra Mtna, Ins. Co. v. Great Western Ins. Co., 48 ST. Y. 571. Resh, 44 Mich. 55 ; s. c, 38 Am. Rep. Coffin v. Newburyport Mar. Ins. Co., 9 228. See note at p. 230. Mass. 436. ' Shearman v. The Niagara Fire Ins. 8 Rice v. New Eng. Mut. Aid So., Co., 46 N. Y, 526 ; s. c, 7 Am. Rep. 146 Mass. 248. Weed v. London and 380. L. Fire Ins. Co., 116 N. Y. 106. 5 Masonic Mutual Benefit Asso. v. s Schuster v. Dutchess Co. Ins. Co., Beek, 77 Ind. 203 ; s. c, 40 Am. Rep. 102N.Y. 260. Merrill v. Agricultural 295. CHAPTER VI. GENERAL PRINCIPLES — CONTINUED. Waiver and Estoppel. § 63. Nature of Waiver and Estoppel. — Waiver is the voluntary relinquishment of a known right. 1 Estoppel in pais is the bar which equity raises, in the interest of fair dealing, to prevent the one party from enforcing certain rights which it possesses under the letter of the contract to the detriment of the other party, where, by its declarations, agreement, or con- duct, it has induced the other party to rest secure in the belief that such rights have been relinquished. 2 While waiver, prop- erly speaking, is the voluntary abandonment of a contract right, estoppel includes those cases where an abandonment is inferred or" imposed by the court from the nature of the con- duct of the party who would otherwise be entitled to the right. The words waiver and estoppel, however, are often used interchangeably by the courts. The party that generally waives or is estopped in insurance law is the insurer. To support .the doctrine of waiver and estoppel it is not necessary that any new or specific considera- tion be exchanged, because, except for reliance upon the belief induced by the conduct of the insurer in question, it is to be presumed that the insured would have taken out other insur- ance for his protection ; but even in respect to the provisions of the contract to be performed by the assured after loss no new consideration need be shown to sustain a waiver or estoppel. 8 § 64. What in General constitutes a Waiver or Estoppel.— Any unequivocal and positive act of the company ' Finderson v. Metropole Fire Ins. » Prentice v. Knickerbocker Life Ins. Co., 57 Vt. 520. . Co., 77 N. Y. 483. 8 Union Ins. Co. v. McGookey, 38 Ohio St. 555. § 66 Waivek and Estoppel. 69 recognizing the policy as valid after a knowledge of its breach, or any act that puts the insured to unreasonable expense or trouble in the justifiable belief that the company still regards the policy as valid, will estop the company from taking advan- tage of the forfeiture. 1 By the highest authority the rule is stated thus : " Any agreement, declaration, or course of action on the part of an insurance company which leads a party insured honestly to believe that by conforming thereto a forfeiture of his policy" will not be incurred, followed by due conformity on his part, will and ought to estop the company from insisting upon the forfeiture, though it might be claimed under the express letter of the contract." 2 § 65. What the Insured seeks to Accomplish by invoking this Doctrine. — As the question ordinarily arises in practice, the insured, when he claims a waiver or an estoppel, is not aiming at a reformation of the policy in equity, nor at a rescission for fraud or mistake, for generally it would be difficult for him to establish good grounds for a reformation in such cases, and after loss a rescission would afford inadequate relief and would not come within the jurisdiction of a jury. Therefore the insured ordinarily brings his action of contract upon the policy, and under the doctrine of waiver and estoppel may be allowed to recover, although upon the face of the writ- ten contract, in conjunction with the testimony of his own wit- nesses, no cause of action is established against the insurers. 3 § 66. The Disturbance of Contract brought about by Parol Testimony. — This fact is of grave import, and upon it turn many of the difficult questions which arise in the application of the doctrine of waiver and estoppel to the insur- ance contract. Thus, to illustrate : The policy makes the state- ments of the written application warranties. The written application, vouched for by the insured, contains certain very important representations ; for example, it states, perhaps, that 1 Viele v. Germania Ins. Co., 26 la. Kenyon v. Knights Templar, 122 N. 9 ; s. c, 96 Am. Dec. 83. Titus Y. 26i. v. Glens Palls Ins. Co., 81 N. Y. a Rowley v. Empire Ins. Co., 36 N. 410. Y. 550. Van Schaick v. Niagara Fire 5 Ins. Co. v. Eggleston, 96 U. S. 572. Ins. Co., 68 N. Y. 434. 70 Insurance: Fiee, Life, Maeine. §67 his age was thirty-five, or that he never had consumption, or that he has taken out no other insurance, but on the trial of the action brought by the insured against the company on its .policy the uncontradicted testimony shows that his age was forty, or that he had been afflicted with consumption, or that he had taken out other insurance. Under the doctrine of waiver and estoppel, however, the plaintiff is permitted to show by oral testimony that the company or its agent, duly authorized, had knowledge of the truth of that which was mis- stated in the application, and issued the policy in full possession of such knowledge, or that the applicant made a true statement to the company or its representative, and is not responsible for the erroneous answers, which, he tells the jury, were errors of the company's agent in filling up the application. Or, again, the policy says that the contract shall be void if mechanics are employed in making repairs for more than fifteen days at any one time, or if the building remains unoccupied for more than ten days without written consent indorsed on the polic}*. These warranties are broken ; but under the doctrine of this rule of waiver the plaintiff is allowed to testify orally in excuse for the breach of the written contract that, during the life of the policy and before he paid the last premium, he was told by the company or some one of its officials that he was relieved from the contract requirements as to these particulars. 1 The leading case of Plumb v. Cattaraugus Ins. Co. is said to have changed the law for New York. 8 And this was conceded by the New York Court of Appeals in a later case. 8 But the doctrine of oral waivers as adopted by New York received the high sanction of the Federal Supreme Court in the Wilkinson case, and has met with full approval in almost all of the States. § 67. Effect of this Doctrine on the Ordinary Rule of Evidence.— It is often said that the doctrine of waiver and estoppel does not contradict the terms of the policy, and is not repugnant to the rule that the written contract merges all 1 Plumb v. Cattaraugus Ins. Co., 18 2 Dewees v. Manhattan Ins. Co., 6 N. Y. 392. Richmond v. Niagara Fire Vroom. 374. Ins. Co., 79 N. T. 230. Ins. Co. v. ' Rowley v. Empire Ins. Co., 36 N. Wilkinson, 13 Wall. 223. Baldwin v. Y. 550. Citizens' Ins. Co., 60 Hun. 389. § 68 "Waiter and Estoppel. 71 prior negotiations. This would be true if the plaintiff should . bring his action to annul the contract; l but where, as is usual, the action is brought to recover upon the policy, it would seem to be more sensible and accurate to concede, that, so far as this doctrine tolerates parol evidence of knowledge by the insurers prior to the contract of facts at variance with its stipulations, and permits the insured to give his oral version of antecedent negotiations and transactions, it does constitute a substantial departure from the ordinary rule of evidence : for a doctrine which denies all force and effect to an unambiguous clause of a written contract, to all moral intents and purposes, expunges the clause from the contract altogether. 2 § 68. Reasons in Favor of Waiver and Estoppel in Certain Cases. — The policy is prepared in the interest of the insurers. The applicant must take it or nothing. Its con- ditions are numerous and complex, and often the insured does, not receive it until after the contract is closed. Hence he may have no opportunity to compare it with the application. It in fact is not the record of his intent, nor does it sum up his antecedent negotiations with the company, except with respect to those parts of the policy which are in writing. It would not be consonant with fair dealing to permit an insurer in return for the premium to deliver a pretended con- tract of insurance, while knowing all the time, from the very threshhold of the transaction, that a forfeiture is already incurred by reason of a violation of some printed condition, and that therefore the policy is of no more avail to the insured than a piece of waste paper. Again, it would not be right to hold the insured responsible for errors in the application, where their insertion was the act of the company or its representative, without any concurrent carelessness or fault on the part of the insured, for in such a case the alleged breach of contract really is not the act of the insured at all. Again, where the policy during its life or after loss becomes voidable at the election of the insurers, their unequivocal act of confirmation' with knowledge of the forfeiture ought to be taken as con- clusive evidence of the exercise of their right of option to ' Pitney v. Glens Falls Ins. Co., 65 s Franklin Fire Ins. Co. v. Martin, N Y. 25. 40 N. J. L. 568. 72 Insurance : Fire, Life, Marine. § 69 abandon the forfeiture, and to revive and continue the insur- ance for the benefit of both parties. § 69. Reasons against the Doctrine of Waiver and Estoppel in Certain Oases. — The written instru- ment is supposed to be the final and most truthful evidence of the result of the negotiations, and if not good for that is a meaningless formality. To go outside of it is to encourage falsehood and fraud, and in the adjustment of insurance rates must ultimately result either in disaster to the insurers and their stockholders, or in saddling upon innocent persons in some form the losses caused by unscrupulous claimants, who, if not concluded by the terms of the written contract, will suit their oral testimony to the exigencies of their case. The applicant knows, or ought to know, that the statements in the application, whether right or wrong, constitute all that the home office has before it in estimating and deciding upon the risk, and fixing the rate of premium. He knows, or ought to know, that the insurers have never given any authority to their agent to distort or secrete from them any facts bearing upon this subject ; and he knows, or ought to know, that the policy contains the complete and binding provisions of the con- tract. Under the doctrine of waiver and estoppel it sometimes happens that the insured is allowed to recover upon a policy in spite of the forfeiture which appears upon its face, where, if the facts disclosed for the first time at the trial had been made known to the company in advance, it would have declined the risk altogether. Thus there is sometimes thrust upon the insurers, by a doctrine of law, a contract which they have neither madej nor upon the testimony disclosed at the trial would have made if they had known it. Such a result would seem to be grossly inequitable; but, on the other hand, to allow the admissibility of this doctrine to turn upon a mere speculation as to whether the insurers would or would^not have accepted the risk, if they had known the truth, is to make confusion worse confounded. Furthermore, such a course might sometimes be unjust to the assured, if innocent, for mean- while he may have lost the opportunity of getting other insur- ance, and may be ignorant of any ground of forfeiture until apprised of it in the course of a law-suit upon the policy. § n Waiver and Estoppel. 73 § TO. How this Doctrine has operated in Prac- tice. — The doctrine of waiver and estoppel by agents of insur- ance companies located outside the home office is largely a development of recent years, and covers one of the most per- plexing subjects to be found in the law books. It has often fostered the claims of unscrupulous men, it has been fruitful in litigations, and has had a tendency to drive the companies into an illiberal policy in framing their contracts and in adjusting their losses. Such action of the companies has stimulated the courts in turn to adopt a more and more rigorous application of the doctrine against the insurers, and has called forth frequent and varied interference by the legislatures of most of the States. Thus this whole branch of the law has been thrown into confusion and uncertainty. The cases upon this subject constitute a considerable portion of the law pf insurance in the United States, more so than in England, and many of the opinions of our courts of last resort set forth in them are hopelessly at variance with one another. Notwithstanding all this the doctrine is firmly established, and in many of its applications is just and salutary, and when wisely enforced may be consonant with principles which are now thoroughly recognized both here and in England. 1 Upon a careful review of the English and American authori- ties, Professor Dwight, as one of the commissioners of the New York Court of Appeals, came to the conclusion that the doc- trine of waiver and estoppel by parol evidence as applicable to written contracts of insurance is not inconsistent with the gen- eral principles of the law. 2 § 71. Cause of the Conflict of Opinion in apply- ing the Doctrine. — The striking divergence of opinion to be found in the reports of American insurance cases upon the subject of waiver and estoppel is not due to indifference or care- lessness on the part of the judiciary in developing this import- ant branch of the law, but rather to certain embarrassing peculiarities of fact which appertain to the making and operation of insurance contracts. The insurers being corporations can act 1 Morrison v. Universal Marine Ins. ' Pitney v. Glens ^allgjns. Co., 65 Co., L. R., 8 Exch. 40. Pickard v. N. Y.6. Pechner v. Phoenix Ins. Co., 1 Sears, 6 Ad. & Ell. 475. 65 N. Y. 195. 74 Insurance : Fieb, Life, Marine. § 71 only through agents, and, as was explained in the first or intro- ductory chapter, the powers of these agents are varied and often ill-defined. Vory few of them can strictly be called general agents in the sense in which that term is usually understood in the law, though the powers given to agents by American fire companies are apt to be broader than the powers of local agents of English companies in England. The applicant for insurance knows little about the scope of the agent's actual instructions. In making request for fire or life insurance he often signs a voluminous written application which is forwarded to the home office before he sees the policy. The premium, too, is some- times paid and the contract closed before the policy is deliv- ered. The policy, when received, perhaps gives to the insured a notice, in the form of a stipulation, that the company, after it has taken advantage of its agent's acts, proposes to repudiate ex post facto all responsibility for them. The policy, states that the asrent is to be deemed the ajrent of the insured in what has already happened, or that no one is to be deemed an agent for the company unless he has a written commission, or thatjio agent or officer or any representative of the companycarycaive. provisions of the contract except in writing indorsed on the policy. If a life policy, it states, probably, that no payment of premium is valid unless paid in cash, and that no payment of premium can be made except in return for^a-^rittgn_receipt signed by some designated officer or officers. Meanwhile the home office may or may not have received the premium. A loss or death insured against may or may not have occurred. The recitals or stipulations in the policy concerningLjh^ author- ity of the agent may or may not correspond with the osfenfibi*. authority which the agent was held out by the company to pbs- ' sess before delivery of the policy. They may or may not accord with the actual authority given to the agent by the company, of which, from the nature of things, the best and primary evi-< dence must exist outside the policy. It will readily be seen that the distinctions likely to arise are many and nice ; that a conflict of opinion may oftentimes be apparent rather thait; real, and that it is not safe to take the remarks of a court in one case and apply them recklessly to the varying circum- stances of another case, or to jump to the conclusion that the comments of a judge in the course of some particular discussion/ § "1 "Waiver and Estoppel. 75 are necessarily intended to serve as the enunciation of a general rule. The necessity for such a warning may be well illustrated by reference to three very recent cases, decided within a single year by a court that perhaps has given more successful study and learning to this branch of the law than any other court in the country. In the case of Arff v. Sun Eire Ins. Co., 125 1ST. Y. 57 (1890), the court advances the opinion that an ordinary agent of an insurance company has the power to employ clerks empowered to discharge the ordinary business of his agency, and that a waiver of a character which the agent himself could make is to be attributed to him when made by his clerk ; that the maxim of delegatus non potest delegare does not apply to such a case, and that the knowledge of a clerk of the agent of the company that there was other insurance was the knowl- edge of the agent of the compan}', arid, therefore, knowledge of the company itself, and sufficient to estop it from taking advan- tage of a clause in the policy under which, otherwise, the policy would have been avoided. The real point of the case, doubtless, was that the subagent was believed to have authority emanating by recognition from the company itself to receive notice of other insurance in pursu- ance of a provision of the policy. The inference ought not to be drawn from this decision that a solemn written contract, which to have any validity at all may perhaps require to be signed by the president and secretary of a corporation, and counter- signed by its general agent, is to be placed wholly at the mercy of an irresponsible subagent, who is neither selected, controlled, paid, or discharged by the company ; nor must it be inferred from the language of the learned justice who pro- nounced the opinion of the court, though it is suggestive of such an inference, that insurance companies are to be deprived of the equal protection of the law. The general rule relating to the authority of subagents and clerks is better stated in the recent case of "Waldman v. North British, &c, Ins. Co., 91 Ala. 170, in which it was held that the maxim delegatus non potest delegare is applicable to the agents of insurance companies, and that any general discretion- ary powers granted to an agent, such- as waiving or modifying the terms of the policy, cannot be by him transferred to a sub- 76 Insurance : Fire, Life, Marine. § 71 agent. That case also, as well as the Arff case, had to do with waiving the clause about other insurance. In Wilber v. Williamsburgh City Fire Ins. Co., 122 K Y. 443 (1890), the court says: "It was entirely competent for the parties to agree that a third person participating in the negotiations should, for the purpose "of procuring the policy, be deemed an agent of the .assured." Such agent " should be deemed the agent of the assured until after the inception of the contract. Whether he thereafter represent the assured is dependent upon actual authority conferred otherwise than by the contract 6f insurance." From this language it must not be understood that the court really intended to commit itself unqualifiedly to the proposition that the actual authority of an insurance agent is to be considered as conferred by a policy of insurance, a con- tract subsisting between the company and a third party, or that a stipulation declaring in effect that all agents in the transaction are to be deemed agents of the assured would be conclusively binding upon the assured until he had seen the policy, and that after he had seen the policy it would not be binding upon him. Curiously enough, the courts of Pennsylvania and Dakota, and other courts, have adopted as applicable to a similar stipu- lation in the policy the precise converse of the rule which might seem to be indicated by the case last referred to, and have held that the stipulation or notice of restriction as to agency contained in the policy has no binding force at all until it is received by the insured. 1 In Kenyon v. Knight Templars, 122 1ST. Y. 257 (1890), the court says : " The mere fact that the agent had knowledge or information of the manner the assured was then selling liquors, did not necessarily affect the right of the defendant to assert and make available the defense that there was a breach of war- ranty, if the answer was untrue. That was provided against by a provision in the contract. The cases in which knowledge of the agent through whom insurance is taken may operate to defeat the right of the company to avail itself of the fact so 1 Kister v. Lebanon Mut. Ins. Co., 464. South Bend Toy Mfg. Co. v. 128 Pa. St. 553. Eilenberger v. Pro- Dakota P. & M. Ins. Co., 20 Ins. tective Mut. Fire Ins. Co., 89 Pa. St. L. J. 871 (South Dak., 1891).' § 71 Waiver and Estoppel. 77 known, at the time it is taken, are those in which there is no application signed by the assured, stating to the contrary of such existing fact, but rest upon a condition expressed in the policy merely. Then it may be presumed that the statement of it in the policy as required by the condition was omitted by mistake or waived. Such is not understood to be the rule when the alleged breach of warranty is founded upon a mis- statement by the assured in the application made and sub- scribed by him." Here the court seems to think that it does make a difference, after all, whether the insured has had actual or only construct- ive notice of restrictions upon the agent's power ; but, from the language of the court just quoted, it must not be inferred that a mere knowledge of forfeiture, without any positive act of con- firmation, as, for example, delivery of policy or receipt of pre- mium, will in any case avail to work a waiver of a breach of the policy ; 1 neither must it be inferred that a breach of a warranty contained in a policy may be waived by an agent where the policy says it cannot, but that a breach of a war- ranty contained in the application forming a part of the policy cannot be waived by any agent, no matter how broad his authority. 2 1 Weed v. London & L. Fire Ins. N. Y. 315. Tubbs v. Dwelling House Co. 116 N. Y. 118 ; Titus v. Glens Ins. Co , 84 Mich. 646. Follette v. Falls Ins. Co., 81 K. Y. 419. U. S. Mut. Ace. Asso., 107 N. C. 240. 8 Ins. Co. v. Norton, 96 V. S. 240. State Ins. Co. v. Gray, 44 Kan. 731. McGurk v. Met. Life Ins. Co., 56 Conn. German Ins. Co. v. Gray, 43 Kan. 497. 528. Steenv. Niagara Fire Ins. Co., 89 Cont'l Ins. Co. v. Pearce, 39 Kan. 396. CHAPTER VII. GENERAL PRINCIPLES. Waiver and Estoppel — Continued. § 72. What cannot be Waived. — Parties to a con- tract of insurance made within a State cannot avoid the pro- visions of a general statute of that State, unless the statute authorizes it. 1 The State has the right to prescribe the conditions on which either foreign or domestic companies may do business within its jurisdiction, and hence may prescribe conditions of the con- tract with reference to certain particulars, or may establish a standard form of contract. 2 A corporation cannot in general do an act ultra vires or beyond its corporate powers as defined by its charter, and every one dealing with the corporation is presumed to be cog- nizant of the nature and extent of such powers. 3 Thus if a fire insurance company organized in New York should attempt to make a contract of life or ocean-marine insurance, the contract would be void. 4 But any directions of the charter as to the internal manage- ment of the affairs of the corporation are not in general bind- ing upon outsiders. 5 Nor are charter provisions binding upon third persons which extend to the directors' discretionary powers to do a certain act ; 6 'as, for example, where, by the regulations of the 1 St Paul P. ft M.Ins. Co. v. Shafer, s Jemison v. Citizens Savings Bank, 76 Iowa, -282. Emery v. Piscataqua P. 122 N. Y. 140 (1890). & M. Ins. Co., 52 Me. 322. Chamber- ' Be Arthur Average Assoc, 32 L. lain v. N. H . Fire Ins. Co. , 55 N. H. 249. T. N. S. 525. '' Continental Ins. Co. v. Chamber- * In re Athenseum Life Assur. Co., lain, 13 1 U. S. 304. Doyle v. Conti- 27 L. J. Ch. 829. nental Ins. Co., 94 U. S. 535. Eeilly « Ernest v. Nicholls, 6 H. of L. v. Franklin Ins. Co., 43 Wis. 449. Cafies, 401. § 75 Waiver and Estoppel. 79 company, insurance is to be made only to three-fourths of the value of property, but the officers of the company are to decide what is the value. 1 • And, in general, for a deviation from the prescribed method of doing a valid corporate act, the corporation will not be dis- charged from liability to an innocent person, and therefore in such matters of informality or of inaccuracy, directions whether of the charter or by-laws may be waived. 2 § 73. What can be Waived : Stock Companies. — Any forfeiture or any condition of the policy inserted for the benefit of the insurers, even those stipulations which provide that there shall be no waiver, or that no waiver shall be made except in a certain manner as by writing, or that certain classes of persons shall be deemed to have no authority to waive, may be waived by the insurers through such representa- tives as in fact have the requisite authority. This is put upon the ground that parties having power to make a contract have power by mutual consent to abrogate or alter it to any extent at their pleasure, unless restrained by statute. 8 § 74. New Subject cannot be Introduced by Waiver. — The doctrine of waiver and estoppel is not to be applied so as to effect a change in the subject-matter of the contract. Thus if by the terms of the policy a designated house is the subject of insurance, the insured will not be permitted to show by parol that in consequence H ignorant of the most material and important facts pertaining to their defense until after the conclusion of a painstaking and expensive investigation. There would seem to be about as much reason for allowing them to make this expense their sole ground of defense as to allow the insured to construct a cause of action out of the expense of the law-suit in which he estab- lishes no right of action.. The language in the Michigan and other similar cases is unreasonable. 8 § 85. A Retention of Proofs Waives Defects that might have been Remedied.— For the insurers to retain the proofs of loss or death, without pointing out any objection to their form or contents within a reasonable time, constitutes a waiver of such mistakes and defects in the proofs as the insured could have remedied upon notice. Here is a clear ground of estoppel. 4 1 Liverpool, London & Globe In- s Castner v. Farmers Mut. Ins. Co., surance Co. v. Verdier, 33 Mich. 50 Mich. 273. jgg * Keeney v. Home Ins. Co., 71 N. Y. 2 Devens V. Mech. & Traders Ins. 396. Jennings v. Metropolitan Lite, Co., 83 N. T. J$8. 148.Mass. 61 (1888). CHAPTER YIII. GENERAL PRINCIPLES CONTINUED. Waiver and Estoppel hy Agents. Insurance companies, being corporations, can act only by representatives or agents. The law of agency in general is applicable to insurance, and in its practical operation in the determination of many of the questions that arise between the parties to an insurance contract or their respective represent- atives requires no special notice; but when it comes to the doctrine of waiver and estoppel, as arising from the acts and omissions of the agents of the insurers, an attempt has been made by many courts to apply as against insurance companies a more than ordinarily stringent rule of responsibility. ^*^~ If an employer chooses to do an act through the instru- mentality of another, it is fairly the employer's act — qui facit per alium facit per se ; and though the act is unauthorized, if, upon learning of it, the employer adopts it by confirmation, then the act, together with any benefit accruing therefrom, be- comes his own — omnis ratihabitio retrotrahitur et' mandato mquiparatur. Subordinates ought to work in subjection to the commands of their masters, and seldom are possessed of pecuniary means with which to satisfy the claims of third per- sons who may have been injured by the conduct of the master's business. The master, therefore, should be responsible for what is done within the scope of the employment — respondeat supe- rior ; and when the thing which the agent is employed to do has been accomplished, the power of the agent has spent itself and is terminated, and the principal is not answerable for acts thereafter of him who was once his agent — nsmo ex alterius facto prcegravari debet. It is proper in all cases, that, as between the principal and an innocent third party, the former rather than the latter § 86 "Waivek and Estoppel by Agents. 87 should suffer for the misconduct and misrepresentations of the agent, if relating to the business intrusted to him, and within the scope of its natural and reasonable requirements. This is for the reason that it is the principal who selects, controls, and pays his agent, who enjoys the benefits of his services when faithfully rendered, and who alone possesses the power to dis- charge him if incompetent or unfaithful. But these familiar considerations Avhich underlie the elementary doctrines of the law of agency in all its ramifications are not illustrated with any special force in the relations existing between an insurance company and its agents. Sometimes these agents are brokers acting for the one party or the other as opportunity offers ; and usually the so-called local or canvassing agents outside the home office, though in the regular employ of the company, are not exactly in their pay, for they simply retain from the moneys paid by the insured a fixed commission. The interests of the agent are by no means identical with those of the company : for it is for the immediate profit of the agent to close the bargain, whether the proposed risk is a good one or not ; and in his feelings and affiliations it often happens that he is quite as friendly towards his neighbors and towns- people who are his customers, as towards the corporation whose central office and whose officers he may never have seen. § 86. Ostensible Authority. — If the company holds out its agent to the public as authorized to do a particular act, or to transact a parfrfoolar kind of business, this carries with it an authority toy^d^pt the ordinary means, and do and say the appropriate^wngs, to accomplish the object for which the agent is emphw^d. 1 To deljlfjmfne the extent of the authority, then, regard must be hgfnot only to the actual instructions given by the principMp-hich are seldom disclosed to the insured, but also to thj^maBacter of the particular business involved — whether, for ^Hwple, it be simply that of investigating losses, anil rer^Brng to the principal ; or whether it be that of soliciting fjlPnsurance, superintending the execution of the application '■ Insurance Co. v. Wilkinson, 13 Wall. 222. Abraham v. Ins. Co., 40 Fed. Rep. 717. 88 Insukance : Fieb, Life, Mabine. § 87 and forwarding it to the home office ; or whether it involve the ampler powers and wider discretions of making and modifying contracts. 1 § 87. Undisclosed Instructions not binding upon the Insured. — If the natural and ordinary demands of the business actually intrusted to the agent invest him with the power to adopt a certain course of action or representation, the principal is bound thereby, and may not be permitted to show that his undisclosed instructions of a different tenor and effect have been violated by the agent. Hence, it often happens that an agent has power to bind his principal in flat disobedience of his express instruc- tions. 2 For the agent's wrongful or fraudulent acts of commission or omission, and for his material misrepresentations or trickery within the scope of his ostensible authority as thus defined, the company is liable. Thus, where the soliciting agent of a life company, in filling up the application, fraudulently misstated the age of the assured, and filled out a physician's certificate, and forged the name of the examining physician thereto, and while the policy was in his hands for delivery changed the age of the assured as stated therein, so as to show his real age, and then delivered it, and neither the assured nor the company knew anything of these fraudulent acts, it was held, that the company was liable. 3 §88. Agency to be Determined by the Facts of Each Case. — Who are agents of the company, and whether brokers and agents are the representatives of the insured or the insurers, are questions of fact to be determined by the circumstances of each case. 4 But, if the facts are undis- puted, the relationship of agency is usually a question of law. 5 1 Ins. Co. v. Edwards, . 122 U. S. * Commercial Ins. Co. v. Ives, 56 457. Eastern R.R. Co. v. Belief Ins. 111. 402. Kausal v. Minn. Farmers Co., 105 Mass. 570. Mut. Fire Ins. Co., 31 Minn. 17. ln- 3 Buggies v. Am. Central Ins. Co., surance Co. v. Wilkinson, 13 Wall. 114 N. Y. 415 (1889). 222. 3 McArthur v. Home Life Ass'., 73 6 Allen v. German Am. Ins. Co., Iowa, 33ti (1887). 123 N. Y. 6. § 89 Waivek and Estoppel by Agents. 89 § 89. Effect of Stipulations in the Contract itself as to who are, or are not, Agents of the Company. — Policies of lire insurance frequently contain either one of these two stipulations : (1) That any person, other than the assured, who may have procured the insurance to be taken shall be deemed to be the agent of the assured, and not of the company, in any transaction relating to the insurance ; (2) that in any matter relating to the insurance no person, unless duly author- ized in writing, shall be deemed the agent of the company. And life policies often contain a provision, in substance, that agents are not authorized to make, alter, or discharge contracts, or to waive forfeitures, or to grant permits, or to receive for premiums anything but cash. The effect of such contract provisions has been the subject of so much controversy, and the occasion of so many inhar- monious utterances from the bench, that it behooves any one to approach with diffidence the necessary attempt to evolve from them the law. These stipulations are not illegal or against public policy, and are held to be of some binding force upon the insured, and at least prima facie true. Consequently, if true, they are absolutely binding. 1 They have the practical advantage of restricting what otherwise might be a broader ostensible power in the agent ; but by the weight of authority they are not con- clusively binding, unless true, because the relation of agency is one existing between the company and its agent, and ought to be primarily determined by what has passed between them extrinsic to the policy, inasmuch as the policy is, in respect to that relation, res inter alios acta. A sweeping general clause of this character, in a printed form of policy, does not very closely resemble an agreement between two persons, intelligently and deliberately made, to the effect that a certain designated third person, of whom they know and who is before their thoughts, shall or shall not be regarded as the agent of one or the other of them in what such third person is about to do or has done. Moreover, the terms of the policy are oftentimes settled by the agent himself with- out conference with the home office ; and if the policy is as- ' Merserau v. Phenix Mut: Life Ins. Am. Ins. Co., 123 N. Y. 6. Whited v. Co., 6G N. Y. 274. Allen v. German Gennarfia Fire lus. Co., 76 N. Y. 415. 90 Insurance : Fire, Life, Marine. § 89 serted to be in any respect the source of the agent's authority, the answer would seem pertinent, that an agent cannot fix the limits of his own authority. And, again, if the agent is in fact the representative of the company, and has an authority sufficiently broad, he can waive the clause denying his author- ity as well as any other clause. If such a clause is untrue or insincere, there is certainly no special sanctity attaching to it ; on the contrary, this class of provisions in the policy has stirred the antagonism of the courts more than am' other of its conditions. And, finally, the significant fact cannot alto- gether be ignored, that the policy, as a rule, is not executed and delivered to the insured until after the application has been given to the company, and often, fn fire and marine insurance, not until after the contract of insurance has been closed and the premium paid. A stipulation of this character, it may be contended, is (1) a recital of fact, or (2) an agreement to be complied with, or (3) a mutual promise between the insured and the insurers, that the policy shall be the sole evidence of the alleged fact of non-agency. To the third suggestion it is a sufficient answer to say that the clauses of the policies do not so prescribe, and the courts, moreover, do not look with much favor upon attempts by the parties to abrogate by agreement the established rules of evidence. 1 If it is regarded as a recital of fact, such recital is not conclusively binding upon the insured because no sufficient ground of estoppel is shown in favor of the insurers. 2 The rule in regard to the conclusive effect of recitals even in deeds is restricted to the recital of those particulars which are sup- posed to have received the deliberate attention of the parties. 8 This is not analogous to the case where a party takes a corporate deed executed by an agent therein recited to have due authority, in which case the grantee is not permitted to deny the authority of the agent, because a good ground of estoppel is presented. 4 1 Travellers Ins. Co. v. McConkey, ' 1 Greenleaf on Evidence, § 26. 127 U. S. 667. Utter v. Ins. Co., 65 4 Stow v. Wyse, 7 Conn. 214 Hunt- Mich. 545. ington v. Havens, 5 Johns. Ch. 23. s 1 Greenleaf on Evidence. § 285. 3 Washburn on Real Estate, p. 109. § 89 Waives and Estoppel by Agents. 91 If the clause is regarded as a stipulation, neither party ought to violate it ; and if the company permits those who are actually its agents, though without a written commission, to solicit insurance for its benefit, and to superintend the execu- tion of applications, and to make representations in its behalf, the insured should be permitted to show these facts by parol, as amounting to a breach of the stipulation on the part of the insurers, if the stipulation is held to have force. Such a stipulation is not conclusively binding after the inception of the contract, for the reason that the company, in spite of the contract, might, as a matter of fact, after delivery of the policy, change the sftope of the authority of the persons employed by it or alter the manner of bestowing authority upon them; 1 and, according to the weight of authority, such a clause is not conclusively binding upon the insured in respect to the negotiations prior to the inception of the contract, because it is to be regarded in its essential nature as a notice to the insured of an alleged fact extrinsic to the policy which should take effect from its receipt, and provided it is true, rather than as a proper provision of the agreement, or one which the insured could fairly anticipate would be incor- porated in the policy. 2 The sound rule would seem to be that laid down by the United States Supreme Court in a case which has often been cited, I think erroneously, as supporting the proposition that the contract limitation upon the agent's powers is conclusive until after the inception of the contract. The opinion of Mr. Justice Bradley in that case would seem rather to mean that the companies may obtain the advantage of the agency clauses which they have inserted in the general forms of their policies only by acting in accordance with them ; and that such clauses are tantamount to a notice, which is not binding unless true, and which may be waived or disregarded by the companies at 1 Wilberv. Willianisburgh City Fire Mar. Ins. Co., 43 Wis. 108. North Ins. Co., 122 N. T. 443. Ins. Co. v. Brit. & Mer. Ins. Co. v. Crutohfield, Norton, 96 XL S. 234. 108 Ind. 518. Sullivan v. Phenix Ins. 9 Kister v. Lebanon Mnt. Ins. Co., Co., 34 Eans. 170. Planters Ins. Co. 138 Pa. State, 553. Commercial Ins. v. Myers, 55 Miss. 479. Boetcber v. Co. v. Ives, 56 111. 402. Kausal v. Hawkeye Ins. Co., 4? Iowa, 253. Par- Minn. Farmers Mut. Fire Ins. Co., 31 tridge v. Commercial Ins. Co., 17 Hun. Minn. 17. Gans v. St. Paul Fire & 95. 92 Insurance : Fire, Life, Marine. § 90 pleasure. 1 Following a similar view the New York Court of Appeals has unanimously held in a recent case that an agent of an insurance company may be shown to have an actual author- ity to waive a forfeiture for non-payment of premiums, although the policy itself declare that he has no such authority. 2 The same principle has lately been held by several courts to be applicable to proceedings antecedent to the closing of the con- tract, although the application shown to the insured contained a notice of a pretended limitation upon the powers of the agent to waive conditions or alter the written contract. 8 So, also, if the agent has in fact an authority broad enough, he may by his acts, if done within the scope of his actual em- ployment, estop the compan}' from claiming that an alleged violation of the letter of the contract really brought about by the agent himself shall constitute a defense. 4 Certain States, by statute, have adopted the rule that the soliciting agent shall be deemed the agent of the insurers, no matter what the policy provides. Such statutes are constitu- tional and control the contract, but have the disadvantage of all unreasonably meddlesome legislation. 5 § 90. Effect of Stipulations as to the Manner of Exercising Authority. — Where the policy by its terms permits a waiver of its conditions, it generally provides that such waiver shall be made only by written agreement, in- dorsed upon the policy. The New York standard fire policy also stipulates that no representative of the insurers shall be deemed to have authority to waive in any other manner, except by written agreement, indorsed upon the policy or attached to it. To provide that a waiver must be evidenced by writing is eminently reasonable and business-like, and full force and effect ought to be given to this clause. 6 1 Norton v. Ins. Co., 96 U. S. 234. ".Continental Life Ins. Co. v. Cham- 8 Wymanv. Phoenix Mut. Ins. Co., berlain, \'6i U. S. 304. McConnell 119 N. Y. 274(18!I0). v. Iowa Mut. Aid Asso., 79 Iowa ! Tubbs v. Dwelling House Ins. Co., 757. 84 Mich. 646 (1891). State Ins. Co. v. 6 Hill v. London Assur. Soc„ 26 Gray, 44 Kans. 731 (1890). Abb. N. C. 203 (1890); s. c, 16 Daly 4 Messelbach v. Norman, 122 N. Y. 120. 578 (1890). § 90 "Waiver and Estoppel by Agents. 93 But whether this prescribed method of effecting waivers is exclusive, or whether it may itself be waived or disregarded by any representative of the company empowered with actual authority to control the contract in his discretion, is a mooted question. The Massachusetts court, in a late case, seems to decide that it is exclusive. It uses the following language: "The defendant requested the court to instruct the jury, in sub- stance, that a local agent, with authority to receive premiums and issue policies, had no authority as such to waive the terms and conditions of the policy, or to waive the conditions in the policy which required the written or printed assent of the com- pany to any change in the situation or circumstances affecting the risk. To these instructions the defendant was entitled. They correctly state the law, and were called for by the evi- dence. An agent to receive premiums and issue policies is not, independently of evidence showing that he has a much larger authority than this, empowered to waive conditions so import- ant that parties have seen fit to incorporate them into their con- tract. Some additional evidence must be offered to show that he had been held out by the company as possessing such authority, or that the company had so ratified similar acts, or had so conducted itself in regard to his other transactions that the insured was justified in believing that he had such author- ity. Nor even if the agent had the fullest authority could the conditions of the policy be waived, except in the manner in which they provide for such waiver. A company which has seen fit to prescribe that the terms and conditions of its policy shall only be waived by its written or printed assent, has pre- scribed only a reasonable rule to guard against the uncertain- ties of oral evidence, and by this the insured has assented to be bound." » Such reasoning as this is very cogent, but it aims a blow at the doctrine of waiver generally, as it has been applied by all the courts to the contract of insurance. In a later case, on the other hand, the New York Court of Appeals undoubtedly voices the prevailing opinion when it says : " Notwithstanding the provisions of the policy that any- thing less than a distinct specific agreement, clearly expressed « Kyte v. Commercial Union Assur. Co., 144 Mass. 46 (1887), Devens, J. 94 Insurance : Fire, Life, Marine. § 91 and indorsed on the policy, should not be considered as a waiver of any printed or written condition or restriction therein, the court recognize and affirm the law as settled in this State that such condition can be dispensed with by the company or its general agents by oral consent as well as by writing." * Inasmuch as the admitted purpose of a waiver or an estoppel is to subvert the terms of the contract, the New York rule seems to be more in harmony with the principles which under- lie the doctrine of waivers generally ; but it by no means fol- lows that this doctrine is altogether independent of the stipula- tions of the parties. It is an anomalous and exceptional rule of law, established only to prevent injustice or fraud, but is to be qualified by express agreement when fairly and intelligently made. § 91. Authority of Officers of the Company. — Unless restricted by charter or official action of the directors, officers have, in general, authority to make and alter contracts, to waive conditions and forfeitures, to give permits, to cancel policies, to adjust losses and compromise claims in their dis- cretion. "Where a policy of insurance, or other instrument emanating from them alone, or from their subordinates, states that neither they nor any other representative of the corporation have any such power, it simply amounts to the contradjption of a rule of law. Some companies define this matter by official action, of which they ordinarily give notice to those who deal with them. 2 The Equitable Life Insurance Company, for example, gives notice that certain of its officers, naming them, are the sole representatives of the company authorized to make, alter, and discharge contracts, and waive forfeitures. In that company one of the designated officers, if he had actual authority, could unquestionably waive any clause of the policy, although ' Weed v. London & Lancashire Fire 625. Pechner v. Phoenix Ins. .Co., 65 Ins. Co., 116 N. Y. 117 (1889), per N. Y. 195. Brown. J. Steen v. Niagara Fire Ins. 2 Ryan v. World Mut. Life Ins. Co., Co., 89 N. Y. 315. Marcus v. St. 41 Conn. 168. Louis Mut. Life Ins. Co., 68 N. Y. § 93 "Waiveb and Estoppel by Agents. 95 thepolicy should provide, as doss the New York standard fire policy, that no representative of the company had such power ; and he could, within the prevailing rule of law, make an effect- ual oral waiver, although the policy provided that no waivers should be valid unless in writing. 1 § 92. Authority of Managers. — General managers of foreign insurance companies and of domestic fire or marine companies, with regard to the doctrine of waiver and estoppel, in the absence of express restrictions upon their authority made known to the insured, stand very much in the place of officers. 2 § 93. Authority of Canvassing Agents : Life. — Can- vassing agents of life insurance companies, whether the so called general agents or sub-agents, have as a rule, as explained in Chapter I., no express authority to make, alter, or discharge contracts, or to waive forfeitures, or to grant permits. In this regard they are essentially special agents, whether the policy calls them so or not ; and there is no reason — though some of the courts do not agree to this — why in the ordinary course of business they should be assumed by those dealing with them to have any such authority, except as described and explained in the following instances. 1. Exception as to first premium. An agent of a life company who is intrusted with the business of closing the contract by delivering the policy is held to have an implied authority to determine how the premium then due shall be paid, whether by cash or, as is sometimes done, by giving credit, in which case the agent becomes the creditor of the insured, and debtor to the insurer. In that event, though the agent subsequently defaulted and the money never reached the company, the policy would still be binding. 3 By the weight of authority the agent is held to have this dis- cretionary power, although the policy in terms denies it ; but 1 Dilleber v. Knickerbocker Life Ins. 5 Eastern R.R. Co. v. Relief Ins. Co., Co., 76 N. Y. 567. Baldwin v. Citizens 105 Mass. 570. McGurk v. Metropoli- Ins.' Co., 60 Hun, 389 (1891). Steen v. tan Life, 56 Conn. 528. Ins. Co. v. Niagara Fire Ins. Co., 89 N. Y. 315. Mahqne, 21 Wall. 152. Church v. Lafayette Fire Ins. Co., 66 ■ Miller v. Gfe Co., 12 Wall. 286. N. Y. 232. 96 Insurance : Fike, Life, Marine. § 93 this is based upon his possession of the document for purposes of delivery, and his instructions to deliver it, and consequently his power does not extend to subsequent premiums or premium notes. 1 It might, however, be necessary for the insured to give some evidence that such a custom was known and permitted by the company, if the policy expressly denied the agent this power, for it has been held that the soliciting agent has no authority simply by virtue of his position to accept anything but cash ; 2 and of course he would have no implied author- ity to take in payment personal propertj 7 , as, for instance, a horse. 8 2. "Where the application for insurance is filled in by the soliciting agent of the insurer, and true answers of the insured, given orally, to the interrogatories contained therein are errone- ously or improperly written by the agent at his own suggestion, without carelessness or fraud or collusion on the part of the assured, the insurer is responsible for the mistake, and is es- topped from seeking to convert its own act into a ground of defense against the insured for an alleged breach of contract. In such a case the courts are disposed to hold the company, no matter what the policy or the application may provide to the contrary, on the ground that the act is purely the act of the company, and that an estoppel derives its sanction from a rule of law and not at all from the contract itself, which indeed its ostensible object is to subvert. 4 If, however, the erroneous statements in the application are the result of fraud on the part of the insured, or collusion with the agent, the equities of the insured are no better than those of the company, and the company is not estopped from insist- ing upon the letter of the written contract. Thus where the 1 Critchett v. Am. Ins. Co., 53 Iowa, 4 Messelbaok v. Norman, 122 N. Y. 404; s.c, 36 Am. Rep. 230. Walsh v. 578. Tubbs v. Dwelling House Ins. Hartford Ins. Co., 73 N. T. 5. Life Co., 84 Mich. 646. Continental Ins. Ass. Co. v. Ward, 17 C. B. 645. Roeh- Co. v. Pearce, 39 Kans. 396. O'Brien ner v. Kniek. Life Ins. Co., 63 N. Y. v. Home Benefit Society, 117 N. Y. 160. 310. Miller v. Phoenix Mutual Life 2 Raub v. N. Y. Ins. Co., 14 N. Y. Ins. Co., 107 N. Y. -.92. Ins. Co. v. State Rep. 573. Wilkinson, 13 Wall 223. Continental * Hoffman v. John Hancock Mut. Ins. Co. v. Chamberlain, 132 U. S. Co., 92 U. S. 161. 304. § 93 Waiver and Estoppel by Agents. 97 insured told the agent that he could write the answer as he liked. 1 The Maryland case, 2 like others of a similar kind, is not to be commended ; for the insured in the Maryland case knew that the company was to be misinformed as to his age, and, although he was an ignorant man, the company ought not to have been held responsible for his moral degradation, whether the act of writing the erroneous answer was the act of the agent or not. If the mistake, in the application constituting the alleged breach of warranty occurs because of the omission of the insured to read the application, and he is not reasonably deterred from reading it by affirmative representations of the agent, or by inability through blindness or ignorance, the in- sured ought unquestionably to be held responsible for the writ- ten statements which he has signed as the basis of the con- tract ; and clearly an omission to read the application is prima facie carelessness s on his part. On this last point,"however, the courts have divided, and in many cases it has been held that the company is bound by the act of its agent in writing the mistake into the application, although the error is perfected through the carelessness of the insured in neglecting to read what he signs. 3. If the statements of the application are what the insured intended them to be, and the mistake arose through ignorance of the meaning of the terms employed, which were used at the suggestion of the agent, the insured ought to be held to the written contract, and the policy avoided, if the agent is only an ordinary canvassing agent, although such agent be styled a general agent with power to select sub-agents ; for, as we have seen, soliciting agents of life companies' are in law nothing but special agents, without authority to alter policies by their rep- resentations or promises. They have no right to interpret the terms of the application or the policy. The law determines what the written language means, and an agent who has no 1 Blooming Grove Mut. Ins. Co. v. ! Keystone Mut. Ben. Asso. v. Jones McAnerney, 102 Pa. St. 335; s. c, 72 Md. 363 (I860). 48 Am. Kep. 209. Lewis v. Phoe- " N. Y. Life Ins. Co. v. Fletcher, 117 nix Mut. Life Ins., Co., 39 Conn. U. S. 519. Ryan v. World Life Ins. 100 _ Co., 41 Conn. 168. 7 98 Insueance : Fiee, Life, Maeine. § 93 authority to make a contract has no authority to unmake one by expressing his opinion of its meaning. 1 Ifc must be conceded, however, that in many cases the contrary view has been accepted by the courts ; namely, that by allowing any representative, though only a special agent, to take an application for insurance, the company impliedly gives an authority to him to interpret the meaning and effect of the interrogatories contained in the paper, and also of such answers as may be made to them by the applicant : and this view has in certain instances seemed to receive the sanction of judges of the highest eminence. See, for example, the language of Chief-Justice Kuger in the New York case, and of Justice Hunt in the Federal case. 2 Whatever may be the sound rule on this point, the com- panies, in consequence of divers decisions against them, are apt to give an express notice to the insured, in the applica- tion or premium receipt, of a restriction upon the agent's authority to interpret or otherwise change the terms of the contract; and by such notice of restriction, if true, the insured will be bound. Thus where in answer to the question contained in the application, " Are you now insured in any other company?" the applicant truthfully stated to the agent , that he had certain other insurance, but the agent wrote " No,"V it was held that the company was not liable ; for on the back \ of the policy was a notice that no agent had the power to bind the company by receiving any representations or information not contained in the application. And this case has lately been affirmed on appeal by the New York Court of Appeals. 3 These cases are on the border line, and other courts upon sim- ilar facts are disposed to consider the doctrine of waiver as dominating the contract restrictions. 4 Similarly if the assured knows or has agreed that the agent is a special agent, without 1 Allen v. German Am. Ins. Co., Fund Life Asso., 54 Hun, 294. Ka- 123 N. Y. 6. Devens v. Mech. & bok v. Phoenix Mut. Life Ins. Co., 4 Traders Ins. Co., 83 N. Y. 168. N. Y Suppl. 718. 2 Miller v. Phcenix Mut. Life Ins. " Tubbs v. Dwelling House Ins. Co., Co., 107 N. Y. -J96. N. J. Mut. Life 84 Mich. 646 (1891). Bushaw v. Ins. Co. v. Baker, 94 U. S. 610. Women's Mut. Co., 8 N. Y. Suppl. 3 MeCollum v. Mut. Life Ins. Co., 423. Baumgartel v. Prov. Wash. Ins. 55 Hun. 103 ; s. c, 124 N. Y. 642 Co., 61 Hun, 118 (1891). (1891). Wilkins v. Mut. Reserve § 93 Waiver and Estoppel by Agents. 99 power of controlling the terms of the contract, the knowledge by such agent of a forfeiture at the time the contract is closed will not bind or estop the company. This is clearly sound. 1 If, however, the agent is in fact a general agent, with authority like an officer of the company to make and modify contracts in his discretion, his interpretation of the questions and answers in the application, if relied on by the applicant, will bind the company, as will also knowledge on his part of a cause of forfeiture at the time the contract is closed. 2 The Mahone case has been made an authority, but improperly, for the extension of the rule announced in it to cases where the agent had in fact no such extensive authority. Knowledge by the soliciting agent of facts constituting a ground of forfeiture at the time of the inception of the con- tract ought not to avail to estop the company, even in conjunction with the receipt of premium or delivery of the policy, unless the agent communicate the knowledge of forfeit- ure to one having discretionary power to waive the conditions of the contract. The acquisition of such knowledge does not in any way enlarge the powers of the special agent, though if he already had the authority to alter the terms of the contract it might then become a factor in operating an estoppel. If the knowl- edge by the special agent of a ground of forfeiture could work an estoppel simply because he was doing something for the company when he acquired it, then the knowledge of his clerk or office boy might accomplish the same result, and the conclu- sion would be reached that the binding obligation of a solemn written contract may be destroyed by the casual information acquired or said to be acqufred by a wholly irresponsible per- son doing some trivial act for the company without the conniv- ance or knowledge of the company or any of its commissioned agents. Estoppel is a doctrine to prevent fraud. Knowledge to operate as a waiver of contract rights should only be imput- able to the company when possessed by some one who is fairly a substitute for the company in the premises. The reasoning of the Iowa court in Boetcher v. Hawkeye 1 Kenyon v. Knights Templar, etc.,' patriok v. Hartford Annuity Co., 56 Asso., 122 N. Y. 247. But see Pitz- CoDn. 116. 8 Ins. Co. v. Mahone, 21 Wall. 152. 100 Insueance : Fire, Life, Maeine. § 94 Insurance Company, that the soliciting agent of the company should not be deemed the agent of the assured, though the policy provided that he should be, is weighty ; but their con- clusion, that knowledge of forfeiture by the special agent should bind the company, is not so satisfactory. 1 This case, however, is only one of a large class, and serves to illustrate the proposition that some of the judges have enforced the doctrine that notice to an insurance agent is notice to the principal in a manner unknown to the general law of agency. There can be no question that some of the courts have gone too far in this direction ; and for confirmation of this view the re- cent and carefully considered opinions of the House of Lords should be consulted. 2 A distinction may perhaps be made between the case where it is sought to destroy a condition of the contract altogether by knowledge possessed by the agent, and the case in which the agent is held to be a suitable representative for receiving a notice pursuant to the terms of the policy. In an English case ■where the policy provided that notice must be given to the directors and their consent obtained for non-residence, and the assignee of the assured gave notice to the local agent of the company that the assured had left the country, and there- after paid his premiums for several years upon the policy, it was held that.the insurers, who had received these premiums in the regular course of business, were liable, although in fact the agent had no authority to give such a permit. 3 § 94. Effect of Stipulations in the Policy in Re- spect to the Authority of Canvassing Life Agents. —Where the application gives truthful notice to the insured that the agent of the company has no authority to waive con- ditions or forfeitures, or where the assured expressly stipulates that the written statements of the application shall' be the only statements upon which the contract is made, any errors of the agent in transcribing the answers will not estop the company, except as the assured is able to make out a clear case of estop- pel by reason of acts of the agent within the actual scope of 1 Boetcher v. Hawkeye Ins. Co., 47 3 Wing v. Harvey, 5 De G. M. & G. Iowa, 253. 265. 2 Blackburn v. Vigors, L. R.,'12 App. Cas. 531. § 95 "Waiver and Estoppel by Agents. 101 his authority. 1 But where the error in the application was solely the act of the company's agent, the assured being unable to read and having given true answers to the agent orally, it was held that the company could not set up the breach of warranty in defense, although the application contained the warranty that the answers of the applicant were full, complete, . and true, whether written by his own hand or not. 2 § 95. Commissioned Agents : Fire. — The commis- sioned agents of fire insurance companies are more properly general agents, and except as restrictions upon their authority are inserted in the application or policy, or otherwise made known to the insured, they are held to have power to waive conditions and forfeitures. 3 This conclusion is based upon the fact that they have authority to make, cancel, and renew con- tracts, being furnished with blanks for that purpose. The principles laid down in the last two sections are also applicable to the representatives of fire and marine companies as well as to life. The fire policy, however — and this is true of the marine policy also — does not ordinarily make the payment of the premium a condition precedent to the validity of the contract, and a general agent may of course extend credit to the insured, or not, as he chooses. The general custom where credit is given is for the agent to do so on his own responsibility. But in case the agent should make default in accounting to the com- pany the policy will nevertheless be valid. And though the policy provide that it shall not take effect until the premium is paid in cash, the general agent has power to waive the provis- ion, and will be held to have waived it if he delivers the policy without enforcing payment. 4 . If at the time of receiving the premium or delivering the policy the general ag^nt has knowledge of a ground of forfeit- ' Ins. Co. v. Wolff, 95 TJ. S. 329. * Walsh v. Hartford Fire Ins. Co., Messelbach v. Norman, 122 N. T. 578. 73 N. Y. 5. Ins. Co. t. Norton, 96 U. S. 240. Wil- * BodiDe v. Exchange Fire Ins. Co., kens v. Mutual Reserve Fund Life 51 N. T. 117. Boehen v. Williams- Asso., 54 Hun, 294. Wa'sh v. Hart- burgh City Ins. Co., 35 N. Y. 131. ford Fire Ins. Co., 73 N. Y. 5. Walsh v. Hartford Fire Ins. Co., 73 2 O'Brien v. Home Benefit Soc., 117 N. Y. 11. N. Y. 310. 102 Insurance : Fire, Life, Marine. § 96 ure already incurred, the company will be held to have waived it, because it would not be right for the company to accept a premium in return for a contract which it knew would be worthless to the other party. 1 A stipulation that the commissioned agent has no authority to waive except by written agreement is binding, unless the in- sured is able to show that the commissioned agent had an actual authorit}', either by instructions or recognized practice, to waive orally, and this it is not so easy to do as before the adoption of the standard fire policy. § 96. Special Soliciting Agents : Fire — They have no authority to waive conditions or forfeitures, but only to re- ceive proposals and forward them. 2 If they are intrusted with the closing of a contract of insurance, and allowed to make a delivery of the policy, it has been held that they have implied authority to determine how the premium shall be paid, and if they give credit the policy will still be binding, though in con- tradiction to its terms. 3 § 91. Other Special Agents. — A special agent ap- pointed to investigate or adjust a loss has no implied authority to waive an essential condition of the contract or a forfeiture. 4 The authority of clerks of agents or of insurers is, as a rule, limited to the performance of ministerial and clerical acts, and they are not to be allowed to disturb or alter the terms of the policy, unless such a result is naturally involved in the proper performance of the particular act which they are employed to do. 6 ' Bennett v. North British & M. Ins. ' Bodine v. Exchange Fire Ins. Co., Co., 81 N. Y. 273. Van Schoick v. 5J. N. Y. 117. Boehen v. Williams- Niagara Fire Ins. Co., 68 N. Y. 434. burgh City Ins. Co., 35 N. Y. 131. Short v. Home Ins. Co., 90 N. Y. * Weed t. London & L. Fire Ins. 16. Co., 116 N. Y. 106. Marvin v. CJni- 3 Tate v. Citizens Mut. Ins. Co., 13 versal Life Ins. Co., 85 N. Y. 278. . So, also, Merchants Mut. * Merchants Ins. Co. v. Morrison, Ins. Co. v. Sweet, 6 Wis. 670. 62 111. 242. (1871). § 100 Implied Warranties : Marine. 105 surer from liability for any loss which is the consequence of such b&l faith or want of prudence or diligence, but does not affect ^.tha contract of insurance as to any other risk or loss covered " by the policy and not caused or increased by such particular defect. 1 The effect of this rule, if indeed it was intended to de- fine an implied warranty, would seem to make our law in sub- stance not very different from the English law, after all, except in the matter of classification ; for, so far as the general obli- gation of the insured to refrain from misconduct is concerned, the English court was of opinion in one case, that, if a vessel insured under a time policy should sail in an unseaworthy state, and incur loss in consequence of such unseaworthiness, without the intervention of a peril insured against as the direct cause of the loss, such loss would not be recoverable under the policy. 2 But it would seem that the English classification is better than that of the United States Supreme Court, because the funda- mental notion of a warranty is that it imports an obligation of such a character that a breach of it will -cause an absolute avoidance of the whole contract irrespective of its relation to the loss. It is in harmony with the general purpose of insurance to make a contract of insurance, as far as may be, one of absolute indemnity against loss by the specified perils, regardless of unintentional negligence on the part of the assured or his agents, and this doctrine has received the high sanction of the Federal Supreme Court itself. 3 The New York court, without however citing any of the late cases, has recently stated the rule in the following words : " In every case of marine insurance by a general policy cover- ing all perils of the sea, where the vessel insured is in port, there is an implied warranty that the vessel is seaworthy at the inception of the policy. It is a condition precedent to the risk, and if the vessel is not seaworthy the policy does not attach. In an action to recover for a loss upon such a policy, where the fact of seaworthiness at the time of issuing the policy is shown, it is immaterial what the vessel's condition is 1 Union Ins. Co. v. Smith, 134 U. S. 8 Orient Ins. Co. v. Adams, 123 U. S. 405 (1887), Blatchford, J. 67 (1887). s Fawous v. Sarsfleld, 6 El. &. Bl. 192. 106 Insurance : Fiee, Life, Marine. § 101 thereafter during the voyage, as loss from unseaworthiness is among the perils insured against. The plaintiffs, under such a policy, make out a, prima facie case by showing seaworthiness at the inception of the risk. J|ut in time polic ies there is implied a warranty that the vessel will be kept in repair and made seaworthy at all times during the continuance of the risk, so far as that is reasonably possible, and this implied covenant imposes upon the insured the duty of active diligence to keep the vessel in good order and in a seaworthy condition." 1 This language, probably, must be understood in a sense |somewhat similar to that employed by Mr. Justice Blatchford >in the case of the Union Ins. Co. v. Smith, just cited, for it is not to be supposed that the court could spell out of a policy that insures even against barratry an absolute and continuous warranty obligatory upon the assured and his agents during the voyage and in foreign ports to keep the ship as seaworthy as possible. "Where at the time of the commencement of the risk a ship was not in port, but off on a distant voyage, it was held that the implied warranty of seaworthiness was not applicable. 2 § 101. Seaworthiness is what. — A ship is seaworthy when reasonably fit to perform the services and to encounter the ordinary perils incident to the voyage. 8 This requires that the ship on sailing should be tight and staunch in hull, properly rigged and laden, provided with a competent master, a sufficient number of competent officers and seamen, as well as with a pilot when required by law or custom, and with the requisite appurtenances and equipments such as ballast, cables, anchors, cordage and sails,- food, water, fuel and lights, and other necessary or proper stores and imple- , ments for the voyage. 4 Her cargo must be properly stowed, and the weight of it not in excess of the vessel's safe carrying capacity. In the case of an insurance being effected on cargo which is 1 Berwind v. Greenwich Ins. Co., 114 Q. B. 596. Thebaud v. Phoenix Ins. N. Y. 234 (1 889), Brown, J. Co. , 52 Hun. 495 (1889), by Van Brant, 2 Jones v. Ins. Co., 2 Wall, Jr. 278. P. J. 3 Merchants Trading Co. v. Univer- * M'Lanahan v. Universal Ins. Co., sal Marine Co., referred to in L. R., 9 1 Pet. 170. , § 101 Implied "Warranties : Marine. 107 of such a nature or so stowed as to render the vessel unsea- worthy, it will be no extenuation to show that in case of need the cargo can be readily jettisoned, for the warranty of sea- worthiness is to be considered in relation to the subject-matter insured, and cannot be taken to contemplate the destruction of that very cargo which it is designed to protect. 1 I Neither the ignorance nor the innocence of the insured will J avail to relieve him from the consequence of a breach of the lwarranty, though all reasonable precautions were taken to Vsecure the seaworthiness of the vessel on sailing, and her unsea- vvorthy condition arose from a latent defect. For an actual fulfillment of the implied condition is indispensable. Upon the same principle, an insurance on cargo is invalidated if the vessel sail unseaworthy, though the assured be ignorant of her state, or powerless to alter it. 2 The implied condition of seaworthiness is to be confined to the ship by which the insurance is effected, and cannot be extended to lighters employed to land the cargo. 2 There is no implied warranty that the cargo itself is seaworthy. 4 The standard of seaworthiness required to satisfy the war- ranty is not uniform in every case, but variable according to circumstances. Thus, if the voyage comprises several distinct! stages, each of which requires a different degree of seawortbi-f ness, the warranty will at least be satisfied if the vessel is sea J worthy for each stage alone at the commencement of it. For instance, in a policy " at and from," the risk is divisible into twj distinct parts, the risk in port and the risk at sea, and a differ! ent degree of seaworthiness is required at the commencements of each of these sections. The vessel on sailing must be fit for] the voyage, but for the risk to attach in port it is only neces- sary that she should have arrived there in a state of sufficient seaworthiness to lie in reasonable security until properly repaired and equipped for the voyage. 5 So where the voyage consists partly of river and partly of 1 Daniells v. Harris, 2 Asp. Mar. L. 4 Koebel v. Saunders, 17 C. B. N. S. C. 413. 71. 2 Oliver v. Cowley Park Insurance, s Parmeter v. Cousins, 2 Camp. 235. 470_ Haughton v. Empire Marine Ins. Co., 'Lane v. Nixon, L. R., 1 C. P. L. R, 1 Exch. 206. 412. 108 Insurance : Fire, Life, Marine. § 102 sea navigation, and requires a different state of equipment for each stage. 1 If the vessel be unseaworthy for any distinct stage of the adventure on entering upon it, the policy, it has been held, • will be avoided, and no subsequent loss will be recoverable, i though the defect may have been remedied before loss, and the loss have occurred irrespective of it. 2 The warranty of seaworthiness in general only attaches at the inception of the risk ; so that in the case of an insurance out and home, if the risk be one and indivisible, the starting of the vessel outward in a seaworthy state will satisfy the war- ranty, and there will be no breach though the vessel should be unseaworthy upon sailing on her homeward passage or from any intermediate port. The standard of seaworthiness may, also, have a relation to the character of the ship insured, and if an insurer agrees with full knowledge of the facts to insure a vessel incapable, from size or construction, of being brought up to the ordinary stand- ard of seaworthiness, the implied warranty will be satisfied if the vessel is made as seaworthy as her capacity will admit of. 3 But, as a rule, the character of the voyage, rather than the purpose for which the ship was originally constructed, must determine the question whether this warranty has been kept. 4 Where the nationality or neutrality of a ship or cargo is an express warranty, it is implied by the warranty of seaworthi- ness that the ship will carry the requisite documents to show such nationality or neutrality. 5 § 102. Implied Warranty : Deviation. — There is a second implied warranty in marine insurance; namely, that when the voyage contemplated, by a policy is described by places of beginning and ending, there shall be no voluntary 1 Bouillon v. Lupton, 33 L. J. C. P. * Thebaud v. Phoenix Ins. Co., 52 37. Hun, 495. 8 Quebec Marine Ins. Co. v. Com. • Christie v. Secretan, 8 T. E. 192. Bank of Canada, L. R., 3. P. C. 234. Biting v. Scott, 2 Johns. 157. s Burges v. Wickham, 33 h. J. Q. B. 17. § 102 Implied "Warranties : Marine. 109 deviation or departure from the course fixed by mercantile usage, and no unreasonable delay in the commencement or prosecution of the voyage. 1 If the course of sailing between the places named is not fixed by mercantile usage, such a course must be pursued as would appear reasonably direct and advantageous to a master of ordinary skill and discretion. 2 A deviation is a variation, and nbt necessarily an increase of the risk insured. 3 Where a policy of insurance was effected on a ship, at and from Montreal to Montevideo, and a delay occurred in the arrival of the vessel at Montreal, which, by converting the voj - - age from a summer into a winter one, materially affected the risk and rate of premium, it was held that the policy would not attach. 4 An alteration in the vessel's port of destination is fatal to the contract. If a vessel is insured to several ports of discharge not men- tioned by name in the policy, she must visit them in the geo- graphical order in which they occur from the port of departure ; but, if the ports are designated by name, they must be visited in the order in which they are mentioned in the policy. It is not, however, essential that a vessel thus insured should pro- ceed to all the ports named. She may go to one or more and omit the rest. But such ports as she does call at must be visited in the order .above described, and it is not lawful for her to re-visit any. This rule is binding unless the departure is warranted by recognized usage. 5 A deviation from the direct course of the voyage insured, though .in conformity with usage, will not be covered unless made in furtherance of the adventure to which the policy relates. 6 1 Burgess v. Equitable Marine Ins. Crancb, 26. Snyder v. Atlantic Mu- Co , 126 Mass. 70. tual Ins. Co., 95 N. Y. 196 ; s. c, 47 - Hearne v. Marine Ins. Co., 30 Am. Rep. 29. Wall. 488.' Turner v. Protection Ins. * De Wolf v. Archangel Mar, Bank Co., 25 Me. 51") ; s.c, 43 Am. Dec. & Ins. Co., 2 Asp. Mar. L. C. 273. 294 Reade t. Commercial Ins. Co., * McCall v. Sun Mutual Ins. Co., 68 3 Johns. 352; s.c, 3 Am. Dec. N. Y. 505. 495. • Pearson v. Commercial Union 'Maryland Ins. Co. v. Leroy, 7 Assur. Co., L. R., 1 App. Cas. 498. 110 Insurance : Fibe, Life, Makine. § 103 § 103. Deviation, when Proper. — A deviation is justifiable, and does not exonerate the insurers, if it is necessi- tated either by physical or by moral force. 1 Thus a deviation is proper when caused by circumstances over which neither the master nor the owner of the ship has any control, or when necessary to comply with a warranty or to avoid a peril whether insured against or not, or when made in good faith and upon reasonable grounds of belief in its neces- sity to avoid a peril, or when made in good faith for the pur- pose of saving human life or relieving another vessel in distress. If a vessel is forcibly diverted from her course by stress of weather, the compulsion of an enemy in time of war, or the violence of a mutinous crew, such a deviation is excusable. If a vessel put into a port outside the ordinary course for repairs or necessary supplies, or to set her cargo in order, or to procure fresh hands required for the navigation, or if she remain in her port of lading to avoid a capture, or depart from the usual course from the same motive, or, in short, if she commit any deviation the adoption of which is so urgently demanded by the force of circumstances as to become imperative to a reason- able mind, the divergence will not invalidate the policy. A departure from an ordinary course of the voyage with the object of saving persons whose lives are in jeopardy is allowed on the ground of humanity, but the same immunity will not be extended in favor of a deviation made solely for the purpose of saving property. 2 A departure to learn whether a port not of destination is blockaded is a deviation. 3 Unreason- able delay amounts to a deviation. 4 In time policies, especially on voyages in inland waters, a deviation from the permitted course has been held to suspend and not to avoid the policy. 5 § 104. Illegality. — There is a third implied warranty, that the adventure shall be a legal one both as regards its nature and the mode in which it is prosecuted. 6 1 Burgess v. Equitable Marine Ins. 4 Audenreid v. Mercantile Mut. Ins. Co., 1£6 Mass. 70. Co., 60 N. Y. 482. * Co. of African Merchants v. Brit- ' Wilkins v. Ins. Co., 3Q Ohio St. ish & Foreign Marine Ins. Co., L. R., 317. G-reenleaf v. St. Louis Ins. Co., 8 Exch. 154. 37 Mo. 25. Hennessey v. Manhattan 3 Maryland Ins. Co. v. Woods, 6 Eire Ins. Co., 28 Hun, 98. Cranoh, 29. « Redmond v. Smith, 7M.&S. 457. §104 Implied Warranties: Marine. Ill Some authorities say that illegality avoids the contract be- cause of its concealment rather than because it involves any violation of an implied warranty. Smuggling voyages, trading adventures to an enemy's port, and all other enterprises prohibited by the law of the land or by the law of nations, being illegal, no policy of insurance will be upheld if effected with the intent to cover them ; but this prohibition has been held in England not to apply to trading adventures undertaken in violation of the revenue laws of other nations. 1 Smuggling or other illegal conduct by the master or crew, without connivance of the ship-owner, would not suffice to vitiate the contract ; for such acts would amount to barratry,' which the policy expressly covers. Policies upon risks which contravene either the statutes enacted to regulate trade and navigation, or the commercial treaties entered into-«jth other countries, are void equally with those which run counter to the revenue laws, subject however to the exception, that, if the adventure can be carried on with- out violating the law, an illegal act performed in the prosecu- tion of it will not invalidate the policy unless committed by or with the concurrence of the assured. 2 Thus in a case where the master of a vessel in the timber trade stowed a portion of the cargo on deck during the winter season, and, contrary to statute, sailed without a clearance cer- tificate that the cargo was below deck, it was held that the illegality did not vitiate the policy, it having been committed without the knowledge or privity of the owner. 3 Again, where a ship not licensed by the board of trade to carry passengers did carry them, it was held, that, inasmuch as such carriage was the unauthorized act of, the master alone, without the knowledge of the owners, and contrary to their intentions, the policy was not vitiated by it. 4 There are risks which it is illegal to insure not because they are at variance with the permanent law of the land, but because they are opposed to public policy, especially in times of war. 1 Lever v. Fletcher, Park on Ins., p. 3 Wilson v. Rankin, L. R., 1 Q. B. 237. 162. * Waugh v. Morris, L. R., 8 Q. B. * Dudgeon v. Pembroke, 2 Asp. Mar. 202. L.C. 323. 112 Insurance : Fire, Life, Marine. § 105 Such, for example, are insurances effected on behalf of alien enemies, or to cover trading adventures to an enemy's port, which in both cases are wholly void and inoperative. The case is different with respect to insurances effected upon the property of neutrals against- war risks which are not invalid in the neutral country, though the adventure to which they attach may be liable to capture by a belligerent. For instance, in the event of a port being blockaded, a trading ad- venture by neutrals to run the blockade, though liable to con- fiscation under the laws of war, is not illegal, and may therefore be made the subject of a valid insurance in the neutral country. 1 As, however, the ordinary risk is much enhanced by such an enterprise, the intention of the assured must be disclosed to the underwriter at the time when the insurance is effected ; other- wise the policy will be void on the ground of concealment. § 105. Actual Total Loss. — An actual total loss occurs when the subject insured wholly perishes, or its recovery is rendered irretrievably hopeless. 2 Thus, for instance, when a vessel founders in a gale, or is paptured by an enemy 3 and is condemned as a prize. "When- ever the thing insured is by the operation of a peril insured against reduced to such a state as to be incapable of use under its original denomination, there is an actual total loss. For example, if a ship is so injured by the perils of the sea as to be incapable of repair, the loss is actual, though her materials sur- vive either in fragments or bound together in the original form. And again, if goods are so badly damaged as to become in- capable of use for the purpose intended, there is an actual total loss. 4 If a ship is sold and so lost to the owner under a decree of a court of competent jurisdiction in favor of salvors and in consequence of a peril insured against, it is an actual total loss, and therefore the person insured is entitled to payment without notice, of abandonment. 5 1 Arnould on Insurance, p. 640. * Rotix v. Salvador, 3 Bing. N. C. 2 Can- v. Insurance Co., 109 N. Y. 281. Great West. Ins. Co. v.Pogarty, 504. 19 Wall. 640. 3 Rhinelander v. Ins. Co., 4 Cranch, 6 Cossman v. West, L. B,., 13 App. 29. Cas. 160. § 106 CONSTRUCTIVE TOTAL LOSS. 113 An insurance confined in terms to a total loss covers a loss which deprives the insured of the possession at the port of des- tination of the entire thing insured, or which renders it entirely worthless, and also covers a general average loss. 1 § 106. Constructive Total Loss. — A constructive total loss occurs when the subject insured, though still existing in specie, is justifiably abandoned on account of its destruction being highly probable, or because it cannot be preserved from actual total loss unless at a cost greater than its value would be if such expenditure were incurred. 2 The right to an abandonment is to be determined by the situation at the time of abandonment. 3 To exist in specie is to be capable of utilization as the thing insured. The difference between an actual and a constructive total loss is that in the former case the loss of the thing in- sured to the owner thereof is ascertained and permanent, while in the latter case it is inferential or temporary. 4 For instance, where a ship is so damaged as to be incapable of repair, the loss, as we have already seen, is actual ; but, where the damage is susceptible of repair only at a cost exceeding the value of the ship when repaired, the loss is constructive. Again, where the vessel founders in deep water, so as" to leave no reasonable hope of recovery, the loss is actual ; but where the vessel sinks in shallow water, so as to admit of a reason- able hope of raising and restoring her only at a cost exceeding her value when raised or restored, the loss is constructive. Upon the same principle, where goods are so damaged by sea perils that they cannot be brought to their destination in specie, the loss is actual; but where, though damaged, it is possi- ble to bring them to their destination in specie only at a cost exceeding their value when so brought, the loss is constructive. 5 1 Mayo v. India Mut. Ins. Co., 152 4 Maggrathv. Church, 1 Caines, 196; Mass. 173 (1890). Benson v. Chap- s. c, 2 Am. Dec 173. man, 6 M. & G. 810. Chadsey v. * Irving v. Manning. 1 H. L. Cas. Guion, 97 N. Y. 333. 304. Rodocanoehi v. Elliott, 2 Asp. 8 Hugg v. Augusta Ins. & Banking Mar. L. C. 399. Aranzamendi v. La. Co., 7 How. (U. S.), 595. Ins. Co. v. Ins. Co., 2 La. 433 ; s. c, 22 Am. Dec. Fogarty, 19 Wall. 640. 136. Rosetto v. Gnrney, 11 C. B. • Orient Ins. Co. v. Adams, 123 U. 196. S. 67. 8 114 Insurance : Fire, Life, Marine. § 107 § 107. Constructive Total Loss : United States.— In the United States a somewhat arbitrary rule has been adopted in order to make it easier to determine whether the insured is entitled to claim a constructive total loss. It is here held that a person insured by a contract of marine insurance may abandon the thing insured, or' any particular portion there- of separately valued by. the policy or separately insured, and recover for a total loss thereof in the following cases : (1) If more than half thereof in value is actually lost or would have to be expended to recover it from the peril : (2) if it is injured to such an extent as to reduce its value more than one-half"; (3) if the thing insured being a ship, the contemplated voyage can- not be lawfully performed without incurring an expense to the insured of more than half the value of the thing abandoned or without incurring a risk which a prudent man would not take under the circumstances ; or (4) if the thing insured being cargo or freight, the voyage cannot be performed nor another ship procured by the master within a reasonable time and with reasonable diligence to forward the cargo without incurring the like expense or risk : but freight cannot be abandoned un- less the ship is also abandoned. 1 With respect to freight, in case it is impossible to earn that subject owing to a total loss of ship or cargo, the loss is actual and can be recovered without notice of abandonment. Where, however, the loss though probable is not ascertained, but depends upon chances of recovery or estimated expenditure, the claim falls within the category of constructive total loss, and requires the same kind of proof as in the case of similar claims upon ship or cargo. 2 Thus if the ship be damaged so far as not to be worth re- pairing, but cargo which was on board be saved under circum- stances which leave it doubtful whether such cargo might or might not be forwarded in a substituted ship, or if the cargo be lost and the ship may or may not earn some freight by carry- ing other goods on the voyage insured, in order to make certain of his right to recover as for a total loss on the policy on freight 1 McConochie v. Sun.Mut. Ins. Co., v. Adam's, 123 U. S. 67. DePeyster 26 N. Y. 477. Bradlie v. Md. Ins. Co., v. Sun Mut. Ins. Co.. 19 N. Y. 272. 12 Pet. 378. Peele v. Merchants Ins. ' Hubbell v. Great West. Ins. Co., Co., 3 Mason, 27-85. Orient Ins. Co. 74 N. Y. 246. § 108 Abandonment. 115 the assured should give notice of abandonment of the chance of earning such substituted freight. 1 The same rule will apply in case the contract of affreight- ment is justifiably terminated by a delay resulting from the operation of the perils insured against. Thus a ship which was bound from Liverpool to Newport, where she was to load a cargo of iron rails for San Francisco, got ashore in Carnarvon Bay, and although ultimately floated and repaired was detained for so great a length of time in consequence of the accident that the charterers threw up the charter and hired another vessel to carry the rails which were wanted for the construction of a railway to their destination. In an action by the assured on the policy of insurance to recover for a loss of the chartered freight, the jury found that the time necessary for getting the ship off and repairing her was so long as to put an end, in a commercial senSe, to the speculation entered into by the ship-owners and the charterers; and upon this finding it was held by the Exchequer Chamber, affirming the decision of the court below, that, the adventure having been frustrated by perils of the seas, there was a con- structive total loss within the policy for which the alssured was entitled to recover. 2 § 108. Notice of Abandonment. — Whenever a claim is made for a constructive total loss, a timely notice of aban- donment by the assured to the underwriters is a condition precedent to the right to recover, unless the assured is excused from the obligation to give notice of abandonment by the cir- cumstances of the case. 3 The only occasion in which notice of abandonment is not necessary is where, at the time the assured elects to treat the claim as one of constructive total loss, there is no possibility of the underwriter deriving any advantage from such notice, either because there is nothing to abandon or because the ' Rankin v. Potter, 2 Asp. Mar. L. v. Mass. Fire & Marine Ins. Co., C. 67. 2 Pick! 104 ; s.c, 20 Am. Dec. 8 Jackson v. Union Marine Ins. Co., 400. L. R., 10 C. P. 125. Allen v. The ' Kaltenbach v. Mackenzie, 4 Asp. Mercantile Mutual Ins. Co., 44 N. Y. Mar. L. C. 39. McConochie v. Sun 437; s.c, 4 Am. Rep. 700. Clark Mut. Ins. Co., 26 N. Y 477. 116 Insurance : Fiee, Life, Maeine. § 109 disposal of the property was justifiably determined before the opportunity to give notice occurred. For instance, where the news of the loss of the ship and of her sale reached the assured at the same time, it was held that the underwriters were liable for a total loss without notice of abandonment ; ' and the same conclusion was arrived at under similar circumstances in an action upon a policy of insurance on cargo. 3 In all other circumstances, however, the giving of a notice of abandosment is a necessary preliminary to a right to recover for a constructive total loss. There is a difference between an abandonment and a notice of abandonment. If a marine insurer pays for a loss as if it were an actual total loss, it is held in England that he is entitled to whatever may remain of the thing insured or its proceeds or salvage as if there had been a formal abandon- ment. 8 * A notice of abandonment is a notification by the assured to the underwriters that he elects to treat the case as one of total loss made while the happening of the loss is prospec- tive. An abandonment must be made within a reasonable time after information of the loss, and after the commencement of the voyage, and before the party abandoning has information of its completion.* It is reasonable that the assured should, on deciding to claim for a total loss, promptly give notice of his intention to the underwriters in order that the- latter may be given the opportunity to take any steps which they may deem advisable for the recovery of the property or for the realization of salvage if the property is recoverable. No specific form is necessary for giving notice of abandonment, nor is it essential that it should be made in writing, though it is customary and advisable so to give it. But the abandonment tendered must be neither partial nor conditional. 4 § 109. Effect of Abandonment.— The abandonment, if accepted by the underwriters, or if justified by the facts of 1 Farnworth v. Hyde, 2 Mar. L. R. » Stewart y. Greenock Mar. Ins. Co., 187 and 439. 2 H. L. Cas. 183. *Roux v. Salvador, 3 Bing. N. C. * Bosley v. Chesapeake Ins. Co., 3 266- Gill & J. 450 ; s.c, 22 Am. Dec. 337. § 109 Abaijdonment. 117 the case, is equivalent to a transfer of his interest by the insured to the insurer with all chances of recovery and indemnity. 1 An acceptance of an abandonment is not to be presumed from the mere silence of the insurers upon receiving the notice, but may be inferred from their acts as well as their words, 2 as where the insurers take possession and do not return within a reasonable time. 3 If the insurers accept the notice of abandonment, the rights of the parties are fixed by the acceptance, and neither of them can draw back, whatever may be the event. 4 t If an insurer refuses to accept a valid abandonment, he is liable as upon an actual' total loss, deducting from the amount any proceeds of the thing insured which may have come to the hands of the insured. After an abandonment, acts done in good faith by those who were agents of the insured in respect to the thing insured subsequent to the loss are at the risk of the insurer and for his benefit. A freight earned previous to the loss belongs to the insurer thereof, but freight subsequently earned belongs to the insurer of the ship. 5 "Whenever a loss is paid, whether total or partial, the under- writer who has paid it acquires a right by subrogation to what- ever may be recovered by the assured from third parties with respect to the loss ; but in the absence of an abandonment the right is limited to the recovery by the underwriter of the sum which he has paid. 6 This right of subrogation, which in the case of partial loss operates merely to the extent of his loss, is made absolute by abandonment, so that the insurer is entitled to whatever may be recovered with respect to the thing insured, though it exceed the amount paid by him. 7 If there are several underwriters, they share in the transfer ■ of the interest in proportion to the amount of their several 1 Eagle v. Bucher, 6 Ohio St. 295 ; 6 Stewart v. Greenoek Mar. Ins. Co., s.c, 67 Am Deo. 343. 2 H. L. Cases, 159. * Provincial Ins. Co. v. Leduc, L. " Burnand v. Rodocanachi, L. R., R.. 6 P. C. 224. 7 App. Cases, 339. 3 Copelin v. Ins. Co., 9 Wall. 461. ' North of England Iron Steamship * North West. T. Co. v. Continental Ins. Asso. v. Armstrong, L. R., S Ins. Co., 24 F. R. 171. Q- B. 244. 118 Insurance : Fiee, Life, Mabine. § 110 subscriptions. 1 By an abandonment the insurer can have no greater rights than the insured had. 2 § 110. Measure of Indemnity. — A marine insurer, as has been previously stated, is liable upon a partial loss only for such proportion of the amount insured by him as the loss bears to the value of the whole interest of the insured in the prop- erty insured. 3 But in a valued policy the value of the interest is agreed upon in advance, and is conclusive in the absence of .fraud. 4 Where profits are separately insured in a contract of marine insurance, the insured is entitled to recover in case of loss the proportion of such profits equivalent to the proportion which the value of the property lost bears to the value of the whole. § 111. Valuation Apportioned. — In case of a valued policy of marine insurance on freight or cargo, if a part only of the subject is exposed to risk the valuation applies only in pro- portion to such part. 5 Where profits are valued and insured by a contract of marine insurance, a loss of the profits is presumed from a loss of the property out of which they were expected to arise, and the valuation of the policy fixes their amount. 6 § 112. Loss under an Open Policy. — A loss under an open policy of marine insurance is ascertained as follows : (1) The value of a ship is its value at the beginning of the risk, including all articles or charges which add to its perma- nent value or which are necessary to prepare it for the voyage insured. (2) The value of cargo is its actual cost to the insured when laden on board ; or, where that cost cannot be ascertained, its market value at the time and place of lading, adding the charges incurred in purchasing and placing it on 1 Stewart v. Greenock Mar. Ins. 4 Griswold v. Union Mut. Ins. Co., Co., 2 H. L. Cases, 183. 3 Blatch. 231. Sturm v. Atlantic 8 Delaware Mut. Safety Ins. Co. v. Mut. Ins. Co., 63 N. Y. 77. Gossler, 96 U. 8. 645. 6 Davy v. Hallett, 3 Caines, 16; s.c, 8 Lamar Ins. Co. v. McGlashen, 2 Am. Dec. 241. 54 111. 513 ; s. c, 5 Am. Rep. 6 Patapsco Ins. Co. v. Coulter, 3 162. Peters, 222. § 116 Measuee of Liability. 119 board, but without reference to any losses incurred in raising money for its purchase, or to any drawback on its exportation, or to the fluctuations of the market at the .port of destination, or to expenses incurred on the way or on arrival. (3) The value of freight is the gross freight exclusive of primage, with- out reference to the cost of earninsr it. 1 And in each case the cost of insurance is to be added to the value then estimated. § 113. Damaged Cargo. — If cargo insured against partial loss arrives at the port of destination in a damaged con- dition, the loss of the insured is deemed to be. the same propor- tion of the value which the market price at that port of the thing so insured bears to the market price it would have brought if sound. 2 § 114. Labor and Expenses. — A marine insurer is liable for all the expenses attendant upon a loss which forces the ship into port to be repaired ; and, where it is agreed that the insured may labor for the recovery of the property, the insurer is liable for the expenses incurred thereby, such expense in either case being in addition to a total loss if that after- wards occurs. 3 § 115. Liable for General Average Losses. — A marine insurer is liable for a loss falling upon the insured through a contribution in respect to the thing insured required to be made by him toward a general average loss called for by the peril insured against. 4 § 116. Insured may Claim wnole Loss from In- surer, leaving Latter to enforce General Average Contribution. — "Where a person insured by a contract of marine insurance has a demand against others for general average contribution, he may claim the whole loss from the 1 Stevens v. The Columbian Ins. Co., • Orrok v. Commonwealth Ins. Co., 3 Caines, 43 ; s. c, 2 Am. Dec. 247. 21 Pick. 456; s. c„ 32 Am. Dec. 271. 2 Pars. Mar. Ins., 406-412. * Dunham v. Commercial Ins. Co., 2 Lamar Ins. Co. v. McGlashen, 54 11 Johns. 315; s. c, 6 Am. Dec. 111. 513 ; s. c, 5 Am. Rep. 162. 374. 120 Insurance : Fire, Life, Marine. § 117 insurer, subrogating him to his own right of contribution ; but no such claim can be made upon the insurer after the separa- tion of the interests liable to contribution, nor when the insured, having the right and opportunity to enforce contribu- tion from others,. has neglected or waived the exercise of that right. 1 § 117. One-third off New for Old In the case of a partial loss of a ship or its equipments, the old materials are to be applied toward payment for the new, and a deduction of one-third from the cost of repairing or replacing the damage is made after deducting the value of the old materials, and the marine insurer is liable for the two-thirds of the cost of the repairs. 8 But certain exceptions to this rule are allowed by custom, and as inserted in the policies the rule is generally modified in certain particulars. Anchors, cannon, and sometimes other articles which are supposed to incur no depreciation in value up to the time of loss are allowed for in full ; for metal sheathing a deduction of one-fortieth from the expense of repairing or replacing (after first deducting the value of the old metal and nails) is gen- erally made for every month since the vessel was last sheathed until the expiration of forty months, after which time the cost of remetaling or repairing the same is borne by the assured. The deduction of one-third off new for old does not gener- ally apply in England in the case of a new ship on her first voyage, and a deduction of one-sixth is sometimes applied to chain cables. 3 It is difficult to give an authoritative definition of the ex- tent of a first voyage, and this may be explained by mercantile usage. The charter party may be so worded as to make the outward and homeward passage only one voyage. 4 This point is sometimes regulated by special provisions of the policy. 1 Maggrath v. Church, 1 Caines, Johns. 315 ; s. c, 6 Am. Dec. 374. 196; s. c, 2 Am. Dec. 173. Orrok v. Commonwealth Ins. Co., 31 8 Eager v. Atlas Ins. Co., 14 Pick. Pick. 456; s. c, 32 Am. Dec. 277. **1. « Fenwick v. Robinson, 3 C. & P. 3 Dunham v. Com. Ins. Co., 11 323. CHAPTER X. GENERAL AVERAGE: MARINE. This subject belongs more properly to admiralty law than to insurance ; but it is so intimately connected with insurance adjustments, and with the rights of the contracting parties under a policy of marine insurance, that it cannot well be altogether omitted. § 118. General Average. — The rule of general- aver- age has its basis in the community of interest existing between the owners of ship and cargo, by reason of which losse s inten-. tionally incurred for the common safety ought to be equitably apportioned among the interests thereby benefited. General average is a contribution made by the parties to a marine adventure to defray the cost of extraordinar y exp enses or sacrifices incurred for the preservation of the ship and cargo. The distinction between a general and a particular average lies in the fact that in the former case there is a gen eral di stribution of the loss among the parties to the adven- ture, while m the latter case there is a special application of the loss to one orjnore-of the parties. Every partial loss is partic- "ular average in relation to the party who first sustains it, whether that loss is ultimately to be made good by a general contribution or to remain where it falls. The right to general average and its co-relative obligation are not founded necessarily upon contract, but arise from the common law of the sea, which is applicable to all who are engaged in maritime commerce. 1 The earliest trace of this ancient rule of maritime law is to be found in an extract from the Rhodian law which was incorporated in the Roman civil law. Thence it found its way into the common law of England, and became an implied 1 Burton v. English, L. R., 12 Q. B. D. 218. 122 Insueance : Fiee, Life, Marine. § 119 term both in the contract of affreightment and the policy of marine insurance. § 119. General Average Losses. — A carrier by water may in case of extreme peril to the ship and cargo, when it is necessary for the safety of the adventure, throw overboard any or all of the cargo or appurtenances of the ship, or other- wise sacrifice the whole or any part of the cargo of the ship, or incur expenses for such purpose. 1 Thus goods or parts of the ship may be cast away to save the ship from foundering in a storm, or to float her when stranded, or to facilitate her escape from an enemy. Throwing property overboard for such purpose is called jet- tison ; and the loss caused thereby, or by any other sacrifice or expense voluntarily made for such a purpose, is called a general average loss, and is the subject of general average contribution by the interests (whether ship, cargo, or freight) which are thereby saved." If the jettison is successful at the time, and the ship continues on her course but is afterward wrecked, whatever is saved from the wreck must contribute to the original jettison ; but if the goods jettisoned be afterward recovered, and the ship proceed- ing on her course be afterward lost, the goods need not con- tribute toward the loss of the ship. In the case of general average expenses properly incurred under the circumstances as then existing, it has been said that the ratable contribution is due from the different interests intended to be benefited, whether the experiment ultimately results in a benefit or not ; and on principle it would seem as though this were the better rule to apply to all such justifiable sacrifices made for the common benefit. 8 A jettison must be made in good faith and with prudence, and ought, so far as possible, to begin with the most bulky and least valuable articles. But of necessity the master of the ship must be left free to take such steps as he deems necessary for the preservation of the interests intrusted to his care. 1 Sweeney v. Thompson, 30 Fed. R. s. a, 86 Am. Dec. 375. Scudder v. 121. Hobson v. Lord, 92 U. S. 397. Bradford, 14 Pick. 13 ; s. a, 25 Am. Star of Hope, 9 Wall. 203. Dec. 355. 2 Harris v. Moody, 30 N. Y., 266 ; s Spofford v. Dodge, 14 Mass. 66. § 120 General Average. 123 In early times the performance of a general average act was usually preceded by a consultation between the master and the merchants, who frequently accompanied their wares upon the voyage, with respect to the necessity for an extraordinary sacri- fice for the common safety, and the best means of attaining that end. Although such a conference has long since been dis- continued in practice, there is a sense in which it is still held in theory, inasmuch as the master becomes agent for the owner of the cargo as well as for the ship-owner in times of emer- gency, with authority to bind both parties in the adoption of such measures as are expedient in the common interest. 1 The general average act, then, must be judicious. Its start- ing point is danger, and its objective point is safety. If the master is disabled, whoever is in active command of the ship may, in case of necessity, make the jettison or other sacrifice. 2 It is one of the commonly accepted rules in the law of gen- eral average, that the party whose negligence has made the sac- rifice necessary cannot claim contribution in general average. 3 § 120. Sacrifices Enumerated. — The sacrifices recov- erable under the principles above stated include the following : The cutting away of masts, spars, or sails to right a vessel which is on her beam ends or to rescue her from other immi- nent peril ; 4 the shipping of her anchors and chains to avoid stranding or collision ; the breaking of bulwarks to relieve the vessel of water which floods her' decks ; the jettison of cargo materials or stores for the common safety ; the extraordinary use of materials and stores in moving a stranded ship off the ground, such as the setting of the sails for that purpose in case of a sailing vessel, the breaking of the engines in the case of a steamer, or- the use of anchors, chains, bolts, hawsers, etc., in either case ; the scuttling of a vessel for the purpose of admit- ting water to extinguish a fire ; 5 the use at sea of spare spars, sails, ropes, or other materials and stores for the purpose of 1 Gratitudine, 3 Chas. Robinson, a Robinson v. Price, L. R.,2 Q. B. 240. D. 91. The Parana, L. R., 1 Prob. 1 Ralli v. Troop, 37 Fed. Rep., p. Div. 452. Portsmouth, 9 Wall. 682 888. Lawrence v. Minturn, 17 How. * Margareta Blanca, 14 F. R. 59. 110. Price v. Noble, 4 Taunt. 123. 6 Ralli v. Troop, 37 F. R. 886. 124: Insurance: Fibe, Life, Marine. § 121 stopping a leak, rigging jury masts, fishing sprung masts, or for any other purpose where the common safety appears to necessitate the sacrifice ; the sale of ship or cargo or part thereof, 1 and in the United States the jettison of deck load when its stowage on deck is warranted by custom ; 2 and also damage from voluntary stranding of the ship, and repairs there- by necessitated. 3 The principal sacrifices of cargo other than jettison and its consequences which come into general average are as follows : Any loss or damage which cargo may suffer through being dis- charged on to the shore, dragged through the surf, landed in rafts, placed in lighters, put on muddy ground, or otherwise treated in an unusual way to float a stranded ship ; 4 but when goods once reach a place of safety, they cease thereafter, according to the English rule, to be at the risk of the general interest. 5 Any loss or damage to cargo necessarily arising from a forced discharge when the cost of the discharge is allowed in general average is itself allowable. 6 Any loss or damage to the cargo, whether suffered by water on board, or otherwise admitted into the ship's hold to ex- tinguish a fire. Any loss or damage to cargo caused by water entering the ship's hold through holes made by the fall of a mast cut away for the common safety, provided such loss or damage was the proximate result of the cutting away. 7 The loss of cargo consumed as fuel to work a steamer's engines or a donkey engine in time of peril, provided the supply of fuel was originally sufficient. Passengers' baggage, Vthough itself not liable to contribute. 8 § 121. Deck Load. — In the United States and England, in the absence of an express prohibition in the policy, the 1 Nelson v. Belmont, 5 Duer, 310. "Gregory v. Orrall, 8 Fed. Rep. 2 Taunton Co. v. Ins. Co., 23 Pick. 287. l r 8- 7 Maggrath v. Church, 1 Caines R. ' N. W. Transfer Co. v. Cont. Co., 196. Saltus v. Ocean Ins. Co., 14 24 Fed. Rep. 171. Johns. 138. ■ 4 Lewi* v. Williams, 1 Hall, 430. 8 Heye v. North German Lloyd, 33 5 Svendson v. Wallace, 10 App. Cas. Fed. Rep. 60 404. § 123 General Average. 125 courts allow a jettison of deck load to be included in general average, provided a custom of the trade can be sho.\vn justi- fying the loading of the goods on deck. 1 But, if no sucli custom is proved, a claim for jettison of deck load cannot be allowed in general average, 2 although if a deck load is saved by a general average act, it must itself contribute. There must be an actual intention to throw the deck cargo overboard in order to constitute a general average act. 3 § 122. Voluntary Stranding.— In the United States the voluntary stranding of a ship when in peril is held to be a general average act, and that irrespective of the question whether the vessel ultimately becomes a total wreck or not. 4 But general average is not allowed in favor of the ship-owner if the voluntary stranding was made necessary by negligent navigation of the ship/ A voluntary stranding is not allowed as a general average act by the English court in the absence of express agreement, and the view of that court is defended mainly upon two grounds: (1) that the stranding is not a sacrifice at all, nor the result of any selective discrimination between different interests, but on the contrary is ah attempt to put both ship and cargo into a situation of less peril ; and (2) that in practice it is impossible to distinguish between damages received by the ship and cargo prior to stranding, which are admittedly particular and not general average, and losses sustained after or in consequence of stranding, which it is claimed should come into general average. The York Antwerp rules, it will be noticed, on this as on some other points, have struck a compromise between conflict- ing views. § 123. Port of Refuge, and other Expenses — The most frequent cause of general average expenses occurs where a vessel in peril puts into a port of refuge for repairs to enable ' Harris v. Moody, 30 N. Y. 266 ; * Barnard v. Adams, 10 How. 270. s. c, 86 Am. Dec. 375. Wood v. Columbian Ins. Co. v. Ashby, 13 Phoenix Ins. Co., 8 Fed. R. 27. Peters, 331. Fowler v. Rathbones, 12 °- The Milwaukee Belle, 2 Biss. 197. Wall. 102. Star of Hope, 9 Wall. 20:!. 3 The Adele Thaokera, 24 Fed. R. Emery v. Huntington, 109 Mass. 431. g 9. 6 Snow v. Perkins, 39 Fed. B. 334. 126 Insurance : Fire, Life, Marine. § 124 her to continue the voyage. The general average practice in such a case in the United States differs in some particulars from the rules prevailing in England. 1 By the law of this country, wages and provisions of the crew are allowed, in general average, from the time of deviat- ing from the voyage for the purpose of putting into a port of refuge, until the voyage is resumed, or until the cargo and vessel are separated, or until there is no longer a reasonable prospect that the voyage will be continued. 2 The expenses of entering the port, and of unloading, ware- housing, and reloading the cargo, are allowable, provided the voyage is resumed, or so long as there is a fair prospect of its continuance. 3 Before dealing with the cargo, however, in a port of refuge, the master is bound to communicate with its owners if it is possible, in order to take their instructions. 4 Goods or money paid for ransom or salvage, or for other services rendered for the common benefit, are also allowed in general aveipge. But if the expense is not incurred for the common safety, then it is chargeable, in particular average, to that interest which it was intended to benefit. 5 § 124. The Adjustment. — The proportions in which a general average loss is to be borne must be ascertained by an adjustment, in which the owner of each separate interest is to be charged with such proportion of the value of the things lost as the value of his part of the property affected' bears to the value of the whole. 6 An adjustment made at the end of the voyage, if valid there, is valid anywhere. The first port reached subsequent to the general average act, where any o.r all the interests are sep- arated, may be the end of the voyage for this purpose. 7 1 Svendsen v. Wallace, 10 App. Cas. McAndrews v. Thatcher, 3 Wall. 347. 404 - McGaw v. Ocean Ins. Co., 23 Pick. 8 Hobson v. Lord, 92 XJ. S. 397. 405. Ocean St. C. Co. v. Anderson, The Star of Hope, 9 Wall. 203. 13 Q. B. D. 651. 3 The Joseph Farwell, 31 Fed. Rep. • Wheaton v. China Mut. Ins. Co., 844 - 39 Fed. Rep. 879. 4 The Julia Blake, 107 IT. S. 7 Barnard v. Adams, 10 How. 270. 41s - Bradley v. Cargo of Lumber, 29 Fed. 5 Douglas v. Moody, 9 Mass. 548. Rep. 648. § 125 General Average. 127 Inasmuch as a lien exists upon the cargo in favor of the ship to secure general average contribution, it is customary for the consignees of the cargo, in order to secure an immediate delivery of their cargo, to give an undertaking or to make a deposit to cover any amount for which they may be ultimately liable in general average. The rules of practice for the adjustment of general average losses vary greatly in detail in different countries and in differ- ent ports. The regulations most frequently used by agree- ment are the York Antwerp rules, adopted by the Association for the Reform and Codification of the Law of Nations, at Antwerp, in 1877, and amended at their Liverpool conference in 1890. These as amended are as follows : § 125. York Antwerp Rules. Rule I. Jettison of Deck Cargo. — No jettison of deck cargo shall be made good as general average. Every structure not built in with the frame of the vessel shall be considered to be a part of the deck of the vessel. Rule II Damage by Jettison and Sacrifice for the Common Safety. — Damage done to a ship and cargo, or either of them, by or in consequence of a sacrifice made for the com- mon safety, and by water which goes down a ship's hatches opened or other opening made for the purpose of making a jettison for the common safety, shall be made good as general average. Rule III. Extinguishing Fire on Shipboard. — Damage done to a ship and cargo, or either of them, by water or other- Avise, including damage by beaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall be made good as general average ; except that no compensation shall be made for damage to such portions of the ship and bulk cargo, or to such separate packages of cargo, as have been on fire. Rule IV. Cutting away Wreck. — Loss or damage caused by cutting away the wreck or remains of spars, or of other things which have previously been carried away by sea-peril, shall not be made good as general average. Rule V. Voluntary Stranding. — "When a ship is inten- tionally run on shore, and the circumstances are such that if that course were not adopted she would inevitably sink, or 12S Insurance : Fiee, Life, Marine. § 125 drive on shore or on rocks, no loss or damage caused to the ship, cargo, and freight, or any of them, by such intentional running on shore shall be made good as general average. But in all other cases where a ship is intentionally run on shore for the common safety, the consequent loss or damage shall be allowed as general average. Rule VI. Carrying Press of Sail; Damage to oe Loss of Sails. — Damage to or loss of sails and spars, or either of them, caused by forcing a ship off the ground or by driving her higher up the ground, for the common safety, shall be made good as general average ; but where a ship is afloat, no loss or damage caused to the ship, cargo, and freight, or any of them, by carrying a press of sail, shall be made good as general average. Rule VII. Damage to Engines in Refloating a Ship. — Damage caused to machinery and boilers of a ship, which is ashore and in a position of peril, in endeavoring to refloat, shall be allowed in general average, when shown to have arisen from an actual intention to float the ship for the common safety at the risk of such damage. Rule VIII. Expenses Lightening a Ship when Ashore, and Consequent Damage. — When a ship is ashore and, in order to float her, cargo, bunker coals, and ship's stores, or any of them, are discharged, the extra cost of lightening, lighter hire, and reshipping (if incurred), and the loss or damage sus- tained thereby, shall be admitted as general average. Rule IX. Cargo, Ship's Materials, and Stores Burnt for Fuel. — Cargo, ship's materials, and stores, or any of them, necessarily burnt for fuel for the common safety at a time of peril, shall be admitted as general average, when and only when an ample supply of fuel had been provided; but the estimated quantity of coals that would have been consumed, calculated at the price current at the ship's last port of de- parture at the date of her leaving, shall be charged to the ship- owner and credited to the general average. Rule X. Expenses at Port of Refuge, etc. — (a) When a ship shall have entered a port or place of refuge, or shall have returned to her port or place of loading, in consequence of accident, sacrifice, or other extraordinary circumstances, which render that necessary for the common safety, the ex- § 125 General Average, 129 penses of entering such port or place shall be admitted as general average ; and when she shall have sailed thence with her original cargo, or a part of it, the corresponding expenses of leaving such port or place, consequent upon such entry or return, shall likewise be admitted as general average. (b) The cost of discharging cargo from a ship, whether at a port or place of loading, call, or refuge, shall be admitted as general average, when the discharge was necessary for the common safety or to enable damage to the ship, caused by sacrifice or accident during the voyage, to be repaired, if the repairs were necessary for the safe prosecution of the voyage. (c) Whenever the cast of discharging cargo from a ship is admissible as general average, the cost of reloading and stor- ing such cargo on board the said ship, together with all storage charges on such cargo, shall likewise be so admitted. But when the ship is condemned or does not proceed on her original voyage, no storage expenses incurred after the date of the ship's condemnation or of the abandonment of the voyage shall be admitted as general average. (d) If a ship under average be in a port or place at which it is practicable to repair her, so as to enable her to carry on the whole cargo, and if, in order to save expenses, either she is towed thence to some other port- or place of repair or to her destination, or the cargo or a portion of it is transhipped by another ship, or otherwise forwarded, then the extra cost of such towage, transhipment, and forwarding, or any of them (up to the amount of the extra expense saved), shall be payable by the several parties to the adventure in proportion to the extraordinary expense saved. Rule XI. Wages and Maintenance of Crew in Port of Refuge, etc. — When a ship shall have entered or been de- tained in any port or place under the circumstances, or for the purposes of the repairs, mentioned in Rule VII., the wages pay- able to the master, officers, and crew, together with the cost of maintenance of the same, during the extra period of deten- tion in such port or place until the ship shall or should have been made ready to proceed upon her voyage, shall be admitted as general average. But when the ship is condemned or does not proceed on her original voyage, the wages and maintenance of the master, officers, and crew, incurred after the date of 9 Insurance: Fiee, Life, Marine. §125 the ship's condemnation or of the abandonment of the voyage, shall not be admitted as general average. Rule XII. Damage to Cargo in Discharging, etc. — Damage done to or loss of cargo necessarily caused in the act of discharging, storing, reloading, and stowing, shall be made good as general average, when and only when the cost of those measures respectively is admitted as general average. Rule XIII. Deductions from Cost of Repairs. — In ad- justing claims for general average, repairs to be allowed in general average shall be subject to the following deductions in respect of " new for old," viz. : In the case of iron or steel ships, from date of original register to the date of accident, — Up to r All repairs to be allowed in full, except year old j painting or coating of bottom, from which one- L third is to be deducted. One-third to be deducted off repairs to and renewal of wood-work of hull, masts and spars, furniture, upholstery, crockery, metal and glassware, also sails, rigging, ropes, sheets, and hawsers (other than wire and chain), awnings, covers, and painting. One-sixth to be deducted off wire rigging, wire ropes and wire hawsers, chain cables and chains, donkey engines, steam winches and connections, steam cranes and connec- tions; other repairs in full. Deductions as above under Clause B, except that one sixth be deducted off iron-work of masts and spars, and machinery (inclusive of boilers and their mountings). • Deductions as above under Clause C, except that one-third be deducted off iron-work of masts and spars, repairs to and renewal of all machinery (inclusive of boilers and their mount- L ings), and all hawsers, 'ropes, sheets, and rigging. One-third to be deducted off all repairs and renewals, except iron- work of hull and cement- ing and chain cables, from which one-sixth to . be deducted. Anchors to be allowed in full. (A). Between and 8 years- (B). Between 3 and 6 years- (C). Between 6 and 10 years - (D). Between 10 & 15 years (E). § 125 General Average. 131 Over / One-third to be deducted off all repairs and 15 years j renewals. Anchors to be allowed in full. One- (F). ( sixth to be deducted off chain cables. The deductions (except as to provisions and stores, machinery, and boilers) to be regulated by the age of the ship, and not the age of the particular part of her to which they apply. Generally No painting bottom to be allowed if the bottom (G). I has not been painted within six months previ- ous to the date of accident. No deduction to be made in respect of old material which is re- paired without.being replaced by new, and pro- L visions and stores which have not been in use. In the case of wooden or composite ships : When a ship is under one year old from date of original register, at the time of accident, no deduction new for old shall be made. After that period a deduction of one-third shall be made, with the following exceptions : Anchors shall be allowed in full. Chain cables shall be sub- ject to a deduction of one-sixth only. ~No deduction shall be made in respect of provisions and stores which had not been in use. Metal sheathing shall be. dealt with, by allowing in full the cost of a weight equal to the gross weight of metal sheathing stripped off, minus the proceeds of the old metal. Xails, felt, and labor metaling are subject to a deduction of one-third. In the case of ships generally : In the case of all ships, the expense of straightening bent iron-work, including labor of taking out and replacing it, shall be allowed in full. Graving dock dues, including expenses of removals, cartages, use of shears, stages, and graving dock materials, shall be allowed in full. Rule XIV. Temporary Repairs. — No deductions "new for old " shall be made from the cost of temporary repairs of damage allowable as general average. Rule X V. Loss of Freight. — Loss of freight arising from damage to or loss of cargo shall be made good as general 132 Insurance : Fire, Life, Marine. § 126 average, either when caused by a general average act, or when the, damage to or loss of cargo is so made good. Rule XVI Amount to be made Good for Cargo Lost or Damaged by Sacrifice. — The amount to be made good as general average for damage or loss of goods, sacrificed shall be the loss which the owner of the goods has sustained thereby, based on the market values at the date of the arrival of the vessel or at the termination of the adventure. Rule XVII. Contributory Values. — The contribution to a general average shall be made upon the actual values of the property at the termination of the adventure, to which shall be added the amount made good as general average for property sacrificed ; deduction being made from the ship- owner's freight and passage-money at risk, of such port charges and crew's wages as would not have been incurred had the ship and cargo been totally lost at the date of the general average act or sacrifice, and have not been allowed as general average ; deduction being also made from the value of the property of all charges incurred in respect thereof subsequently to the general average act, except such charges as are allowed in general average. Passengers' luggage and personal effects, not shipped under bill of lading, shall not contribute to general average. Rule XV III. Adjustment. — Except as provided in the fore- going rules, the adjustment shall be drawn up in accordance with the law and practice that would have governed the ad- justment had the contract of affreightment not contained a clause to pay general average according to these rules. § 126. Contributory Value of Freight. — As has been observed, the law prevailing in the United States does not conform in all respects to these rules. In respect to the contributory value of the freight interest, which cannot always be easily ascertained, an arbitrary rule has been adopted in New York. While the full amount of freight is contributed for in general average, only fifty per cent, of that amount is called upon for contribution. 1 That is supposed to be a rough estimate of its net value at the end of the voyage, after expenses have been deducted from the gross freight. 1 Rathbone v. Fowler, 6 Blateh. 296. CHAPTER XI. THE NEW TOEK STANDARD FIKE POLICY. The dissimilarities existing in numerous forms of fire poli- cies resulted in inconveniences and uncertainties, especially in cases where the same property was insured by policies in differ- ent companies, which often thus furnished inconsistent pro- visions for the adjustment of the same loss. This and other considerations influenced the legislatures of certain States to pass statutes for the adoption of standard forms of fire policies. A fist of references to these statutes will be found in the appendix. The actual framing and adoption of the standard policy by the several States was sometimes separated by a con- siderable interval of time from the enactment making provision for its adoption. In framing a standard form of fire policy Massachusetts was the pioneer State. Under the act of 1886, Chapter 488, passed prior to the Massachusetts act, New York followed with the preparation of a standard form differing in many particulars from that previously drafted by the Massachusetts authorities. The other States mentioned in the list already referred to have accepted either substantially or precisely the New York stand- ard form. This was drafted under the provisions of the New York statute ostensibly by a committee of the New York Board of Fire Underwriters, but actually by that committee in con- ference with a committee of the National Board of Fire Un- derwriters, and all that legal knowledge and business experience could furnish was brought to bear upon the careful construc- tion of this important instrument. 1 The aim, among other things, was to avoid giving occasion for novel questions of con- troversy by making it accord in its phraseology with the decisions of the court of last resort in this State. 1 The work was superintended by William Allen Butler, Esq., of th« New York bar. 134 Insurance: Fire, Life, Hakine. § 127 The use of the standard form is made by the statute obliga- tory in New York upon all fire companies doing business within the State, and a penalty is imposed for violating the act, but it is provided that any policy in form inconsistent with the pro- visions of the act shall nevertheless be binding upon the com- pany issuing the same. It is hardly necessary to remark that the policy is not an absolute agreement to grant indemnity to the insured at all events for the loss occasioned by the casualty insured against, but is made dependent upon the fulfilment on his part of cer- tain provisions of the contract which are called conditions. If any one of these is violated or unperformed, the policy is avoided, and there can be no recovery unless the policy is sub- sequently confirmed by the insurer. The conditions for the most part are expressed in the contract itself, and to solve their proper meaning, force, and effect must be the chief concern in the study of fire-insurance law. An inspection of the New York standard policy, given in the appendix, will show that some of its conditions are precedent to the effectual making of the contract ; others pre-suppose the contract made, but are precedent to a right of action thereon. Others declare events m which all right under the contract is forfeited, or otherwise define the obligations of the parties, or restrict the liability of the insurers. Others deal with the mode of settling disputes, and others limit the period for bringing suit. The conditions may also be divided into three classes ; those precedent to a ■valid inception of the contract, those relating to the contract during the pendency of the risk, and those which appertain to the presentation of the claim of the assured and the proofs of his loss. Before the standard policy was adopted, much com- plaint was made regarding the fine-print conditions ordinarily inserted in a fire policy. The chief justice of the New Hamp- shire court made the character of these conditions the subject of a forcible but unjudicial tirade against insurance companies generally. 1 We shall examine the clauses of the New York standard policy in the order in which they occur in the policy. § 121. In Consideration of the Stipulations and Premium. — The insurer is entitled to payment of premium 1 De Lanej y, Ins. do., 52 S. H. 581. § 128 Standard Fire Policy : Loss by Fire. 135 upon the inception of the risk or closing of the contract unless otherwise agreed, but ordinarily the payment of the premium is not made a condition of the policy, nor is its non-payment made a ground of forfeiture. It is generally paid in cash or check, but may be paid by notes or credit. Premium notes in mutual companies are generally made a lien upon the property insured. 1 If the risk attaches, the premium is not returnable ex- cept as provided by the terms of the agreement or by statute. If the contract is rescinded, the premium is returnable ; 2 but if void for fraud it is not returnable. 3 § 128. Insures against all Direct Loss by Fire. — Loss by fire means the result of the ignition of the property insured or some substance near to it. For example, where sugar was spoiled by great heat from a fire in ordinary use be- cause of the closing of a register, the company was held not liable, and so also where the heat of the sun contracted timber without any actual fire ; 4 and similarly where the interior of a boiler was damaged by overheating from regular furnace fires owing to absence of water in the boiler; 5 but the proximate results of fire within the rule of law establishing the liability of the insurer may include other things than combustion ; as, for example, injuries to the insured property by water from the fire-engines, or exposure of goods during the fire, or during their reasonable removal, and the loss of goods by theft dur- ing the fire, or during a reasonable removal to a place of safety. 6 If a policy were silent upon the subject, loss by fire would include loss by a gunpowder explosion, but not loss by a steam explosion or by the wind. 7 It would not include loss by 1 Woodfin v. Asheville Mut. Ins. Atkinson v. Newcastle & GL W. W. Co., 6 Jones (N. C.) 558. Co., L. R. 6 Ex. 404. '' Ins. Co. v. Pyle, 44 Ohio St. 19 ; • American Towing Co. v. G-er. Fire s. c, 58 Am. Rep. 781. Ins. Co.. 20 Ins. L. J. 402 (Md. 1891). s Blaeser v. Milwaukee Mut. Ins. ' Stanley v. Western Ins. Co., L. R., Co., 37 Wis. 31 ; s. c, 19 Am. Rep. 3 Exch. 74 ; s. c, 37 L. J. Q. B. 73. 747. Babcock v. Montgomery Co. Mut. Ins. 1 Babcock v. Montgomery Co. Mut. Co., 6 Barb. 637. White v. Republic Ins. Co., 6 Barb. 637. Austin v. Fire Ins. Co., 57 Maine 91 ; s. c, 2 Drewe, 6 Taunt. 436. Scripture v. Am. Rep. 22. Lowell Mut. Fire Ins. Co., 64 Mass. ' Waters v. Merchants' Louisville (10 Cush.) 356 ; s. c, 67 Am. Dec. 111. Ins. Co., 11 Peters 218. Scripture v. 136 Insurance : Fiee, Life, Marine. § 129 lightning unless ignition resulted, but a lightning clause may be attached to the policj 7 . 1 Fire originating in spontaneous combustion is within the risk. Damage caused by concussion caused by an explosion of gunpowder in another building is not within the risk. 2 But the special provisions of the contract govern. The policy includes loss by the incendiary act of the insured if insane, and includes the unintentional or careless acts of third persons, whether his agents or not, as well as their criminal acts ; but if the fire is caused by the willful act of the insured himself, or of some one acting with his privity or con- sent, the insurer will be exonerated. Arson by the wife of the insured without his connivance would be no defence to the company. 3 Arson by an officer of an insured corporation, unless some- thing like a conspiracy could- be shown among those interested in the corporation, would be no defence to the insurer, because a corporation does not impliedly authorize its representatives to commit a crime. 4 The word " direct " is not in the corresponding clause of the Massachusetts policy. § 129. The Following Described Property.— The description of the property is written into the printed form, usually in brief but comprehensive terms. Hence, if the lan- guage of the description leaves it doubtful what goods or buildings or other property it was intended to cover, the courts construe the ambiguity liberally in favor of the insured, with a view to give a full indemnity for all that might reason- ably be considered included in the description. Accordingly, the description of the policy covers not only what is specifically Lowell Mut. Fire Ins. Co., 10 Citeh. gomery Co. Mut. Ins. Co., 4 N. Y. 356; s. c, 67 Am. Deo. ill. Brown 326. v. St. Nicholas Ins. Co., 61 1ST. Y. 332. » Everett v. The London Assurance, Millandon v. New Orleans Ins. Co., 4 19 C. B. N. S. 126. Caballerov. Home La. Ann. 15 ; s. c. 50 Am. Dec. 550. Mut. Ins. Co., 15 La. Ann. 217. Transatlantic Fire Ins. Co. v. Dorsey, • Midland Ins. Co. v. Smith, 6 Q. B. 56 Md. 70 ; s. c, 40 Am. Bep. D.568. Karow v. Cont. Ins. Co., 57 403. Wis. 56; s. c, 46 Am. Bep. 17. 1 Everett v. The London Assurance, 4 Commonwealth v.Wachendorf, 141 19 C. B. N. S. 126. Babcock v. Mont- Mass. 270. § 130 Standard Fire Policy : Location. 137 enumerated but also whatever is necessarily appurtenant to it or included in it. 1 As we have had occasion to notice, evidence of usage is admissible to show the meaning of ambiguous words as employed in any trade. Thus, in an action upon a fire policy described to cover a junk dealer's stock of "rags" and "old metals," evidence was admitted to show that by trade custom those terms had acquired a broader signification than belongs to them in common usage. 2 A policy upon merchandise in a store applies to the stock successively in the store from time and time. 3 § 130. Location. — While located and contained as de- scribed herein and not ehewhere. Place is ordinarily material to the contract and of the very essence of the risk, and a change of locality without consent of the insurers removes the goods from the protection of the policy, though it contain no special provision to that effect. With varying location the risk is apt to vary, and whether it does or not is immaterial, for the insurers have the right to know what risk they are assuming, and often decline an insur- ance because of the amount of risk already placed by them- selves or others upon the same building or property.* If consent to removal is obtained, goods are not protected in transit unless the policy so provides, but are protected in the old place until removed. 5 But it has been held that where the clause in the policy is 1 Buchanan v. Exchange Fire Ins. * Lyons v. Providence Washington Co., 61 N Y. 26. Lovewell v. West- Ins. Co., 14 R. I. 109; s. c, 51 Am. Chester Fire Ins. Co., 124 Mass. 418 ; Rep. 364. London and Lancashire s. c, 26 Am. Hep. 6T1. Phoenix Ins. Ins. Co. v. Lycoming Fire Ins. Co., Co. v. Favorite. 49 III. 259. Medina v. 105 Pa. State 424, 432. Theobald v. Builders' Mut. Fire Ins. . Firemen's Ins. Co., 18 Exch. 45. Bradbury 7. Fire Ins. La. 431. Hannan v. Williamsburgh Asso., 83 Me. 896. Sampson v. Secur- City Fire Ins. Co., 81 Mich. 560. ity Ins. Co., 183 Mass. 49. Wall v. 8 Mooney v. Howard Ins. Co., 138 East River Mut. Ins. Co., 7 N. T. 370. Mass. 375 ; s. c. 52 Am. Rep. 877. English v. Franklin Fire Ins. Co., 55 * Hooper v. Hudson River Fire Ins. Mich. 273 ; s. c, 54 Am. Rep. 877. Co., 17 N. Y. 424. Am. Cent. Ins. • Kunzze v. Amer. Exch. Fire Ins. Co. v. Rothchild, 82 111. 166. Hoff- Co., 41 N. Y. 412. Sharpless v. Ins. man v. -53. 417. 6 Waynesboro Mut. Fire Ins. Co. v. 8 Waring v. Indemnity Ins. Co., 45 Creaton, 98 Pa. St. 451; s. c, 42 Am. N. Y. 606. Rep. 618. Birmingham Fire Ins. Co. a Herkimer v. Bice, 27 N. T. 163. v. Pulver, 126 111. 3>9. Snell v. Del- Bobbitt v. Liverpool, &c, Ins. Co., 66 aware Ins. Co., 4 Dallas, -430. Brown N. C. 70. Hooper v. Robinson, 98 v. Quincy Ins. Co., 1(J5 Mass. 396. U. S. 528. Fire Ins. Asso. v. Mer- • Clark v. Baird, 9 N. Y. 183. Teer- chants', &c, Trans. Co., 66 Md. penning v. Com. Exch. Ins. Co., 43 N. 339. Y. 279. Reed v. Washington F. & M. * Hagedorn v. Oliverson, 2 Maule & Ins. Co., 138 Mass. 572. 140 Insurance: Fire, Life, Marine. §'l34 In case the insurer exercises its option to rebuild or repair, the rule of damages here denned is superseded by the contract of building, which amounts to a new and independent agree- ment. 1 But, if the insured refuses to permit the insurer to rebuild, the latter having seasonably elected to do so, the former can maintain no action upon the policy.* If the policy is valued, and the loss is total, as has been noticed heretofore, the face of the policy fixes the amount. 3 The extent of the insurer's liability is often modified by particular clauses ; as, for example, one of the various forms of co-insurance clauses or average clauses of which specimens are given in the appendix. The object of the co-insurance clause is to compel the insured to .take out insurance to the full value of his property, or else to become a co-insurer to the amount of the deficiency ; and the average clause applies where property is insured as an entirety, though located in several places or buildings in pro- portions unknown to the insurers, and its object is to compel the insured to consider the property as ratably distributed where there is a loss in one place or building, and not in all. The amount of recovery to which different classes of persons are entitled, as dependent upon the extent of their insurable interest, the form of the policy, and whether they insure for themselves alone or for the benefit of others also interested in the property, has been sufficiently explained under the discussion of general principles. The word "cash" is omitted from the Massachusetts form. § 134. Reinstatement Clause. — Optional with com- pany to take all or any part of the articles at ascertained or appraised value, or to rebuild or replace property lost or damaged within reasonable time, on giving notice within thirty days after receipt of proof s, but there can be no abandonment to the company of the property. This option is reserved by the company to protect itself 1 Wynkoop v. Niagara Fire Ins. Co., a .Beals v. Home Ins. Co., 36 N. Y. 91 N. Y. 478. Morell v. Irving Fire 522. Ins. Co., 33 N. Y. 429. » Phoenix Ins. Co. v. McLoon, 100 Mass. 475. § 134 Standard Fike Policy : Restoration. 141 against extravagant claims, and to prevent disputes as to the amount of damage. If the company once elect to do so, they must reinstate, and cannot afterwards repudiate their election. And the con- verse is also true, for the selection of one alternative constitutes an abandonment of the other. 1 The election to restore or rebuild involves not only the rejec- tion of the right to pay the cash value to the insured, but also the waiving of all those provisions of the contract having reference to that method of performance. From the time of such election the contract between the parties becomes an undertaking on the part of the insurers to build or repair the subject insured, and to restore it to its former condition, and the measure of damages for a breach of this substituted contract of building does not necessarily depend on the amount of damage inflicted by the peril insured against. 2 If the insurers, in the attempt to restore the property, do more than their contract obligates them to do, they cannot claim allowance for the excess of value. 3 If, without fault of the insured, the company either neglects to complete the work or is prevented from doing so by the in- terference of the public authorities, the loss will fall upon the insurers. 4 So, also, if during the rebuilding or repairing the property is again burned ; for here, too, through no fault of the insured, the insurers have failed to fulfill their contract. Whether the work of repairing or rebuilding is done prop- erly and within a reasonable time, must generally be a question for the jury, 5 and for an3 r breach of their obligations the insurers will be held responsible, according to the ordinary rules of damage. The rebuilding clause has been held to have no application to a mortgagee's polic}'. The Massachusetts standard policy has a similar provision allowing the company to restore upon giving notice within 1 Times Fire Assur. Co. v. Hawke, 3 Brinley v. National Ins. Co., 11 1 Fost. & F. 406. Met. 195. * Wynkoop v. Niagara Fire Ins. Co., * Brown v. Royal Ins Co., 1 El. & 91 N. Y. 478; s. c, 43 Am. Rep. 686. EL 853. Morell v. Irving Fire Ins. Co., 33 N. '' Haskins v. Hamilton Mnt. Ins. Y. 429. Co., 5 Gray, 432. 142 Insurance : Life, Fife, Marine. § 135 fifteen days after the proofs of loss are submitted, and the company is declared not liable for more than the sum insured with interest. § 135. This Entire Policy shall be Void — Before this phrase was inserted in the policy, the better opinion was that the contract of insurance was severable in those cases where it covered several items of property which were insured in separate amounts either at separate rates or for a single premium which could be mathematically apportioned or approximately so, and provided the breach of warranty af- fected only a portion of the items. 1 But the phraseology of the standard policy admits of no ambiguity. 2 The word "entire" is omitted from the similar clause of the Massachusetts form. § 136. Interest of the Insured not Truly Stated in the Policy. — Except for this requirement the insured might describe his interest in the most general terms, and if he had any insurable interest at all it would avail to sustain the contract. 8 He might describe the property as his or say that he was the owner, and if that were true in any substantial sense he could recover to the extent of his insurable interest ; 4 as, for example, where the insured called the property his bat in real- ity had only a life estate J" But under this clause he is bound to disclose the character of his insurable interest ; whether, for example, he is owner, trustee, consignee, factor, agent, mortgagee or lessee, and make sure that the description of his interest is truly noted in the policy. It is only right that the insurers should know the nature and extent of his insurable interest. 1 Loomis v. Rockford Ins. Co., 77 * Daeey v. Agricultural Ins. Co., Wis. 87. Schuster v. Dutchess Co. 21 Hun, 83. Trade Ins. Co. v. I'arra- Ins. Co., 102 N. Y. 260. cliff, 45 N. J. Law 543 ; s. c, 46 2 Smith v. Agricultural Ins. Co., 118 Am. Rep. 792. Wainer v. Milford N. Y. 518. Geiss v. Franklin Ins. Co. Mut. Fire Ins. Co., 153 Mass. 335 123 Ind. 172. (1891). 3 Buffum v. Bowditch Mut. Fire Ins. 5 Allen v. Charlestown Mut. Fire Co., 10 Cush. 540. Ins. Co., 5 Gray, 384. §137 Fraud: False Sweaking. 143 This clause, however, does not require him, unless particu- larly interrogated on the subject, to state the circumstances which relate to the value or permanency of his interest. For example, if the character of his title is a fee simple and the property is consequently described as his, he need not state that he is only a part owner ; J or that there are mortgages or other incumbrances outstanding upon his property; 2 or that he has made an agreement to part with the title in the future ; 3 or that his property has been seized on execution but not yet sold. 4 Any obligation which may rest upon him to make such disclosures does not come by virtue of this particular clause. The word " interest"" has been appropriately ased in the standard form in place of the words " title or possession," for the reason that there are some insurable rights, like that of mortgagee or surety or stockholder, to which the attributes of .title and possession are not necessarily incident. But it is apprehended that the substitution of this broad word does not impose an obligation upon the insured to make any fuller or other disclosure in respect to his title or possession than is required by the other form of words, although the ruling in the following cases might lead to a different conclusion. 5 If the policy is made payable to one " as his interest may appear," the interest need not be stated. The written words overrule the requirement of the printed form. This clause does not appear in the Massachusetts form. § 137. In Case of Any Fraud or False Swearing. —This provision is perhaps only the express declaration of a doctrine understood to be applicable to insurance contracts. But it makes clear the extension of the rule in full force to intentional misstatements made after the loss, as well as those ' Peck v. New Lond. Co. Mut. Ins. 8 Davis v. Quincy Mut. Fire Ins. Co., Co., 22 Conn. 575. Turner v. Bur- 10 Allen, 113. rows, 5 Wend. 541. 4 Strong v. Manufrs Ins. Co., 10 ■' Dolliver v. St. Joseph F. & M. Pick. 40 ; s. c, Am. Dec. 507. Ins. Co., 128 Mass. 315 ; s. c, 35 * Edmunds v. Mut. Safety Fire Ins. Am. Rep. 378. Judge v. Conn. Fire Co., 1 Allen, 311. Abbott v. Hampden Ins. Co., 132 Mass. 521. Carson Mut. Fire Ins. Co., 30 Me. 414. Lee v. Jersey City Fire Ins. Co., 43 v. Agricultural Ins. Co., 79 Iowa, 379. N. J. L. 300 ; s. c, 39 Am. Rep. ° Dakin v. Liverpool, L. & G. Ins. 584. Co., 77 N. Y., 600. 144 Insurance : Fire, Life, Marine. § 137 made to induce the insurers to accept the risk. In fact, it is by the statements contained in the proofs of loss that the insured, if unscrupulous, is most tempted to deviate from strict honesty in order to swell the amount of his recovery. False swearing in the proofs of loss, to vitiate the policy, niust be intentionally false, whether by a fraudulent overvalu- ation of the goods destroyed, or a statement of items which really have no existence, or by an undervaluation of what is saved, or in any other particulars. 1 An innocent mistake, 8 or an innocent though exaggerated estimate of value, will not avoid the policy. 3 The overvaluation, in order to work a for- feiture, must be so plain that it cannot be accounted for upon the principle that every man is naturally prone to put a favor- able estimate upon the valhe of his own propert}'. 4 The question of fraud or false swearing is generally for the jury, and the company does not receive much consideration at their hands unless a clear case of dishonesty is established. But if it appears by the plaintiff's own showing 5 that his state- ment of value was knowingly and intentionally exaggerated, a forfeiture ought to be found by the court. 6 Where the discrepancy between the representation of the insured and the finding of the fact by the jury is very great, a limit will be reached where the court will intervene and decide as matter of law that the amount of the error is consistent only with bad faith. To illustrate, where a house was valued at $1,400, and the evidence showed its value to be about $1,000, it was held that this difference did not establish as matter of law that there had been a breach of warranty against overvaluation. 7 1 Chapman v. Pole, 22 L. T. N. S. Am. Eep. 625. Susquehanna Mut. 307. Claflin v. Commonwealth Ins. Fire Ins. Co. v. Staats, 103 Penn. St. Co., 110 TJ. S. 81. Sternf eld v. Park 529. Towne v. Springfield Fire, &c., Fire Ins. Co., 50 Hun, 262. Mullin v. Ins. Co., 145 Mass. 582. Vt. Mut. Fire Ins. Co., 58 Vt. 113. 4 Sturm v. Atlantic Mut. Ins. Co., Watertown Fire Ins. Co. v. Grehan, 63 X. Y. 77. Franklin Fire Ins. Co. 74 Ala. 642. Titus v. Glens Falls Ins. v. Vaughan, 92 U. S. 516. Co., 81 N. Y. 410. 6 Carson v. Jersey City Fire Ins. Co., s Thierolf v. Universal Fire Ins. 14Vroom. 300 ; s. c, HQ Am. Eep. 584. Co., 110 Penn. St. 37. • American Ins. Co. v. Gilbert, 27 3 Maher v. Hibernia Ins Co., 67 N. Mich. 429. Y. 283. Jersey City Ins. Co. v. 7 Smith v. Home Ins. Co., 47 Hun, Nichol, 35 N. J. Eq. 291; s. c, 40 30. § 137 Fraud : False Swearing. 145 •Putting the value of $2,000 upon goods worth $1,200 was held not to prove a fraudulent intent. 1 Also, where a value of $5,000 was given to property worth $2,000, a finding of no fraudulent intent was not set aside. But there was also a find- ing that the actual value of the property destroyed exceeded the amount of insurance. 2 But in another case a rule nisi for a new trial was made absolute where the claim sworn to was £1,085, and the amount found by the jury was only £500, the court concluding that this finding of fact ought to be considered in effect a verdict for the defendant. 8 And where the proofs made the loss three times as large as the amount found by the 'jury, and no reason being disclosed for supposing that the misstatement arose inadvertently, the court was of opinion that fraud was shown as matter of law and that the policy should be held forfeited, notwithstanding the jury's verdict for the plaintiff. 4 It will be observed that in the matter of innocent misrepre- sentations of fact a clear distinction is made between those antecedent statements which, if material, form the inducement for the contract, and, whether material or not, are generally incorporated in the contract as warranties, and those state- ments, on the other hand, which are made after the loss, in an attempt to give to the insurers such information as may be available respecting the origin, character, and extent of the loss already accrued. But statements intentionally false in the proofs of loss amount to perjury. 5 The corresponding clause in the Massachusetts standard policy is as follows : " This policy shall be void if any material fact or circumstance stated in writing has not been fairly rep- resented by the insured." This does not refer to statements in the proofs of loss, but only to the inducing representations upon which the contract is based, and the wording of the clause makes the question of fairness one for the jury. The Mas- sachusetts statute is also pertinent upon this point. 1 Behrens v. Germania Fire Ins. Co., * Stemfeld v. Park Fire Ins. Co., 50 64 Iowa. 19. Hun, 262. * Dogge v. Northwestern Nat. Ins. " Avery v: Ward, 150 Mass. 160 Co., 49 Wis. 501. (1889). 3 Levy v. Baillie, 7 Bing. 349. 6 Wainer v. Milford Mut. Fire Ins. Co., U3 Mass. 335 (1891). 10 CHAPTER XII. STANDARD FIRE POLICY — CONTINUED. § 138. Other Insurance. — If the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy without agreement indorsed or added thereon. Other or double insurance exists where there- are two or more policies on the same interest and subject, and against the same risk. Insurers need to know the amount of other insur- ance to enable them to calculate their share of the loss under the ^t-0 rata clause, and they also generally desire a disclosure on this same point in advance to enable them to determine whether they will accept the risk or not ; because a substantial over-insurance of the property might offer a temptation to the insured either to bring about the fire or to be careless in preventing it. The requirement of the contract is quite reasonable and must be complied with. 1 ' It must be noticed that insurances of different interests, as for example the policy of a mortgagor and another policy by a mortgagee, are not within the operation of this clause, because they do not constitute double insurance. So also the interests of different mortgagees are distinct, 8 and the different interests of joint-owners ; s but where warehousemen, common carriers, or bailees generally, and agents, trustees, or co-partners, take out insurance for the benefit of the owners or others interested, and the owners or other parties in interest take out insurance for themselves upon the same subject and against the same 1 Sanders v. Cooper, llo N. Y. 279. 2 Fox v. Phenix Fire Ins. Co., 53 Landers v. Watertown Fire Ins. Co., Me. 333. 86 N. Y. 414; s. c, 40 Am. Bep. 554. 3 Woodbury Sav. Bank v. Charter Liverpool, L. & G. Ins. Co. v. Verdier, Oak F. & M. Ins. Co., ■ 81 Conn. 35 Mich. o95. 518. § 138 Otheb Insurance. 147 risk, this constitutes double insurance. 1 Such, other insurance for another person would not avoid the owner's policy, unless it appeared that it was taken out by his authority or consent : otherwise it really would not constitute a contract, because the element of mutual assent would be wanting, and the courts are very reluctant to vitiate a policy unless the intent on the part of the insured to procure double insurance is established ; for if the insured is not aware of the existence of other insur- ance, one of the reasons for inserting this clause of the policy is wanting. No temptation to commit arson could be inferred from a fact of which the insured is ignorant. 2 In one case it was held that where the consignor effected an insurance with the warranty "no other insurance," and unknown to him the consignees also insured the same goods, the first policy was not avoided. 3 But the warranty in the policy being absolute, principle would seem to require, that, if the double insurance really exists by legal authority of the insured, the policy in suit must be held avoided, whether the existence of the double insurance was known to the insured or not. 4 Policies in which the clause against other insurance does not contain the additional words " valid or invalid " have given rise to much difficulty in cases where two or more policies con- stituting double insurance contain the same provision. Shall , both policies be avoided, or only one, and if only one, which one ? There is in each a condition by which the policy con- taining it ought to be avoided, and yet the moment that either policy is held void, the reason for vitiating the other has ceased to exist. And substantially the same difficulty arises where the other insurance is in fact voidable at the option of the insurers upon some other ground of forfeiture which renders the policy invalid. The opinions of the courts upon these questions are varied 1 Home Ins. Co. v. Bait. Warehouse 3 Williams v. Crescent Mut. Ins. Co., Co., 93 U. S. 527. Sturm v. Atlantic 15 La. Ann. 652. Mut. Ins. Co., 63 N. Y. 77. Mussey * Phoenix Ins. Co. v. Copeland, 86 v. Atlas Mut. Ins. Co., 4 Kern. 79. Ala. 551. Van Alstyne v. ^Etna 2 London & L. Fire Ins. Co. v. Turn- Ins. Co., 14 Hun, 360. London & bull, 86 Ky. 230. Doran v. Franklin L. Fire Ins. Co. v. Turnbull, 86 Ky. Fire Ins. Co., 86 N. Y. 635. 230. 148 Insurance : Fire, Life, Marine. § 138 and irreconcilable. A full presentation of the subject may be found in the last edition of May on Insurance, chapter 18. 1 Much of this difficulty would seem to be removed by the insertion, as in the standard form, of the words " valid or invalid," to which force must be given; and when the policy in suit contains them, it should be held vitiated by other insur- ance, whether void or voidable. 8 If, however, a case should arise where the other policy is upon its face absolutely null and void, so as to be no policy at all, but a piece of waste paper, or where the policy, though still existing as a document, has been canceled, or where it has been irrevocably avoided at the election of the insurer issuing it, then, in either case, the conclusion seems to follow that there is within the meaning of this clause no other or double insur- ance. 3 The case of Stevens v. Citizens Ins. Co., 69 Iowa, 658, is thus referred to at page 807 of May on Insurance : " It has been held that the clause against other insurance, valid or not, is not violated by a prior policy which had become absolutely void by its terms. It is difficult to see why the words ' valid or not' do not in all common sense cover a void policy." This criticism of the Iowa case by the learned editor of May would be just, if the case had been decided on the ground men- tioned by the reporter in the head note. But the reported facts in evidence disclose the important consideration, that, before the policy in suit had been taken out, the property had been removed from the locality in which it was situated when insured by the other policy ; and the court was of opinion that this removal without the requisite consent of the insurer took the property altogether out of the operation of the first policy, so that when the second policy was issued there was no double insurance existing upon the property in question. It is clear that, in the absence of the words " valid or in- 1 Hubbard v. Hartford Fire Ins. Co., 'Phoenix Ins. Co. v. Copeland, 90 33 Iowa, 325 ; s. c, 11 Am. R. 125. Ala. 386. Phenix Ins. Co. v. Lamar, Thomas .v. Builders Mat. F. Ins. 106 Ind. 513. Allen v, Merchants Co., 119 Mass. 121 ; s. c, 20 Am. R. Mut. Co., 30 La. Ann. 1386; s. c. 31 317. Fireman's Ins. Co. v. Holt, 35 Am. Kep. 243. Ohio St., li>9 ; s. c, 35 Am. R. 601. 8 Phenix Ins. Co. v. LamaT, 106 Lackey v. Ga. Home Ins. Co., 42 Ga. Ind. 513. Am. Ins. Co. v. Replogle, 456. 114 Ind. 6. § 140 Factories. 149 valid,'' the prohibition of this clause would extend only to valid other insurance. The corresponding provision of the Massachusetts policy is as follows : " This policy shall be void if the insured now has or shall hereafter make any other insurance on the said property with- out the assent in writing," etc. § 139. Factories. — Or if the subject of, insurance be a manufacturing establishment, and it be operated in whole or in part at night later than ten o'clock, or if it cease to be operated for more than ten consecutive days. Exactly what constitutes an operating of a factory may not be very easy to define ; but, in general, the evident meaning of the clause is that the active working of the business of the factory must be suspended, to constitute a cessation. Such continuation of the furnace fires, or even of the running of machinery, as could not from the nature of the business be temporarily suspended, is not to be considered prohibited. The mere running of the main shaft at night without any further operation has been held permissible. 1 Running the factory at night after the limit named in the policy avoids it. 2 Stopping work without permission even for repairs falls within the prohibition of this clause. 3 The Massachusetts policy contains a similar clause, naming nine o'clock p. m. instead of ten o'clock, and thirty days as the limit for cessation of operations. § 140. Watchman. — It is sometimes provided that a watchman shall be kept. What is a reasonable compliance with such a provision must often be a question for the jury. "Where the clause of the policy required that a watchman must be kept day and night, it was held in a very recent case that the policy was voided because only one watchman was kept in the building. The court concluded that the intent. of the » Whitehead v. Price, 2 Cr. M. & R. 3 Day v. Mill Owners Mut. F. Ins. 447 ; s. c, 5 Tyrwh. 825. Co., 70 Iowa, 710. 8 Keardon v. Faneuil Hall Ins. Co., 135 Mass. 131. 150 Insurance : Fire, Life, Marine. § 141 instrument was that a watchman must be awake, and if there was only one watchman, there would be some portion of the time, presumably, when he would be asleep. 1 The warranty to keep a watchman must be observed. 2 § 141. Increase of Hisk,— Or if the hazard be increased by any means within the control or knowledge of the insured. So far as the conduct of the insured himself is concerned, an obligation is said to rest upon him by general principles of insurance law not to enhance the risk. 8 This important clause of the policy must receive a reason- able construction. The hazard is of necessity a variable quan- tity. It constantly changes from day to day, though perhaps imperceptibly, from the operation of the laws of nature and various circumstances beyond the control of the insured. Such influences, and also the acts of persons other than the insured upon or in respect to property other than the insured property, are in general, unless unusual or extraordinary, to be considered as a necessary part of the risk which the insurer has under- taken to sustain. It is not to be supposed that the insured has guaranteed that no improvements or changes shall be made anywhere in the vicinity of the insured property, but it is reasonable to exact an obligation from the insured that he shall not allow himself, or permit others' in control of the in- sured property with his consent, to change its nature or its use in such a way as to make the risk of the insurers materially different from that which they agreed to undertake. Trivial variations in the risk necessarily incident to the use of the insured property are presupposed by the contracting parties to be likely to occur ; other changes are not. This clause binds the assured to make no alteration or change in the structure or use of the property which will sub- stantially increase the risk, and it prohibits him from introduc- ing any practice, custom, or mode of conducting his business which would have the same effect, and also from discontinuing any precaution already used or represented in his application 1 Rankin v. Amazon Ins. Co., 89 ' Hoffecker v. Newcastle Co. Mut. Cal. 210 (1891). Ins. Co., 5 Houst. (Del.), 101. ■ Bank of Ballston Spa v. Ins. Co., 50 N. T. 45. § 141 Increase of Risk. 151 to have been adopted and practiced with a view to diminish risk. 1 Erection of new buildings upon the property insured or ad- jacent thereto, or any change in the structure of the buildings which makes them more inflammable, or the introduction of new and more hazardous employments or machinery, are likely to avoid the policy unless a disclosure is made to the company, and its consent obtained by written permit. 3 The introduction of electric lighting should be disclosed to the company, but the making of ordinary and necessary repairs does hot fall within the prohibition of this clause. 3 Whether the change Amounts to a material alteration in the risk must generally be a question for the jury. 4 In Iowa it has been held that giving a chattel mortgage amounted to an increase of risk as matter of law; 5 but this decision is very questionable, and in general the creation of encumbrances, whether voluntary as in the case of mortgages, or involuntary as in the case of tax liens, is not to be consid- ered as increasing the risk within the meaning of this clause, although they might result in increasing the inducement to the insured to destroy his property. 6 It must be noticed that the requirements of this clause impose upon the insured an obligation which in terms might seem to cover all material changes in the surrounding or adjoining premises ; but inasmuch as nothing is specifically said about the adjoining premises, and the word " knowledge " is connected with the word "control," it is doubtful how far the courts would hold the insured responsible for not disclosing changes made by others upon adjacent premises. The only 1 Houghton v. Manufrs. Mut. P. Ins. Co., 18 N. Y. 108. Lyman v. State Co., 8 Met. 114 ; s.c, 41 Am. Dec. 489. Mut. Fire Ins. Co., 14 Allen, 329. Diehl v. Adams Co. Mut. Ins. Co., 4 Shepherd v. Union Mut. Fire Ins. 58 Penn. St. 443 ; s.c, 98 Am. Dec. Co., 38 >T. H. 23.'. Ritter v. Sun Mut. 302. Ins. Co., 40 Mo. 40. Insurance Co. v. ° Murdock v. Chenango Co. Mut. McDowell. 50 111. 120 ; s.c, 99 Am. Ins. Co., 2 Comst. 210. Long v. Dec. 503. Schmidt v. Peoria M. & F. Beeber, 106 Penn. St. 466 ; s.c, 51 Ins. Co., 41 111. 295. Am. Rep. 532. Williams v. People's " Lee v. Agricultural Ins. Co., 79 P. Ins. Co., 57 N. Y. 274. Cole v. Iowa, 379. Germania Fire Ins. Co., 99 N. Y. 36. 6 Judge v. Conn. Fire Ins. Co., 133 Stokes v. Cox, 1 H. & N. 320. Mass. 521. Hosford v. Germania Fire 3 Townsend v. Northwestern Ins. I»s. Co., 127 U. S. 399. 152 Insurance : Fire, Life, Marine. § 142 safe plan, however, is to bring to the attention of the insurers any alterations in the situation which might affect their esti- mate of the risk. Sometimes policies contain an express pro- vision in regard to an increase of risk by adjacent buildings or in the use of surrounding premises. It has been held that in such a case no obligation is imposed upon the insured to dis- close changes of risk unless they are known by him to increase the risk. 1 Of course, after receiving notice of the change of circum- stances, it is optional with the company, under the cancellation clause, to terminate the insurance or not, and after exercising an election the insurer will be bound thereby. "Where the warranty against increase of risk without permis- sion is absolute, the insured is responsible for alterations made by his tenant on the insured property, though without his knowledge or consent. 2 If the change of risk is such as to fall within the ban of this provision of the contract, the question is quite immaterial whether or not it was the cause of the loss ; for the risk has become other than that which was contracted for, and the con- tract is void at the option of the insurers. 3 According to the weight of authority and reason, then, a temporary increase of risk vitiates the policy and does not simply suspend its operation; 4 but a contrary rule has been adopted in Illinois. 5 The clause in the Massachusetts policy is substantially the same. § 142. Mechanics. — Or mechanics more than fifteen days at any one time. The limit of time which has wisely been inserted in this clause tends to make it much more free from ambiguity, and if the insured allows any building or repairing operations to go on 1 Rife v. Lebanon Mut. Ins. Co., 115 ' Kyte v. Commercial Union Assur. Pa. St. 531. Co., 149 Mass. 116. Jennings v. 8 Long v. Beeber, 106 Penn. St. 466. Chenango Co. Mut. Ins. Co., 8 Den. Liverpool & L. Ins. Co. v. Gunther, 75. 116 U. S. 113. 6 North British & Mercantile Ins. 3 Daniels v. Equitable Fire Ins. Co., Co. v. Steiger, 13 III. App. 482. 48 Conn. 105. < § 143 Unconditional and Sole Ownership. 153 for more than the required time, without a permit, he will of course vitiate his policy. 1 In the Massachusetts policy this subject is not specifically * covered, but repairs fall within the operation of the general clause in regard to an alteration in the situation or circum- , stances affecting the risk. § 143. Interest of Insured. — Or if interest of the in, sured be other than unconditional and sole ownership. This 'provision is reasonable and valid. 3 If the character of the title of the insured to the property is a fee, but he is only a part owner, the policy, of course, is void unless he discloses the fact. Or if, though invested with the legal title, the equitable estate and the right to the legal estate are in another, the policy is voided unless the fact is stated. 3 A surviving partner is not the sole and unconditional owner of the undivided partnership estate. 4 But as a rule any encumbrances or liens upon the property of the insure:! need not be disclosed under this clause. 5 And a lease from the insured need not be mentioned ; 6 but under a policy which by its terms required that the " true title and interest" of the insured must be stated, it was held that a mortgage must be disclosed. 7 A vendee in possession, with an equitable right to the whole title unencumbered, is considered the unconditional and sole owner, although he may not yet have received his deed. 8 If it is equitably true that the insured is the unconditional and sole owner, the clause will not be held to have been violated. 9 So where two agreed to carry on a cotton plantation, one to furnish stock, money, and supplies, 1 Mack v. Rochester German Ins. Fire Ins. Co., 132 Mass. 531. Clay Co., 106 ST. Y. 560. Fire & M. S. Ins. Co. v. Beck, 43 Md. 2 Barnard v. National Fire Ins. Co., 358. 27 Mo. App. 26. * Ins. Co. v. Haven, 95 U. S. 242. 3 Clay F. & M. Ins. Co. v. Huron ' Bowditch Mutual Fire Ins. Co. v. Sait & L. M. Co., 31 Mich. 346. Winslow, 3 Gray, 415. * Crescent Ins. Co. v. Camp, 64 B Bonham v. Iowa Central Ins. Co., Tex. 521. 25 Iowa, 328. 6 Woodward v. Republic F. Ins. Co., • Lebanon Mut. Ins. Co. v. Erb, 112 32 Hun, 365. Dolliver v. St. Joseph Penn. St. 149. Martin v. State Ins. F. & M. Ins. Co., 128 Mass. 315 ; s.c, Co., 44 N. J. Law, 485; s.c, 43 Am. 35 Am. Rep. 378. Judge v. Conn. it. 397. 154 Insurance : Fiee, Life, Mabine. § 145 the other to furnish the plantation and superintend the business, the former to be indemnified for his advances out of the pro- ceeds of the cotton, and the stock and implements used to be equally divided at the end of the year, it was held, that, the cotton not being worth enough to pay the advances, the partner who had made them was the sole and unconditional owner of the cotton but not of the stock and implements j 1 but one who held only a quit claim deed from a second mortgagee was not unconditional and sole owner ; 2 and a purchaser at a sheriffs sale who has not paid the purchase money, there being an out- standing right to claim the premises, has not such an ownership. 3 A person in possession of property, with a reservation of title in the seller until payment of the notes given for the purchase price, is not sole anil unconditional owner. 4 Where the use of real estate was contributed as a partner's share of the capital, there being no deed directly or in trust, the firm cannot truly describe the property as belonging to them by an entire, unconditional, and sole ownership. 5 This clause is not in the Massachusetts policy. § 144. Leased Ground. — Or if building on ground not owned by the insured in fee simple. If the insured owns only part of the fee, it has been held that the clause would be violated unless as provided an agree- ment giving necessary consent is indorsed upon the policy; 6 or if he has only a life estate ; 7 but if he has the equitable right to a fee simple it has been held that the clause would not be violated, though the special written permission had not been obtained. 8 This clause is not in the Massachusetts policy. § 145. Chattel Mortgage. — Or if personal property be or become encumbered oy a chattel mortgage. 1 Noyes v. Hartford Fire Ins. Co., 6 Citizens' Fire Ins. S. & L. Co. v. 54 N. Y. G68. Doll., 35 Md. 89 ; s.c, 6 Am. Rep. 360. 2 Southwick v. Atlantic F. & M. 6 Scottish Un. & Nat. Ins. Co. v. Ins. Co., 133 Mass. 457. Petty, 21 Fla. 399. 3 Security Ins. Co. v. Bronger, 6 ' Garver v. Hawkcye Ins. Co., 69 Bush. 146. Iowa, 202. 4 Geiss v. Franklin Ins. Co., 123 " Swift v. Vt. Mut. Fire Ins. Co., 18 Ind. 172. Vt. 305. § 1-40 Unconditional and Sole Ownership. 155 Except for this restriction, or some provision of the policy ex- pressly indicating that incumbrances must be disclosed, it would not be necessary to state the existence of a chattel mortgage. By the weight of authority it does not constitute a change of interest, title, or possession, or an increase of risk. 1 The dictum to this effect in a recent Iowa case is not to be approved. 2 But the giving of a chattel mortgage has been held to be an " alter- ation of ownership," s and has also been said to be an " alien- ation in part." 4 But this could not be held to be so under the New York standard policy. This provision also is absent from the Massachusetts policy. §146. Foreclosure. — Or if with the knowledge of the insured foreclosure jwoceedings be commenced or notice of sale by virtue of any mortgage or trust deed. If the insured obtains such knowledge, of course, he must in- form the insurers and give them the opportunity of cancelling the policy if they so desire. 5 As the decisions are somewhat conflicting in regard to whether giving a mortgage constitutes a change of interest or an increase of risk, it is important to notice that this clause of the standard policy by implication would seem to indicate that giving a mortgage need not be disclosed to the company by virtue of any requirement in the policy, unless under the mort- gage a default should have occurred on the part of the insured, and foreclosure proceedings begun. 6 There are cases suggesting a contrary rule. 7 This clause is not contained in the Massachusetts form of policy. 1 Wytheville Ins. Co. v. Stultz, 87 ' Conover v. Mutual Ins. Co., 1 Va. 629 (1891). Hennessey v. Manhat- Comst. 29 '. Judge v. Conn. Fire Ins. tan Fire Ins. Co., 28 Hun. 98. Orrell Co., 132 Mass. 521. Bishop ». (lay v. Hampden Fire Ins. Co., 13 Gray, 431. F. & M. Ins. Co., 45 Conn. 430. Shep- 5 Lee v. Agricultural Ins. Co., 79 herd v. Union Mut. F. Ins. Co., 38 Iowa, 379 (1890). N. H. 232. Smith v. Monmouth Mut. ' Edmunds v. Mut. Safety Fire Ins. F. Ins. Co., 50 Me. 96. Byers v. Co., 1 Allen, 311. Farmers Ins. Co., 35 Ohio St. 603 ; 35 4 Abbott ir. Hampden Mut. Fire Ins. Am. Bep. 623. Co., 30 Me. 414. * Western Mass. Ins. Co. v. Biker, * 5 Quinlan v. Providence Washington 10 Mich. 279. McCullooh v. Indiana Ins. Co., 39 N. Y. St. Bep.SJO. Titus Mut. Fire Ins Co., 8 Blackford (Ind.), v. Glens Falls Ins. Co., 81 N. Y. 410. 50. CHAPTEK XIII. STANDARD FIRE POLICY — CONTINUED. § 147. Alienation Clause. — Or if any change other than by the death of an insured take place in the interest, title, or possession of the subject of insurance {except change of occu- pants without increase of hazard), whether by legal process or judgment, or by voluntary act of the insured or otherwise. This clause is perhaps not 'altogether free from ambiguity. It is known as the alienation clause, of which fifty different forms are collected in the last edition of May on Insurance (pp. 552-556), most of which provide for the case of a sale, transfer, conveyance, or alienation of the property under divers forms of prohibitory stipulations. In the earlier policies, like the present Massachusetts standard form, the declaration gen- erally was, that a sale or alienation without written assent should avoid the policy. Under that form of prohibition it was held in many cases that to effect an avoidance*' of the policy there must be a sale or transfer of the entire interest. The New York court said : " So Ions- as the insured re- tains such an interest that he may be a sufferer by the loss, the policy remains valid to protect that interest." * To avoid the effect of such adjudications, which really nulli- fied the clause altogether, some policies were modified so as to prohibit any sale or transfer or change of title or possession, in whole or in part, without written consent. Under such a clause the rule is, that while there cannot be a conveyance of title, or parting with possession in whole or in part, yet an incidental change relating to the title or interest, if it does not alter the character of the interest or ownership of the insured, will not avoid the policy. For instance, giving a real estate 1 Hitchcock v. North-western Ins. Co., 26 N. Y. 68. Locke v. North Am. Ins. Co., 13 Mass. 61. § 147 Alienation. 157 mortgage is not a cause of avoidance under such a form of alienation clause, 1 or giving a chattel mortgage, 2 or placing or incurring other liens upon the property. 3 A contract to sell is not a sale under a clause prohibiting alienation ; 4 and, although the new phraseology of this im- portant clause in the standard policy is unfortunately indefi- nite, the rule understood and acted upon by the companies and the legal profession generally is that a contract to sell unaccompanied by delivery of possession is not " a change of interest." Consequently, until the deed of conveyance passes the legal title, it is not customary to alter the policies of insur- ance in such a case. 5 If the prohibition were simply against a sale, a sale in fore- closure before being consummated by the delivery of the deed would not avoid ; 6 but a transfer or assignment in bankruptcy or insolvency, whether voluntary or involuntary, is a change of interest, and unless consented to by the insurer will vitiate the policy. 7 A deed, though absolute in form, if given only as collateral security, is regarded only as a mortgage under this clause of the policy, and consequently does not avoid it, though given without any written permission of the insurers. 8 But except as the standard policy provides otherwise, the death of the insured would operate as a change of interest. 9 And a devise by will is also a change of interest or title. 10 • 1 Conover v. Mutual Ins. Co., 1 Clinton v. Hope Ins. Co., 45 N. T. Comst. 290. Jackson v. Mass. Mut. 454. F. Ins. Co., 23 Pick. 418; s. e., 34 * Ayres v. Hartford Fire Ins. Co. , 17 Am. Dec. 09. Phillips v. Merrimack Iowa, 176. Hill v. Cumberland Valley Mut. Fire Ins. Co., 10 Cushing, 350. M. P. Co., 59 Pa. St. 474. Washing- Jud^e v. Conn. Fire Ins. Co., 132 ton Ins. Co. v. Kelley, 32 Md. 421. Mass. 521. ° Haight v. Continental Ids. Co., 92 ! Hennessey v. Manhattan Fire Ins. N. Y. 51. Co., 28 Hun, 98. Eice v. Tower, 1 ' Hine v. Woolwortb, 93 N. T. 75. Gray, 426. Birdseye v. City Fire Ins. Co. , 26 Conn. 3 Baley v. Homestead Fire Ins. Co., 1<>5. Young v. Eagle Fire Ins. Co., 80 N. Y. 21 ; 36 Am. Rep. 570. Hos- 14 Gray, 150. ford v. Hartford Fire Ins. Co., 127 8 Barry v. Hamburg- Bremen Fire U. S. 404. Ins. Co., 110 N. T. 1. 4 Browning v. Home Tns. Co., 71 ' Hine v. Woolworth, 93 N. Y. 75. N. Y. 508 ; 27 Am. Kep. 86. Pitney 10 Sherwood v. Agricultural Ins. Co., v. Glens Falls Ins. Co., 65 N. Y. 6. 73 N. Y. 447; s. e„ 29 Am. Rep. 180. 158 Insurance : Fibe, Liee, Marine. § 147 The phrase " change of title " has been many times con- strued, and cannot be held to cover the giving of a mortgage. 1 But in the New York standard policy two very broad words are used in conjunction with each other, "change of interest." It has been said that these words mean " every con- ceivable change of title or interest." 2 And, also, in another case it was said that these words were broader than the phrase " sold or conveyed," and must be held to cover a contract to sell which had been partly performed, though the legal title had not passed from the insured. 3 A somewhat similar distinction was made in several other cases. 4 And a standard author, in construing the meaning of the alienation clause, says : " But it must be remembered that this depends entirely upon the language of the policy. If the policy stipulates against any change of title, or alteration therein, or against an alienation {n whole or in part, a mortgage is held within the prohibition." 5 It will be found, however, upon an examination of the forms of the policies in respect to which the opinions just cited were given, that they contained nothing which by implication indicated that the disclosure of mortgages was not required ; whereas, taking the New York standard policy in its entirety, the rule must be considered clear, that the giving of a mortgage or other incumbrances which are not by terms forbidden, will not avoid the policy though no written consent be indorsed thereon. 6 . To convey the property and take back a mortgage amounts to a sale and a change of interest. 7 This clause must be construed in connection with the char- acter of the property insured, and has no application to a fluctuating stock of goods in a store or factory, which it must be presumed is intended to be sold and replaced from time to 1 Commercial Ins. Co. v. Spank- Abbott v. Hampden Mut. Fire Ins. neble, 52 111. 53 ; 4 Am. Rep. Co.. 30 Maine, 414. 582 - 6 Wood on Fire Ins., 2d ed., p. 719 2 Lappin v. Charter Oak F. & M. (note). Ins. Co , 58 Barb. 325. « Commercial Ins. Co. v. Spankneble, s Germond v. Home Ins. Co., 2 Hun, supra. Judge v. Conn. Ins. Co., 132 *""• Mass. 521. Barry v. Hamburg-Bremen 4 Western Mass. Ins. Co. v. Riker, Fire Ins. Co., 110 N. Y. 1. 10 Mich. 279. Edmunds v. Mutual ' Savage v. Howard Ins. Co., 52 Safety Fire Ins. Co., 1 Allen, 311. N. Y. 502 ; s. c, 11 Am. Rep. 741. § 14:7 Alienation. 159 time, but the policy usually attaches only to such property as is in the designated locality at the time of loss. 1 "Where the insured are joint owners of the property or jointly interested in it, as, for example, in the case of partners or trustees, a transfer from one to another without the intro- duction of any new person has been held to be no violation of the prohibition of the alienation clause which was formerly in use. This conclusion was put upon the ground that the com- pany having exhibited its willingness to grant insurance to those named in the policy, a mere shifting of interest among them would not be objectionable to the company. The reason for this rule would seem'to admit of its application to the case where the parties named in the policy are not joint owners but only jointly insured. 2 Whether, under the alienation clause of the New York standard policy, the permission of this rule is applicable at all, or is confined to a case where joint ownership or joint interest exists, or whether it is applicable as between part owners or tenants in common, who have not, strictly speaking, a joint ownership, is not altogether clear, and especially since the recent case of Walton v. Agricultural Ins. Co., 116 N. Y. 326. In that case the policy was issued to Walton and his wife upon a barn the title to which was in Walton at the time of the issuance of the policy, but which Walton told the soliciting agent of the company he was about to convey to his wife. Subsequently, without the written consent of the company, which the terms of this clause of the policy required, Walton conveyed the title through a third person, as a conduit, to his wife. It was held by the Second Division of the Court of Appeals, four justices to three, that the policy was void, on the ground that there had been a breach of " the warranty against a conveyance of the property without the written consent of the company." It is, perhaps, a misfortune that the majority of the court, in their concise opinion, do not state the grounds 1 Wolfe v. Security Fire Ins. Co., 39 Peek v. New London Co. Mut. Ins. N. Y. 49. Co., 82 Conn. 575. Lockwood v. Mid- 8 Hoffman v. .JStna Fire Ins. Co., dlesex Mut. Assur. Co., 47 Conn. 553. 32 N. T. 405 ; s. c, 88 Am. Dec. 337. Walton v. Agricultural Ins. Co., 116 Powers v. Guardian Fire & Life Ins. N. T. 326. Allemania Fire Ins. Co. Co., 136 Mass. 108; 49 Am. Rep. 20. v. Peck, 133 111. 220. 160 Insurance : Fire, Life, Marine. § 147 of their decision with as great particularity as is exhibited by the dissenting opinion of Mr. Justice Bradley. Whether the court based their conclusion upon the words, " if the interest of the parties therein be changed in any manner," or upon the fact that there was no joint interest between the vendor and the vendee, or upon the fact that an intermediary was called in to effectuate the transfer between husband and wife, is not made clear by the prevailing opinion. The change introduced into this clause by the phraseology of the New York standard policy certainly does not tend to the elucidation of this par- ticular question. A leading author is of the opinion that when the policy provides that any " change of interest " shall void the policy, a sale even by one co-partner or other joint owner to another, will produce a forfeiture. 1 But the ruling was otherwise by the Alabama court. 2 Another court was of opinion that a division on petition for partition, by one co-tenant against another, was a phange in the title, though not strictly an alienation. 3 A careful reading of the New York standard policy in its entirety would seem to indicate that there was no intention of restricting the liability of the insurers by the phraseology adopted for this particular clause of the policy ; and a distinc- tion may be made between those policies in which the words " change of interest " are added to the ordinary alienation clause, for the purpose of enlarging its meaning, and the case of the New York standard policy, in which the one word " inter- est " is used as a brief and appropriate substitute for the longer phrases which had previously been employed. Whatever may be the rule in the case of different part own- ers, who are not joint owners but are insured jointly, there is no doubt, of course, that the introduction of a new in- terest or person without permit voids the policy under this clause. 4 After the loss has occurred, and the risk has terminated, the 1 Wood on Fire Ins., see. 857. 4 Malley v. Atlantic F. & M. Ins. s Burnett v. Eufaula Home Ins. Co., Co., 51 Conn. 223. Savage v. How- 46 Ala. 11 ; 7 Am. Rep. 581. ard Ins. Co., 52 N.' Y. 50g ; s. c, 11 3 Barnes v. Union Mut. Fire Ins. Co., Am. Rep. 741. 51 Maine, 110 ; s. c, 81 Am. Dec. 562. § 148 Assignment of Policy. 161 insured may sell or transfer his interest without the consent of the company. Some policies provide for forfeiture in case the property shall become encumbered in any way without the written con- sent of the insurer. This has been held to be confined to such encumbrances as the insured voluntarily puts upon his property, and not to tax liens or judgments. 1 A mortgage made on the farm exclusive of the house will not avoid the policy, although the description of the policy in terms covers the farm as well as the house. 8 Possession under the alienation clause means, in general, the right to possession, rather than the physical occupancy of the property. The construction of this clause is generally for the court, though if the material facts bearing upon the question of the interest of the insured are in dispute, the difference of fact may of course raise a question for the jury. The Massachusetts policy is simpler. It forbids a sale of the property without written assent of the company. § 148. Assignment of Policy. — Or if this policy he assigned hefore loss. Without express prohibition in the policy, it has been held that a fire policy is not assignable except with the consent of the insurer, for a fire policy is peculiarly a per- sonal contract, and does not run with the title to the prop- erty. 3 In a dissenting opinion in the last case, James, L. J., was of opinion that the contract should be held to run with the title to the land, and inure to the benefit of the owner at the time of loss, whoever he might be. Marine policies at common law were considered assignable without express consent of the insurers, because of custom and commercial convenience, which made it important that cargoes should pass freely from one owner to another without con- 1 Baley v. Homestead Fire Ins. Co , s Phenix Ins. Co. v. Hart, 39 111. 80 N. Y. 21 ; 36 Am. Hep. 570. Hos- App. 509 (1890). ford v. Hartford Fire Ins. Co., 127 8 Lett v. Guardian Fire Ins. Co., U. S. 404 125 N. Y. 82. Rayner v. Preston, 18 ' - Ch. Div. 1. 162 Insurance: Fire, Life, Marine. §148 sultation with distant- insurance companies. 1 But this con- sideration has never been extended to a fire policy. A pledge or deposit of the policy as collateral security is not prohibited by this clause. 2 By the better opinion it is held that an assignee of a policy need have no insurable interest in the subject of insurance if the policy is originally taken out in good faith, and not issued to the original insured as a mere cover to avoid the statute against wagers. 8 But the United States Supreme Court, and some others, have said that the assignee of a policy, as well as the assignor, must have an insurable interest. 4 It is important, however, to notice, that if the policy is a fire policy, and is assigned without a transfer of the interest or property which it covers, the assignee is merely the designated payee, and he would simply have an equitable lien upon the proceeds of the insurance to which the original insured might be entitled. "Where the property or subject of the fire insurance, as well as the policy, are transferred to the assignee with the assent of the company, a new contract is thus formed between the com- pany and the assignee which will not be disturbed by any subsequent breach of condition on the part of the assignor. 5 As to the past, however, the assignee simply steps into the shoes of the assignor. No one except the company can make objection to the assignment from the original insured to the assignee, on the ground that the company's consent was not obtained. 6 After the risk has terminated by fire, the interest of the insured becomes a chose in action, which he has a right to assign, in spite of this clause, without asking permission of the company. 7 Some of the courts have expressed the opinion that the insurers cannot, by their contract, prevent a transfer of this right of action after the loss has occurred. 8 1 Pellas v. Neptune Marine Ins. Co., ' Mellen v. Hamilton Fire Ins. Co., 5 C. P. D. 34. 17 N. Y. 609. Hall v. Dorchester Mut. 2 Griffey v. N. T. Central Ins. Co., Fire Ins. Co., Ill Mass. 53. Imperial 100 N. T. 417 ; s. e., 53 Am. Rep. 202. F. Ins. Co. v. Dunham, 117 Pa. St. 460. 3 Olmsted v. Keyes, 85 N. Y. 593. 8 Goit v. Natl. Protection Ins. Co., 4 VYarnock v. Davis, 104 IT. S. 775. 25 Barb. 189. West Branch Ins. Co. ° Fogg v. Middlesex Mut. Fire Ins. v. Helfenstein, 40 Pa. State, 289 ; s. c, Co.,' 10 Cush. 337. 80 Am. Dec. 573. Carroll v. Charter • Leinkauf v. Caiman, 110 N. Y. 50. Oak Ins. Co., 38 Barb. 402. § 149 Memorandum : Gas, Benzine, etc. 163 The Massachusetts policy forbids an assignment without written assent of the company. § 149. Memorandum Clause.— Or if an illuminat- ing gas or vapor, etc.; or, if there he kept, used, or allowed, benzine, dynamite, etc. These clauses contain memorandum articles, that is, a list of inflammable substances, themselves peculiarly liable to de- struction by fire, or likely to involve a loss so extensive that its results cannot easily be made the subject of calculation. The restrictions are proper and must not be infringed except as provided in the contract by written agreement indorsed upon the policy. 1 Where the memorandum clause does not contain the phrase which here appears, " any usage or custom of trade or of manu- facture to the contrary," it is permissible to the insured to use the articles prohibited by this general printed clause, provided they were such as naturally pertain to the stock of goods or property described in the written part of the policy. And this is put upon the ground that the written words must control the printed form. Custom may be shown to aid in the application of this rule. 2 Thus where a stock of fancy goods was insured with privi- lege to keep fire-crackers on sale, it was held by the New York court that keeping fireworks would not avoid the policy, although by the printed memorandum clause fireworks were prohibited. 8 But the Federal Supreme Court came to the opposite conclusion on the same facts. 4 And where privilege was given to use the property for a printing office, the keeping of camphene was held to appertain naturally to the permitted business, although camphene ap- peared in the printed memorandum of prohibited articles. 5 Similarly in the case of a photographer's stock. 6 1 United Life, Fire & Marine Ins. ' Steinbach v. Lafayette Fire Ins. Co. v. Foote, 22 Ohio State, 340 ; s. Co., 54 N. Y. 90. c, 10 Am. Rep. 735. Bamum v. * Steinbach v. R. F. Ins. Co., 13 Merchants Fire Ins. Co., 97 N. Y. Wall. 183. 188. Williams v. People's Fire Ins. 6 Harper v. N. Y. City Ins. Co., 32 Co., 57 N. Y. 274. H. Y. 444. 8 Carrigan v. Lycoming Fire Ins. • Hall v. Ins. Co. of North Amer., Co., 53 Vt. 418 ; s.c, 38 Am. Hep. 637. 58 N. Y. 292 j s. c, 17 Am. Rep. 255. 164 Insurance : Fire, Life, Marine. § 150 It is permissible to show by parol evidence what articles naturally appertain to the property which is the subject of insurance. 1 In spite of the attempt in the standard form to limit this rule of construction, the rule will still prevail, and the only effect of the clause, " any usage or custom of trade to the con- trary," will be to impose upon the insured the burden of show- ing with perhaps greater clearness that the written description fairly covers the prohibited articles in question. 2 If the insured allows his tenants, or other persons lawfully in possession of the premises insured, to violate the provisions of the memorandum clause, the policy will be avoided. 3 But the requirement of the memorandum clause does not ex- tend to such insignificant quantities of the prohibited articles as one would use for medicine or for cleaning clothes, or for any similar use which must be presumed to be allowed by the con- tract of insurance in view of the character and use of the property. 4 The elaborate classification of risks which was formerly indorsed upon many of the policies has been omitted in the standard form. The memorandum clause of the Massachusetts policy is more liberal to the insured. § 150. Vacancy Clause. — Or if a building, whether in- tended for occupancy by owner or tenant, be or become vacant or unoccupied and so remain for ten days. The addition of a definite length of 'time, " ten days," is an improvement upon the old form. This provision is quite reason- able and must be observed, inasmuch as the insurers have a right to know whether the subject of insurance is receiving ordinary supervision or is being neglected. 5 1 Pindar v. Kings Co. Fire Ins. Co., 'Liverpool & L. Ins. Co. v. Gun- 36 N. Y. 648 ; s. c, 93 Am. Dee. 544. ther, 116 D. S. 113. * Birmingham F. Ins. Co. v. Kroe- * Wood v. North-western Ins. Co., gher, 83 Pa. State, 64 ; s. c, 24 Am. 46 N. Y. 421. Williams v. People's Rep. 147. Whitmarsh v. Charter Oak Fire Ins. Co., 57 N. Y. 274. Carlin V. Ins. Co. , 3 Allen, 581. Cobb v. Ins. v. Western Assur. Co. , 57 Maryland, Co. of North Amer., 11 Kansas, 98. 515 ; s. o„ 40 Am. Rep. 440. Western Assur. Co. v. Rector, 85 Ky. » Hill v. Equitable M. P. Ins. Co., m - 58 N. H. 82. § 150 Vacancy. 165 In brief, the meaning of this clause is that if the property insured is a dwelling-house it must have an occupant living in it. And in the case of other property it must have that kind of care and superintendence which naturally belongs to the character of the occupancy and property described in the policy. 1 Holding the keys of a house is not occupancy, and this is true though some of the furniture remains in the house. 2 The word " unoccupied " has been added to the word " va- cant," to give the restriction a broader effect in favor of the in- surance company. By a technical construction, " vacant " has been held in New York to mean empty of everything but air, and " unoccupied " to mean that no person is in use or posses- sion of the property. 3 Where the building was described as "a store and dwelling," ceasing to use it as a dwelling does not make it unoccupied. 4 As different classes of property naturally require different kinds of occupancy, the question whether the building is occu- pied or not may be a question for the jury. 5 If the property is a factory or mill, it is not necessary that any one should be residing in it at night ; but it must be put to some practical and actual use, and not treated simply as a store- house. 6 Where a trip-hammer shop was not in operation, but a man visited it almost every day to inspect it, it was held that the policy was avoided, and that such visits did not constitute an occupancy.' But where a schoolhouse was left vacant during the time of the ordinary vacations, and the furniture was not removed, it was held that the provisions of the vacancy clause were not violated. 8 ■ Halpin v. Phenix Ins. Co., 118 N. v. Adriatic Fire Ins. Co., 85 N. Y. Y. 172. Poor v. Humboldt Ins. Co., 162. 125 Mass. 274; s. c, 28 Am. Rep. 228. * Burlington Ins. Co. v. Brockway, Rockford Ins. Co. v. Wright, 39 111. 39 111. App. 43 (1890). App. 574 (1890). 6 Rockford Ins. Co. v. Storig, 31 111. 8 Corrigan v. Conn. Fire Ins. Co., App. 486 (1888). 122 Mass. 293. Litch v. North Brit. " Halpin v. Mtna, Fire Ins. Co., 120 & Mer. Ins , 136 Mass. 491. N. T. 70. 3 Hen-man v. Merchants Ins. Co., ' Keith v. QuincyMut. Fire Ins. Co., 44 N. Y. Superior Ct. 444; s. c, 10 Allen, 228. on appeal, 81 N. Y. 184. Herrman " Am. Ins. Co. v. Foster, 92 111. 334; s. c, 34 Am. Rep. 134. 166 Lstsubance : Fiee, Life, Mabine. § 150 In another case, where a saw-mill was insured, the learned judge who pronounced the opinion of the court held that this could not be intended to be occupied like a domicile, and that a vacancy clause must be construed in view of the situation and character of the property insured, and the contingencies affect- ing its use, to which property of like character to that insured and similarly situated is ordinarily subject ; and that interrup- tions of business and discontinuance of active use were in such a case to be anticipated, and would no more avoid the policy than would the omission to use a church building during week days. 1 Where a house is only used for taking meals, and a barn only for storing hay, both are unoccupied. 3 In the case of a saloon, it is enough if a clerk lives in the building and sleeps there. 3 "Where a ten tenement frame block had two of its tene- ments occupied, the court was of the opinion that it was not vacant or unoccupied. 4 But if buildings are separate the con- dition of the policy is to be applied distributively to them, and the occupancy of one of the buildings named in the policy will not excuse a vacancy in the others. 5 Vacancy is not per se an increase of risk, 6 and need not be stated unless the policy requires it, or insurers make inquiry t upon this point. 7 If a violation of this clause occurs, the policy is absolutely voided and not merely suspended ; but, as in all similar cases, it may be revived by the insurers by some act of confirmation after discovery of the forfeiture. 8 Before the time limit was added to this clause considerable uncertainty existed as to the length of disuse which would ■constitute a vacancy, and the conclusion was that a temporary ■ absence from a dwelling-house where the occupants left the 1 Whitney v. Black River Ins. Co., 6 Herrman v. Adriatic Fire Ins. Co., 72 N. Y. 117, by Andrews, J. ; s. c, 28 85 N. T. 163. • Herrman v. Merchants Am. Rep. 116. Lockwood v. Middle- Ins. Co., 81 N. Y. 184. sex Mut. Assur. Co., 47 Conn. 553. • Becker v. Farmers' Mut. Fire Ins. 2 Ashworth v. Builders Ins. Co., 112 Co., 48 Mich. 610. Mass. 422. ' Browning v. Home Ins. Co., 71 N. 8 Stensgaard v. Natl. Fine Ins. Co., Y. 508 ; s. c, 27 Am. Rep. 86. 36 Minn. 181. 8 Moore v. Phenix Ins. Co. , 62 N. H. 4 Harrington v. Fitchburg Mut. Fire 240. Wainer v. Milford Mut. Fire Ins. Co., 124 Mass. 126. Ins. Co., 153 Mass. 335 (1891). § 152 Invasion, Theft, Neglect, etc. 167 furniture and household goods would not avoid the policy or require a written consent. 1 A permit by the company to leave the house vacant for the summer will be liberally construed as meaning the season broadly rather than the summer months. 3 It is not permissible to call experts and ask them whether it increases the risk to leave a house unoccupied; 3 and the unambiguous time limit contained in this clause cannot be dis- turbed by evidence of custom to the contrary in the case of the same or similar property. 4 By the Massachusetts policy a vacancy for thirty days is permitted without the written assent of the company. § 151. Certain Restrictions. — This company shall not be liable for loss caused directly or indirectly by invasion, insur- rection; riot, civil war, etc., or by theft, or by neglect of the insured to use all reasonable means to save the property at and after a fire, or by explosion of any kind, or lightning. Some of these exceptions to the liability of the insurers may not be at all likely to happen, but if they should happen their results might be so disastrous as to remove them from the oper- ation of any rule of average. "Usurped power" means an armed rebellion. Except for the provision relieving the com- pany from liability for loss " by order of any civil authority," the company would be liable if a building near to that insured were blown up by direction of the authorities to stay the spread of fire. 5 Theft and explosion have been previously adverted to in § 128. Whether the insured uses reasonable means to save his prop- erty is a question for the jury. 6 § 152. Falling Building. — Or if a building or any part thereof fall except as the result of fire, etc. 1 Cummins v. Agricultural Ins. Co. * Stone v. Howard Ins. Co. , 153 67 N. Y. 260 ; s. c, 23 Am. Rep. 111. Mass. 475 (1891). JEtna Ins. Co. v. Meyers, 63 Ind. * City Fire Ins. Co. v. Corlies, 21 238. Wend. 367 ; s. c, 34 Am. Dec. 258. 8 Vanderhoef v. Agricultural Ins. Field v. City of Des Moines, 39 Iowa, Co., 46 Hun, 328. 575 ; s. c.,.18 Am. Rep. 46. 8 Luce v. Dorchester Mut. Fire Ins. ° Ellsworth v. JEtna Ins. Co., 89 N. Co., 105 Mass. 297 ; s. c, 7 Am. Rep. Y. 186. Briggs v. North Amer. & M. 528. Ins. Co., 53 N. Y. 446." 168 Insurance: Fibe, Life, Marine. § 153 Without, this restriction the company would be liable for a conflagration caused by a collapse of the building or a part of it, unless before the fire started the building had lost its character as a building and had become a mere congeries of materials. 1 Where seven days" elapsed between the fire and the fall of the building it was held that the loss by the latter was not the proximate result of fire. 2 The Massachusetts standard policy contains no similar pro- vision. § 153. Memorandum Articles.— This company shall not be Uablefor loss to accounts, bills, currency, deeds, etc., or for property held on storage or for repairs, etc. If the property enumerated in this memorandum clause were covered by the policy the insurers would be subjected to claims of uncertain amount and very difficult of verification. " Storage " means keeping for safe custody to be delivered again in the same condition substantially as when received, and as employed in this clause of the policy the prohibition is applicable only when the storing or safe-keeping is of mer- chandise for trading purposes and when the storing is the sole or principal object of the deposit. If the goods are merely kept for consumption or sale, the prohibition of this clause does not apply. For example, wine kept in a cellar either to be sold or consumed is not on storage. 3 And raw material kept in a factory to be manufactured is not stored. 4 So if any material is casually or temporarily left in a room. 5 The Massachusetts policy contains a list of memorandum articles, " bills of exchange, notes, accounts, evidences of prop- erty, plate, money, jewels," etc., but differs widely from the New York clause under consideration. 'Nave v. Home Mut. Ins. Co., 37 S N. T. EqsitaMe Ins. Co. v. Lang- Mo. 430 ; s. e., 90 Am. Dec. 394. Fire- don, 6 Wend. 623. Hynds v. Sche- man'sPund Ins. Co. v. Congregation neetady Co. Mut. Ins. Co., 11 N. Y. Eodeph Sholom, 80 111. X 58. Huck 554. O'Niel v. Buffalo Fire Ins. Co., v. Globe Ins. Co , 127 Mass. 306 ; 3 Comst. 122. s. c, 34 Am. Rep. 37:i. 4 Vogel v. People's Mut. Fire Ins. 8 Gaskarthv. Law Union Ins. Co., 6 Co., 9 Gray, 23. Ins. L. J. 159 (Manchester (Eng.) Civil » Hynds v. Schenectady Co. Mut. Court). - Ins. Co., U N. Y. 554. CHAPTEE XIV. STANDARD FIKE POLICY — CONTINUED. § 154. Survey is a Warranty. — Application; survey, plan, etc., shall be a part of this contract and a warranty. The statements of the application are thus incorporated into the contract, and must be construed as a part of it. 1 A mere reference to the application, however, would not be suffi- cient to make it a part of the contract in such a sense as to incorporate its statements as a warranty. 3 And if there is any phraseology in the policy which gives the court a.n excuse for construing the statements of the application as representations rather than as warranties, it is pretty certain to avail itself of it. 3 A mere expression of opinion will not be construed as a warranty. 4 The phraseology of the application, where it is made a part of the contract, may itself limit the conditions of the policy in favor of the insured. 5 But, as a general rule, as we have already seen, in considering the subject of warranty, all the statements of the application must be literally true, or exactly fulfilled, or the entire contract will be avoided. "Whether the fact stated, or the act stipulated for, is material or not is of no consequence. 6 Any statements in the application, however, which have nothing to do with the subject of the contract, or with the risk, will be held to be immaterial, and will be regarded 1 Cushman v. IT. S. Life Ins. Co., 63 v. New Bng. Mut. Life Ins. Co., 98 N. Y. 404. Phoenix Ins. Co. v. Ben- Mass. 381. ton, 87 Ind. 132. 4 Clapp v. Mass. Benefit Asso., 146 2 Vilas v. N. Y. Cent. Ins. Co., Mass. 519. Wheelton v. Hardisty, 8 72 N. Y. 590 ; s. c, 28 Am. Rep. El. & B. 232. Igfi. 6 Washington Life Ins. Co. v. 3 Houghton v. Manufacturers' Mut. Haney, 10 Kas. 525. Fire Ins. Co., 8 Met. 114 ; s. c, 41 " Bennett v. Agricultural Ins. Co., Am. Dec, 489. Phoenix Life Ins. Co. 50 Conn. 420. Ripley v. iBtnalns. Co., v. Raddin, 120 U. S. 183. Campbell 30 N. Y. 136 ; s. c, 86 Am. Dec. 362. 170 Insurance : Fire, Life, Marine. § 154 as having Been gratuitously volunteered. For an innocent error in making them the policy will not .be avoided. 1 So, also, in the case of a promissory warranty, circumstances may so change that the warranty will be held to be inappli- cable; for example, if a loss occurs before the time for the fulfillment of the warranty has arrived, the loss will, never- theless, be covered by the policy. 2 A warranty of the exist- ence of a force pump on the insured premises, at all times ready for use, implies that there is sufficient power to work the pump. 3 Where the insured, in answer to the question whether his title to the property was absolute, said " his deceased wife held the deed," it was held that there was a breach of war- ranty, because the answer was not full and true ; the fact being that his wife, in whose employ he had been prior to marriage, had executed in his favor, after marriage, an instrument acknowledging an indebtedness, and stating that it should be a lien upon her property. 4 "Where the insured described his building as " two stories high," the main part of the building in fact being two stories, but a small rear addition being only one story, the inaccuracy was held to be no breach of warranty. 5 And where the applicant stated that the building to be insured was detached not less than one hundred feet, and the fact was that there was a barn about sixty feet distant from it, the court held that there was no breach of warranty. 6 A war- ranty that a room is warmed by a stove, and that the pipe is well secured, means that the room is so warmed, and the pipe so secured, when the stove is in use ; but not at other times. 7 Although the courts have been disposed to relieve the insured, as far as possible, from the consequences of a technical viola- tion of Avarranty, the legislatures of some States have also interfered by statute, and have provided that misrepresenta- tions, unless material to the risk, shall not avoid the policy. ' Anderson v. Fitzgerald, 4 H. L. 4 Rohrbach v. Germania Fire Ins. Cas. 484. Hartford Protection Ins. Co., 62 N. Y. 47 ; s. c, 20 Am. Rep. Co. v. Harmer, 2 Ohio St. 452 ; s. c, 451. 59 Am. Dee. 684. * Wilkinsv. Germania Fire Ins. Co., ' Gloucester Mfg. Co. v. Howard 57 Iowa, 529. Fire Ins. Co., 5 Gray, 497; s. c, 66 ° Baldwin v. Citizens' Ins. Co., 60 Am^Dec. 376. Hun, 389 (1891), by Barnard, P. J. les v. N. W. Ins. Co., 2 Curtis ' Loud v. Citizens' Mut. Ins. Co., 2 (Circuit Court), 610.- Gray, 221. §155 Standard Fire Policy: Who ake. Agents. 171 By a Massachusetts law, any provisions of the application, or of by-laws of the company to become part of the contract, must be set forth in the body of the policy. This clause is not in the Massachusetts form of policy. § 155. Who are Agents of the Company. — In any matter relating to this insurance, no person, unless duly author- ised in writing, shall be deemed the agent of this company. This clause has already been discussed in a previous chap- ter, under the subject of waiver and estoppel. The stipulation is not void or against public policy, and force must be given to it. 1 If the company makes it true, they can have the benefit of it. The clause is tantamount to a notice in respect to the method the company adopts to give authority to its agents ; and if not true, or if in fact the agent has an authority broad enough to waive it, the fact may be shown. 2 The true doctrine of waiver and estoppel is expounded in two recent cases in New York. 3 Agency involves a relation existing between the company and the agent, independent of the policy, which is res inter alios acta, and hence the relation may be shown by evidence outside the policy. 4 The editor of the last edition of May says: " It makes no difference that the policy declares the agent to be the agent of the assured, not of the company. For whom a person is acting is a matter of law on the facts of every case. The application precedes the policy ; and to hold that a provision in the after- coming policy, unknown to the assured at the time of applica- tion, could turn the insurance agent into his agent, when he thought all the time he was dealing with him and accepting his advice as agent of the company, would be an outrage." Logically speaking, this stipulation should have been 1 Marvin v. Universal Life Ids. Co., Ins Co., 60 Hnn, 389. Kansal v. 85 N. Y. 278. Minn. Mut. Fire Ins. Assoc., 31 Minn. 1 Insurance Co. v. Norton, 96 U. S. 17; s. a.S^l Am. Rep. 776. Par- 234. tridge v. Commercial Fire Ins. Co., 17 'Wyman v. Phenix Ins. Co., 119 Hnn, 95. Wilkinson v Ins. Co., 13 N. T. 274. Messelbach t. Norman, Wall. 222. Williams v. Hartford 122 N. Y. 578. Ins. Co., 54 Cal. 452 ; s. c, 35 Am. 4 Commercial Ins. Co. v. Ives, 56 Rep. 77. May on Ins. p. 272 (3d ed. HI. 403. Baldwin v. Citizens Fire 1891). 172 Ii^ubance : Fiee, Life, Mabine. § 156 omitted from the conditions of the New York policy, as it is from the Massachusetts standard policy ; but, practically speaking, it is an eminently appropriate provision if it is regarded simply as a notice to the insured that it is unsafe to deal with any pretended representative of the company unless he can show his written credentials. 1 Certain States have legislated upon this subject ; as, for ex- ample, Iowa, the statute of which provides that the soliciting agent shall be held to be the agent of the insurance company, " anything in the application or policy to the contrary notwith- standing." And such statutes are constitutional and control- ling, but perhaps unreasonably interfere with the freedom of the parties to settle the terms of their contracts. 2 § 156. Renewals. — This policy may by a renewal be con- tinued under the original stipulations, etc., provided that any increase of hazard must be mads known, etc. A policy is often renewed by a short form of receipt which obviates the necessity of issuing a new policy. The company may make a valid renewal by parol, 3 even though the policy should stipulate that a renewal must be in writing. 4 The renewal constitutes in effect a new contract based upon the same terms and conditions as the old, but for some pur- poses may be regarded as a continuation of the old. 5 By mutual consent the new contract may be modified in respect to any of its provisions, as where, for example, the com- pany consents to a change of location. 6 If the company, knowing of the change of location without express consent, issues the renewal receipt and receives the 'Allen v. German Am. Ins. Co., 'First Bapt. Church v. Brooklyn 123 N. Y. 6. Ins. Co. v. Norton, 96 Fire Ins. Co., 19 N. Y. K05. U. S. 234. Walsh v. Hartford Fire * Cohen v. Continental Fire Ins. Co., Ins. Co., 73 N. Y. 5. Hill v. Lon- 67 Tex. 325 ; s. c, 60 Am. Rep. 24. don Assur. Corp., 26 bjfjo. N. C. ' Peacock v. New York Life Ins. 203. Co., 20 N. Y. 293. Hay v. Star Fire 2 Continental Life Ins. Co. v. Cham- Ins. Co., 77 N. Y. 235 ; s. c r> 33 Am. berlain. 132 U. S. 304. McConnell v. Rep. 607. Iowa Mut. Aid Assoc., 79 Iowa, 757. " Rathbone v. City Fire Ins. Co., 31 Phil. Fire Assoc, v. New York, 119 Conn. 193. Kunzze v. Amer. Exch. U. S. 110. . Fire Ins. Co., 41 N. Y. 412. § 15T Standard Fiee Policy: Cancellation. 173 premium, this amounts to an implied consent to the change of location. 1 But if the terms of the renewal contract are under negotia- tion and have not been definitely settled, the promise to give a renewal is not yet binding upon the company.'' A parol agreement of or for renewal may be made with the same freedom as a parol agreement for original insurance. This provision is omitted from the Massachusetts policy. § 157. Cancellation. — This policy shall be canceled at any time at the request of the insured or by the company, by giving five days' notice of such cancellation. If this policy shall be canceled as hereinbefore provided, or become void, or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, this com- pany retaining the customary short-irate 'premium, except that when this policy is canceled by this company by giving notice it shall retain only the pro rata premium. There are statutory provisions in New York and elsewhere requiring the companies to cancel on request, and to return the premium less the customary short-rate (see appendix). Such a statute is compulsory upon the company, and when request has been made to it, this of itself terminates the insur- ance without any formal cancellation or physical defacement of the policy ; but the request to terminate the contract of in- surance must be made by the insured or his authorized agent to the insurer, or to one having adequate authority to act in the matter in its behalf ; and the request must be actually received. When the request is sent by mail, until it reaches the insurer or its agent the cancellation is incomplete and the policy remains in force. 3 The demand for cancellation must be unconditional. 4 "Where, as in the Massachusetts standard policy, it is pro- vided that the insurance is terminable by the company on 1 Ludwig v. Jejsey City Ins. Co., s Crown Point Iron Co. v. jEtna Ins. 48 N. T. 379; s. c, 8 Am. Rep. Co., 127 N. T. 608 (1891). 556. 4 Goit v. National Protection Ins. a O'ReiJly v. Corporation of London Co., 85 Barb. 189. Griffey v. N. Y. Assurance, 101 N. Y. 575. Johnson v. Central Ins. Co., 100 N. Y. 417 ; s. c, Conn. Fire Ins. Co., 84 Ky. 470. 53 Am. Rep. 203. 174 Insurance : Fibe, Life, Makine. § 158 giving notice and refunding a ratable proportion of the pre- mium, giving the notice of cancellation is not of itself sufficient, but the policy continues in force until after payment or tender of the return premium. 1 An agent employed merely for the purpose of procuring insurance haf no implied authority to cancel. 2 Notice by the company to a special agent of the insured appointed to procure insurance is not sufficient. 8 But notice given to the general agent of the assured is sufficient. 4 The insertion in the New York policy of the words " by giving five days' notice " is a wise one, and has the advantage of fixing definitely the time at which the policy ceases to be in force after the notice is given, which heretofore has been a vexed question. By the Massachusetts form the company must give a ten days' notice to the insured. § 158. Mortgagee Clause. — If with the consent of this company an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance oilier than the interest of tlw in- sured as. described herein, etc. A form of mortgagee clause is given in the appendix. It is attached to the policy in the form of a rider, and it consti- tutes a new contract between the company and the mortgagee under the terms and conditions of the policy itself as modified by the provisions of the mortgagee clause. 5 "Where without the mortgagee clause the policy is made payable to a mort- gagee, the latter stands in the position of the mortgagor, and can recover only when the latter has incurred no forfeiture. 6 In case of loss insurers cannot compel the mortgagee to ' Van Valkenburgh v. Lenox Fire 4 Stone v. Franklin Fire Ins. Co., Ins. Co., 51 N. Y. 465. Lyman v. 105 N. Y. 543. State Mut. Fire Ins. Co., 14 Allen, 5 Hastings v. Westchester Fire Ins. 329. Co., 73 N. Y. 141. 2 Insurance Cos. y. Raden, 87 Ala. • Hine v. Homestead Fire Ins. Co., 31 1 ; s. c., 13 Am. St. Rep. 36. Young 29 Hun. 84. Harrington v. Fitcbburg v. Newark Fire Ins. Co., 59 Conn. 41 Mut. Fire Ins. Co., 124 Mass. 126. (1890). Grosvenor v. Atlantic Fire Ins. Co., 17 3 Hermann v. Niagara Fire Ins. Co., N. Y. 391. Bates v. Equitable Ins. 100 N. Y.411. Co., 10 Wall. 33. § 158 Mortgagee Clause. 175 i have recourse to any remedy against the mortgagor before calling upon them to pay under the policy. 1 That the prop- erty still held by the mortgagee as collateral security for his debt is ample security furnishes no defense to the insurers. 2 In spite of a mortgagee clause the mortgagor may still avail himself, as between himself and the company, of the re- instatement clause if the company elects to rebuild. 8 Sometimes, instead of taking advantage of the mortgagor's policy and attaching to it a mortgagee clause, the mortgagee effects an independent insurance upon his own interest as mortgagee. If he does this without any agreement between himself and the mortgagor, the latter has no interest in the insurance moneys, and cannot compel the mortgagee to apply them toward payment of the debt. 4 But if the insurance has been procured by the mortgagee on account of the mortgagor, or at his cost, the rule is otherwise. 5 It has been held that the rights of the • mortgagee to the benefits of his insurance become fixed at the time of loss, and that he may recover the insurance though the debt is dimin- ished or paid subsequent to the fire. 6 The English courts are disposed to enforce more strictly the doctrine of indemnity, and allowed an insurance company to recover back the insurance money which had been paid to the vendor of real estate while still the owner of the , building which he had contracted to sell, and before he had received the purchase price. This decision was put upon the ground that the company became subrogated pro tanto to the purchase price of the land, 7 though unpaid at the time of the fire. This case has already been commented upon in the treatment of subrogation. Although the interesting and learned opinions by Justices Brett, Cotton, and Bowen, pronounced in its sup- port, exhibit some vagueness of thought, it would appear to be the doctrine of that case, that, upon paying the loss under the 1 Excelsior Fire Ins. Co. v. Royal * Mclntire v. Plaisted, 68 Me. 363. Ins. Co., 55 N. Y. 343 ; s. c, 14 Am. Foster v. Van Reed, 70 N. Y. 19 ; s. c, Rep. 271. Foster v. Equitable Mut. 26 Am. Rep. 544. F. Ins. Co., 2 Gray. 216. * Waring v. Loder, 53 N. Y. 581. 8 Kernoehan v. N. Y. Bowery Fire e Foster v. Equitable Mut. Fire, 2 Ins. Co.. 17 N. Y. 428. Allen (Mass.), 216. ' Hartmann v. Westchester Fire ' Castellain v. Preston, L. R., 11 Q. Ins. Co., 75 N. Y. 7. B. D. 380. 176 Insurance: Fike, Life, Marine. §158 policy of the vendor, the company took, by subrogation, a vested right in the executory and unperformed contract exist- ing between the vendor and vendee, of the benefit of which it could not be deprived by any action of the parties to that contract. Such a doctrine seems to be unreasonable and incon- venient, and uncalled for by any serious consideration of public policy. The contract of sale was wholly independent of the policy of insurance, and did not affect the company in any way, provided the terms of the policy did not prohibit it. Subrogation could not apply, for the vendee was not a wrong- doer primarily responsible for the loss, nor was his contract made to insure a preservation of .the property. It was a mere incident to the property, the legal title and insurable interest in which still resided in the vendor. Any possible future proceeds from the executory contract of sale, if the parties thereto should ultimately decide to carry it out, could not be brought into an estimate of the amount of loss, for the reason that the measure of damages established by the policy was the cash value of the property destroyed at the time of the fire. It often happens that a fire ultimately turns out to be a source of profit to the insured, but this consideration offers no argument in favor of disturbing an insurance adjustment already settled. The general policy of the courts in passing upon questions of insurance law has been not to allow the .doctrine of indemnity to obtrude itself inconveniently, pro- vided the contract of insurance is free from suspicion of being a wager at the time of its inception. The English court con- ceded that the executory contract of sale furnished no defense to the insurers either in full or pro tanto. In the Massachusetts standard a mortgagee clause is in- serted in the body of the contract. V WVW CHAPTER XV. STANDARD FIEE POLICY CONTINUED. § 159. Removal of Property for Safety If prop- erty covered by this policy is so endangered by fire as to require removal to a place of safety, and is so removed, etc. A wise provision, making more definite an obligation of considerable uncertainty ; for the general principle obtains, that where a removal is reasonably necessary under the cir- cumstances of the case on account of impending clanger by fire, damages resulting from removal are recoverable against the insurer as proximate loss. 1 This provision is not inserted in the Massachusetts form. § 160. Notice and Account of Loss. — If fire occur, the insured shall give immediate notice of any loss thereby, in writing, to this company, protect the property from further damage, forthwith separate, etc. This clause is the result of a careful revision of the pro- visions previously existing in other forms of policies. It is incumbent upon the. insured to pay strict attention to the requirements of the contract in this regard, to limit the loss so far as it lies within his power to do so, to give an opportunity to the company to take such measures with promptness as may seem wise to them to effect the same result, and to furnish them with all reasonable evidence to enable them to determine the nature and extent of their loss. 2 An " immediate " written notice of loss is required ; then afterwards, "forthwith," the damaged and undamaged per- 1 Whiteburst v. FayetteviUe Mut. 71. Balestracci v. Firemen's Ins. Co., Ins. Co., 6 Jones (N. C.) Law, 352. 34 La. Ann. 844. White v. Republic Fire Ins. Co., 57 2 Bumstead v. Dividend Mut. Ins. Me. 91 ; s. c, 2 Am. Rep. 22. Stan- Co., 12 N. Y. 81. ley v. Western Ins Co., L. R., 3 Ex. 12 178 Insurance: Fire, Life, Marine. § 16C sonal propertj'- must be separated and arranged and inven- toried, and within sixty days the verified statement must be famished, giving the required particulars of the property and the loss. The terms "immediate notice" and "forthwith" mean with due diligence under the circumstances of the case, of which the jury will ordinarily be the judge, unless the delay seem to the court so great as to be inexcusable. 1 In one case the court decided that a delay of forty-eight ^ houra in giving the notice of the fire was without excuse, and a non-suit was directed. 2 In another case, where the policy required immediate proof and notice of loss, a delay of thirty- five days in sending an inventory of loss was considered excus- able. 3 But, in another case, a delay of eleven days without sufficient explanation was held to be unreasonable. 4 The policy is, by a previous clause, made payable sixty days after due notice, ascertainment, estimate, and satisfactory proof of the loss have been received. " Satisfactory proof '• means proof which ought to be satisfactory. 6 But it is essential that the proofs should be furnished within the specified time, unless the eompany waives the requirement. 6 A proper mailing of a notice of loss is a sufficient com- pliance with the requirement of the policy, that immediate notice of loss must be given in writing. 7 "Whether the written proofs constitute a compliance with the warranty of the policy, is properly a question for the court. 8 In regard to the essential conditions of the contract of insurance, we have noticed that insanity or other disability furnishes no excuse for a violation, but this rigid rule is relaxed 1 Bennett v. Lycoming Co. Mut. Ins. " Walsh v. Washington M. Ins. Co., Co.,67N. T. 274. Kimball v. Howard 32 ST. Y. 427. London Guarantee & Fire Ins. Co., 8 Gray, 33. People's M. Aec. Co. v. Fearnley, 43 L. T. N. S. Ace. Asso. v. Smith, 126 Pa. St. 317. 390. Kingsley v. New England Mut. Fire ° Underwood v. Farmers Joint Stock Ins. Co., 8 Cush. 393. Bokes v. Am- Co., 57 N. Y. 500. azon Ins. Co., 51 Md. 512 ; s. c, 34 ' Susquehanna Mut. Fire Ins. Co. v. Am. Rep. 323. Tunkhannock Toy Co., 97 Pa. State, 2 Brown v. London Assur. Co., 40 424; s. c, 39 Am. Rep. 816. Badgei Hun, 101. v. Glens Falls Ins. Co., 49 Wis. 3 Knickerbocker Ins. Co. v. McGin- 389. nis, 87 111. 70. » Travellers Ins. Co. v. Sheppard, 4 Trask v. State F. &.M. Ins. Co., 29 85 Ga. 802 (1890). Pa. St. 198; s. c, 72 Am. Dec. 622. § 161 Pboof of Lose. 179 somewhat in respect to the provisions requiring proofs of loss after the risk has terminated ; and insanity has been held to constitute a sufficient excuse for the omission to serve a pre- liminary notice of loss upon the company. 1 Furnishing proofs of loss is a condition precedent, and the loss of the policy is no excuse for not performing it. 2 If the insured is out of the country, and cannot make the required proofs as stipulated by the policy, it has been sug- gested that the court might grant relief, at any rate, to the extent of holding that sufficient proofs by an agent constitute a compliance. 3 If the company entertains any objection to the proofs on account of technical defects, it must make an objection upon that specified ground, or it will be held to have waived them, provided they relate to matters which upon notice could be remedied by the insured ; and a refusal to pay the policty based upon other grounds is held to imply a waiver of the formal and technical defects in the proofs. 4 If demanded, plans and specifications must be furnished. 5 And so also must the required certificate of the nearest magistrate. But the court will not go into a very nice cal- culation to determine whether one magistrate is a little nearer to the place of the fire than another. 6 Upon this subject there has been legislation (see appendix). The requirements of the Massachusetts policy are not so detailed. § 161. Exhibit Remains ; Submit to Examina- tions ; Books of Account,. etc. — The insured, as often as required, shall exhibit to any person designated by this com- 1 Insurance Cos. v. Boykin, 12 Wall. 6 Fawcett v. Liverpool, London & 433. Wheeler v. Conn. Mut. Life Ins. Globe Ins. Co., 27 IT. C. Q. B. 225. Co., 82 N. T. 543 ; s. c, 37 Am. Eep. ° Daniels r. Equitable Fire Ins. Co., 594. 50 Conn. 551. Amer. Cent. Ins. Co. v. 2 Blakeley v. Phoenix Ins. Co., 20 Rothchild, 82 111. 166. Tinley v. Wis. 205 ; s. c, 91 Am. Deo. 388. North Am. Fire Ins. Co., 25 Wend. ' Walsh v. Vt. Mut. Fire Ins. Co., 374. Williams v. Niagara Fire Ins. 54 Vt. 351. Co., 50 Iowa, 561. Dolliver v. St, 4 Priest v. Citizens Mut. Fire Ins. Joseph Fire & Marine Ins. Co., Co., 85 Mass. (3 Allen), 602. Brink v. 128 Mass. 315; s. c, 35 Am. Rep. Hanover Ins. Co., 80 N. Y. 109. , 378. 180 Insubance : Fibe, Life, Marine. § 161 pany all that remains of any property herein described, and submit to examinations under oath, etc., and produce for examination all books of account, etc. These provisions confer great privileges upon the insurers, and ought to be enforced by the latter only within bounds of reason and propriety. They are binding upon the insured so far as it lies within his power to comply with them. 1 Under this clause the courts do not require the production of proofs which cannot be produced because they have been destroyed by the .fire, or for any reason are beyond the control of the insured. 2 And if, by diligent effort, duplicate bills, in- voices, or vouchers cannot be obtained, their production will be excused. 3 But, otherwise, they must be produced. 4 The company seldom requires the insured to submit to a personal examination, except in those cases where fraud is sus- pected.* But in such cases this provision of the policy is some- times of great value to the company, and especially if it is ob- tained before the insured employs legal advice. If the insured gives false testimony in detail upon his examination had under the terms of the policy, it is generally a source of great embar- rassment to him upon the subsequent trial of his law-suit. Upon this preliminary examination the representative of the company finds it particularly desirable to cross-examine the insured in regard to the location of the various pretended items of prop- erty said to be in the building at the time of the fire, and also to compel him to state in detail where and when he purchased them. If the property is fictitious, it is very difficult for him to tell a plausible story, and he soon finds himself obliged to have recourse to the suspicious response, that he cannot remem- ber. If he locates the fictitious property in detail, and does not have a copy of his testimony at the subsequent trial months or perhaps years afterwards, he will be very apt, when in the witness chair, to tell an entirely different story. If he states the times and places of purchases from other • O'Brien v. Comm'l Fire Ins. Co., Council Bluffs Ins. Co., 65 Iowa, 308. 63 N, Y. 108. Titus v. Glens Palls People's Fire Ins. Co. v. Pulver, 127 Ins. Co., 81 N. T. 410. Claflin v. 111. 246. Commonwealth Ins. Co., 110 U. S. 'Miller v. Hartford Fire Ins. Co., 81 - 70 Iowa, 704. * Mech. Fire Ins. Co. v. Nichols, 1 'O'Brien v. Commercial Fire Ins. Harr. (N. J.), 410 ; Bggleston v. Co., 68 N. Y. 108. § 162 Appraisal. 181 merchants, the books of the latter will often furnish a check upon his statements. If the insured absents himself so that he cannot with due diligence be found, this amounts to a refusal to be examined on oath, and after a partial examination, a refusal to continue will have the same effect. 1 But if the company concludes its examination it cannot give a fresh notice, and open up a new hearing. 2 "Whether the conduct of the insured, upon the examina- tion, amounts to a disobedience of the injunction of this clause, may be a question of fact for a jury. 3 The company must demand an" examination within a reasonable time, and must not wait until an action has been brought against it under the policy. 4 In the examination the insured is only bound to answer such questions as have a material bearing upon the insurance and the loss. 5 Logically, the sufficiency of the examination, and the rele- vancy of the questions asked, should be for the court. 6 But, in practice, the courts are very reluctant to dismiss the com- plaint on such grounds, and generally leave the question of reasonable compliance to the jury, provided the insured has submitted to any sort of an examination. The Massachusetts policy contains no such provision. § 162. Appraisal. — In the event of disagreement as to the amount of loss, the same shall, as above provided, he ascertained by two competent and disinterested appraisers, etc. This is called the appraisal or arbitration clause, and is very important to the companies in many instances to relieve them from extravagant or fraudulent claims. Courts are the legally appointed tribunals for determining controversies, and are jealous of interference with their prerog- ' Bonner v. Home Ins. Co., 13 Wis. 4 Aurora Fire Ins. Co. v. Johnson, 677. Harris v. Phoenix Ins. Co., 35 46 Ind. 315. Conn. 310. 5 Titus v. Glens Falls Ins. Co., 81 2 Moore v. Protection Ins. Co., 29 N. Y. 410. Ins. Co. v. Weides, 14 Maine, 97 ; s. c, 48 Am. Dec. 514. Wall. 375. 8 Phillips v. Protection Ins. Co., 14 6 North Am. Life & Ace. Ins. Co. v. Mo. 220. Burroughs, 69 Pa. State, 43 ; s. c, 8 Am. Eep. 212. 182 Insurance : Fiee, Life, Marine. § 162 atives. Any agreement to refer to arbitration the general question of the liability of the insurers under the policy, or all matters of dispute under the policy, is void ; for it is held to be against public policy to oust the courts altogether of their jurisdiction. 1 An arbitration clause providing that there shall be two arbitrators and an umpire, without specifying expressly who shall appoint them, has under a strict construction been held invalid. But the provision of the New York standard policy which simply refers to appraisal the question of the amount of loss, leaving any dispute in regard to the company's liability to be determined by the courts, is valid, and a compliance with it is a prerequisite to any right of recovery in an action upon the policy. 3 By strict construction against the company, it has been held that an arbitration clause somewhat similar to that in the standard policy is only applicable to property partially injured and cannot be held to cover property totally destroyed. 3 Of course the framers of the policj^ did not intend to have such a distinction made. Evidence relating to property totally de- stroyed can be presented to arbitrators as well as to courts ; with the difference, that juries are generally prejudiced in favor of the insured, and arbitrators are likely to be fairly disinterested. If the arbitrators go outside the matters submitted to them for determination, their appraisal will not be binding. 4 If the two appraisers agree, they may act without calling in the umpire. 5 The Massachusetts standard policy has an appraisal clause substantially the same, except that it is silent as to the expenses of the appraisal, and provides that neither party shall be re- 1 Delaware & H. Canal Co. v. Penn. Uhrig v. Williamsburgh City Fire Coal Co., 50 N. T. 260. Reed v. Ins. Co., 101 N. Y. 362. Hamilton Washington Ins. Co., 138 Mass. 575. v. Home Ins. Co., 137 U. S. 370, Clement v. British Am. Assur. Co., 386. Morley v. Ins. Co., 85 Mich. 141 Mass. 293. Hurst v. Litchfield, 210 (1891). 39 N Y. 377. Scott v. Avery, 20 8 Rosenwald v. Phoenix Ins. Co., 50 English Law & Bq. 327; s. c, 5 H. L. Hun, 172. Cases, 811. * Skipper v. Grant, 10 C. B. N. S. 8 Seward v. City of Rochester, 109 237. N. Y. 164. Hamilton v. Liverpool, 6 Enright v. Montauk Fire Ins. Co., L. & G. Ins. Co., 136 U. S. 242. 40 N. Y. State Rep. 642. § 164 Pro Eata Clause. 183 quired to- choose or accept any person as referee who has served as a referee in any like case within four months. § 163. Enforcing Contract is no Waiver.— This company shall not be held to have waived any provision or con- dition of this policy* or any forfeiture thereof by any require- ment, etc., relating to the appraisal or examination ; and the loss shall not become payable until sixty days after the notice of ascertainment, estimate, and satisfactory proofs have been received, including an award by appraisers when appraisal has been required. As has been noticed, the courts in some instances have been disposed to construe as a waiver of a known cause of forfeiture any demand for an appraisal or examination of the assured or the appraisal ;* but this clause of the policy allows the company to pursue the contract methods for ascertaining the character and extent of the loss before .exercising its option to decide whether or not it will contest the claim of the insured. And the provision that the loss is not payable until after the award by the appraisers makes it clear, under the decisions of the courts, that a compliance with the appraisal clause is not simply directory, but is a condition precedent to any right of action under the policy. The Massachusetts standard form does not contain this clause. § 164. Pro Rata Clause : Other Insurance.— Shall not be liable for greater proportion of any loss than the amount hereby insured shall bear to whole insurance, whether valid or not, or by solvent or insolvent insurers / and the extent of the application of the insurance under this policy, or of the contri- bution to be made by this company, may be provided for by agreement attached hereto. This provision relates to double or other insurance which has been already denned, and not to insurances of different interests though upon the same property. 2 1 Morley v. Ins. Co., 85 Mich. 210 55 N. Y. 222; s. c, 14 Am. Rep. 239. (1891). Hamilton v. Home Ins. Co v Acer v. Merchants Ins. Co., 57 Barb. 137 TJ. S 370 (1890). 68. Titus v. Glens Falls Ins. Co., 81 2 McMaster v. Ins. Co. of North Am. , N. Y. 415. 184 Insukance : Fibe, Life, Mabine. § 164 Thus, if a mortgagor insures his interest, and a mortgagee, either by a separate policy or by a mortgagee clause attached to the mortgagor's policy, insures his interest on the same property, there is no double or other insurance. But if the mortgagor's policy is simply made payable to the mortgagee without a mortgagee clause, and the mortgagor should take out another policy upon the same property and against the same risk, it would constitute a case of double insurance. 1 The object of this clause of the policy is to prevent circuity of action. "Without it, in any case of double insurance, as we have seen, the insured might bring his action against any one company for the whole amount of loss up to the extent of the policy, leaving the co-insurers to settle their respective obliga- tions under the equitable doctrine of contribution. But under the limitation of this clause, the insured can sue one company only for its ratable proportion of the loss, and therefore the right of contribution among the co-insurers becomes available to them only in case of over-insurance. If one company pays to the insured either more or less than its proper share, the other companies are still liable to the insured for the amount of their respective obligations as fixed by their own contracts respectively. 2 "When the different policies contain similar terms, and are concurrent, there is little difficulty in dividing the loss propor- tionately among them ; but when the policies cover in part the same, and in part different property, and contain different and inconsistent provisions applicable to the one loss, it may readily be seen that it is simply impossible to adjust the loss in strict conformity to the requirements of their repugnant condi- tions. The problem of adjusting such losses often becomes one of grave perplexity and difficulty, and is not always understood by the judges, who, no matter how learned they may be in the law, are often insufficiently familiar with the business of insur- ance and the science of mathematics to be able to master the situation even to their own satisfaction. The Missouri court, in a case of this character, summed up 1 Hine v. Woolworth, 93 ST. T. 75. 2 Conn. Fire Ins. Co. v. Mer. & Van Alstynev. ^Etnalns. Co., 14 Hun, Mech. Ins. Co., 15 Ins. L. J. .615 (Va. 860. Hastings v. Westchester Fire Ins. Apl. 15, 1886) Co., 73 N. Y. 141. § 164: Pro Eata Clause. 185 the reasons for the conclusion at which it had arrived in an apportionment of loss between insurance companies, in the fol- lowing words : " We are strengthened in this conclusion by the fact that F. L. Eidgely and George K. McGunnegle, who have very great experience in the business of underwriting in St. Louis, having been consulted in reference to this case, concurred in recommending the same adjustment." * A practical insurance man has given a number of rules, more or less inconsistent with one another, which have been prepared by various persons in the trade to aid in arriving at a proper adjustment by contribution. 2 The same writer says : " The contribution clause, like con- tribution under the old form, is held to be operative only between the companies in case of double insurance, and between policies containing it ; and then only when the con- current insurance exceeds the general loss. . . . The lia- bility of co-insuring companies under this clause is based upon the degree of concurrency of the policies, and is restricted to the ratable proportions of the loss, within the amount of the concurrent insurance ; though some of the policies may cover other property in addition to that destroyed, or protect specific items not embraced in any of the others." 3 The questions arising under this clause are so frequently settled by the companies in an amicable adjustment that the scope of this book will not admit of an elaborate discussion of the subject; but certain principles maybe named which the courts have endeavored to apply in the settlement of inconsist- ent provisions contained in the various policies. 1. The different policies are placed as far as possible upon an equality, and special conditions and limitations in one policy are not brought over into another policy. 4 2. The object of the contribution clause is construed to be the restriction of the amount recovered from each insurer to its equitable contributory share, and must not be permitted to operate so as to reduce the aggregate amount of indemnity which the insured might otherwise recover. No arrangement 1 Angelrodt v. Del. Mut. Ins. Co., a Griswold's Fire Underwriters' Text 31 Mo. 598. Book, p. 713. 2 Griswold's Fire Underwriters' Text 4 Howard Ins. Co. v. Scribner, 5 Book, pp. 745 et seq. Hill, 298. 186 Insurance : Fire, Life, Marine. § 164 of the clauses in the policy shall be used to the disadvantage of the insured. He must be paid, and the dispute, if any, settled among the underwriters. 1 Lord Mansfield said : " In no case must the contribution clause be construed in such a manner as to throw loss upon the insured, against which he would have been fully protected had the policies been free from that clause." 8 In an interesting apportionment by the arbitration commit- tee of the New York Board of Fire Underwriters, growing out of a recent fire in the Kossiter stores in New York City, the arbitrators laid down three principles which they considered fundamental. " (1) That the insured shall not suffer by non-concurrence of policies, if the aggregate of the insurance exceeds the loss. (2) That a co-insurance clause serves its purpose if it is a guar- anty that at least the benefits of full insurance are secured. (3) That a floating policy, with condition that it shall not attach until all specific insurance is exhausted, cannot be held by reason of non-concurrence of specific policies, save for the excess of the aggregate amount covered by all such non-concurrent policies." 3 But to constitute double insurance it is not necessary that bhe persons insured under the different policies should be named by the same description. For example, if a warehouseman bakes out insurance upon the goods stored with him as a bailee, not only for his own benefit but on account of whom it may concern, or by any designation for the benefit of others in- terested in the same property, provided such other persons have either given original authority for the procuring of the insurance or have subsequently ratified it, the policy covers their interest as well as the interest of the warehouseman, it being shown that such other persons were within the contem- plation of the parties to the contract at the time when it was ' Lucas v. Jefferson Ins. Co., 6 Cow. Mercantile Ins. Co. v. L., L. & G. Ins. 635. - Co., 5 Ch. Div. 569. 111. Mut. Ins. a Godin v. London Assurance Cs., 1 Co. v. Hoffman, 133 111. 532. Balto. Burr. 489. Fire Ins. Co. v. Loney, 20 Md. 30. 3 Ogden v. East River Ins. Co., 50 Haley v. Dorchester Mut. F. Ins. Co., N. Y. 388; s. c, 10 Am. Rep. 492. 13 Gray, 545. Sloatv. Royal Ins. Co., Lowell Mfg. Co. v. Safeguard Pire Ins. 49 Pa. State, 14; s. c, 88 Am. Dec. Co., 88 N. Y. 591. North British & 477. § 165 Stajstdakd Fire Policy : Keinsukance. 187 made ; and in that case a policy by the owners or the other persons in interest will constitute other or double insurance. 1 § 165. Reinsurance. — Liability for' reinsurance shall be as specifically agreed hereon. When an insurer finds it prudent or convenient to protect himself from loss by reason of any liability he has assumed under a policy, he may contract with another company to re- lieve him from that liability by a policy of reinsurance. Except as to the matter of premium, which may be more or less than that paid on the original policy, the insurer takes upon himself the rights, duties, and obligations of the original insurer. A company sometimes has all its risks reinsured by another company or other companies. A preliminary contract is gen- erally exchanged providing that the policy of insurance shall issue on a certain date, and meanwhile a schedule of the risks is prepared which is to be attached to the policy of reinsur- ance. With the exception of this schedule, which may cover in brief form thousands of policies, the policy of reinsurance is generally like an ordinary policy of insurance. It constitutes a new contract, and is to be governed by the law of the place where it is made ; but it is based upon the representations made at the time of the original insurance. 2 The original insurers are governed by the ordinary rules relating to concealment, and must make a fair disclosure to the reinsurers of material facts concerning the risk. 3 The statute of frauds is not applicable to the contract of reinsurance, nor is it an agreement to answer for the debt of another. 4 The contract of reinsurance is an indemnity against liability for loss, and consequently, as soon as the liability of the first insurer has actually accrued, it may bring suit against the reinsurer before an actual payment of the loss. And so also the reinsurer may be obliged to pay the original insurer the amount of its liability, although the latter may have become 1 Home Ins. Co. v Baltimore Ware- Co., 107 U. S. 485. N. T. Bowery house Co., 93 U. S. 527. Fire Ins. Co. v. N. Y. Fire Ins. Co., * Cohen v. Confl Life Ins. Co., 69 17 Wend. 359. N. T. 300. * Bartlett v. Fireman's Fund Ins. * Sun Mut. Ins. Co. v. Ocean Ins. Co., 77 Iowa, 155. 188 Insurance: Fire, Life, Marine. §165 insolvent, and although it may ultimately be unable to pay its indebtedness to the insured. 1 But if, before having recourse to the reinsurer, the first insurer pays or adjusts its loss, or compromises it so as to fix its amount, this amount will limit its right of recovery against the reinsurer. 2 If the original insurer through mistake pays to the insured a larger amount than it was bound to pay, the liability of the reinsurer will not be thereby increased unless the form of the contract of reinsurance permits it, or unless the amount paid was fixed by a judgment. The original insured cannot bring suit against the reinsurer unless the contract of reinsurance stipulates that he may, for otherwise no privity exists between the original insured and the reinsurer. 3 Any defense which is available to the original insurer may also be raised by the re- insuring company. 4 The provision of the policy in respect to other insurance is held to mean other reinsurance. 5 Sometimes policies of reinsurance cover risks as existing on a certain date, and in other policies the reinsurers are not care- ful to insert such a limitation. The difference between these two forms of contracts may be very important. For under the first form, if the original insurers or their agents change the risk, as frequently happens, by an express or construct- ive consent, for example, to a removal of the property to a new locality, or a change of partners, or an assignment of the policy, the reinsurers will be discharged from liability. Whereas without such limitation the reinsurers would be liable, notwithstanding such waivers or privileges as the orig- inal insurers might see fit to extend to the insured under the policies. 6 The practice is for the original insurer, if sued by the in- 1 Mutual Safety Ins. Co. v. Hone, Protection Ins. Co., 1 Story, 458. 2 Corast. 235. Blaokstone v. Aleman- Eagle Ins. Co. v. Lafayette Ins. Co., 9 nia F. Ins. Co. , 56 N. Y. 104. Gantt Ind. 443. v. Amer. Cent. Ins. Co , 68 Mo. B Mutual Safety Ins. Co. v. Hone, 3 503. Comst. 235. 2 Insurance Co. v. Insurance Co. , 38 * Manufacturers Fire & Marine Ins. Ohio State, 11; s. c, 43 Am. Hep. 413. Co. v. Western Assur. Co., 145 8 Glen v. Hope Mut. Life Ins. Co., Mass. 419. Faneuil Hall Ins. Co. 56 N. Y. 379. v. L., L. & Globe Ins. Co., 153 4 N. Y. State Marine Ins. Co. v. Mass. 63. § 166 . Subrogation. 189 sured, to give the reinsurer an opportunity to come in and de- fend the suit at the expense of the latter. If the reinsuring company declines to do this, it will be liable for the reasonable costs of the suit. 1 The provision of the policy, requiring an appraisal and limiting the time within which a suit may be brought, has been held to have no application to a contract of reinsurance. 2 The Massachusetts policy is silent upon this subject. § 166. Subrogation. — Subrogation of rights to the extent of payment shall be assigned to the company. The common law right of subrogation has been already considered. It grows out of the principle of indemnity, and has an equitable basis in that the negligent person who caused the loss and who is primarily liable ought to be made ultimately responsible for. the damage sustained. 3 The insured in the first instance has his option between two forms of remedy. If he pursues his remedy against the wrong- doer and recovers compensation, the insurance company will escape. But if he chooses first to enforce his claim against the insurance company, the latter is entitled, by way of sub- rogation, to have recourse over against the guilty party for compensation. 4 Consequently, the wise course for the insured to adopt ordi- narily is to recover his insurance moneys in the first instance before instituting any suit against the wrong-doer. Inasmuch as the insurance company is entitled to the right of subrogation, the insured will not be permitted to defeat that right by releasing the wrong-doer or compromising with him to the prejudice of the insurance company without the consent of the latter. 5 The provision of the policy requiring the insured to make a formal assignment pro tanto of any rights that he may have 1 N. Y. State Marine Ins. Co. v. Pro- * Liverpool & G.- W. Steam Co. v. teetion Ins. Co , 1 Story, 4o8. Phenix Ins. Co., 139 TT. S. 397. Insur- 2 Jackson v. St. Paul F. & M. Ins. anee Co. of N. A. v. Fidelity, &c. Co., Co,, 99 N. T. 134. Eagle Ins. Co. v. 123 Pa. State, 533; s. c. 10 Am. St. Lafayette Ins. Co., 9 Ind. 446. Rep. 546. 8 Liverpool & Or. W. Steam Co. v. 6 Conn. Fire Ins. Co. v. Erie Ry. Co., Phenix Ins. Co., 129 D, S. 397. 73 N. Y. 399 ; s. c, 39 Am. Rep. 171. 190 Insurance : Fire, Life, Marine. § 166 against the negligent person or corporation enables the insur- ance company without any question, under the codes of pro- cedure, to institute action against the wrong-doer in their own name. Insurance companies, however, having regard to the prejudice which juries are apt to exhibit towards corporations, sometimes make an arrangement with the insured whereby it is agreed that a suit shall be brought in the name of the insured against the wrong-doer for the whole amount of damage sus- tained, and that the proceeds of the suit and expenses shall be apportioned between the insured and the insurers under some stipulated arrangement. Sometimes the insurance money is paid before the suit, and sometimes not until after its termina- tion. In such a case the insurance company does not take any assignment. It has been held that the wrong-doer who is sued for negligently causing the fire cannot make a defense out of the payment of the insurance money to the insured by the insurance company, because the policy is res inter alios acta. 1 Except as varied by express agreement, the insurer has no rights against the wrong-doer other than those vested in the insured, and the company cannot enforce those until it has admitted its liability under the policy. 2 The insurers can recover only what they have paid under the policy. 8 Sometimes the insurers take an assignment of the whole amount of the claim for damages belonging to the insured, al- though this exceeds the amount paid on the policy. This is not equitable, and no company would be apt to insist upon such a form of assignment if the insured made objection to*"ifc A common carrier may, by agreement with the owners, secure to himself the benefit of any insurance effected by the owner of the goods, and in the absence of fraud such an agree- 1 Conn. Fire Ins. Co. v. Erie By. Co., Weber v. Morris & Essex R. R. Co., 73 N. Y. 399 ; s. c, 29 Am. Rep. 171. 35 N. J. Law, 413 ; s. c. 10 Am. Rep. Monmouth Co. Mut. F. Ins. Co. v. 253. Hutchinson, 21 N. J. Eq. 107. Hard- » Midland Ins. Co. v. Smith, 6 Q. B. ing v. Townshend, 43 Vt. 536 ; s. c, D. 561. Phoanix Ins. Co. v. Erie & W". 5 Am. Rep. 304. Hayward v. Cain, Tr. Co., 117 U. S. 312 ; s. c, 118 U. S. 105 Mass. 213. Montioello v. Molli- 210. son, 17 How. 152. Clark v. Wilson, s Holbrook v. U. S., 21 Ct. of Claims, 103 Mass. 221; 4 Am. Rep. 532. 434. § 167 Proximate Loss : Spread of Fire. 191 merit defeats any right of subrogation which otherwise the in- surers might have. 1 If the bill of lading provides that a common carrier on incurring liability shall have the benefit of the insurance on the goods, the insurer will have no right of suit by way of subro- gation, for the insurer can only take such rights as belong to the insured at the time of loss. 2 An agreement in a bill of lading that the carrier, if he incurs liability by loss or damage to goods, shall have the benefit of any insurance on them is not within the prohibition of a clause in the policy against selling, transferring, or pledging the inter- est of the insured in tha policy. 3 The mortgagee clause gives to the insurer a right of sub- rogation. If the insured has a contract right against his lessee to make good the damage for which he receives payment from the insurers, the latter, according to the English view, will be sub- rogated to that right. 4 The Massachusetts policy contains a subrogation clause. § 167. Proximate Loss : Spread of Fire. — It not infrequently happens that the fire which causes the loss to the property of an insured person is negligently started by a com- mon carrier or other person on premises more or less distant from the property of the insured. The insurers, upon paying the loss, thereupon become subrogated to the rights of the insured against the wrongdoer, under the doctrine which has just been explained. The prosecution of these rights often involves the difficult question, in respect to the spread of the fire, how far the dam- ages caused thereby are to be attributed to the negligence of the wrong-doer as a proximate cause. The proximate cause is the efficient, controlling cause which produces the effect with- out the intervention of any new and extraordinary agency. 1 Mercantile Mut. Ins. Co. v. Calebs, 3 Jackson Co. v. Boylston Mut. Ins. 20 N. Y. 173. Co., 139 Mass. 508 ; s. c, 52 Am. Rep. 5 Piatt v. Richmond T. R. & C. R. 728. R. Co., 108 N. Y. 358. Jackson Co. v. 4 Darrell v. Tibbetts, 5 Q. B. D. Boylston Mut. Ins. Co. , 139 Mass. 508 ; 560. 8. c, 52 Am. Rep. 728. 192 Insukance : Fiee, Life, Marine. § 167 It is to be determined not so much by any relationship of propinquity in time or space, as by the intimacy of connection between the negligent act and the resulting consequences. | Thus, results are proximate, whether to be foreseen or not, , which follow the cause without any unusual disturbance in the ' operation of the laws of nature. If an efficient, adequate cause is found to account for the result, it must be deemed the true cause, unless some other, not incidental to it but indepen- dent of it, is shown to have intervened between it and the result. - It is natural for fire to spread so long as there is anything near at hand to burn, and the dangerous character of this ele- ment presents no excuse for imprudence in its use. Though the number of sufferers from a conflagration may be very many, and the extent of the damage very great, this offers no reason for shifting the burden of loss from those who are guilty to those who are innocent. The extent of proximate loss ought not to be bounded by any limits of ownership, nor confined within any arbitrary walls, unless such boundaries are of such a character that they must be expected to prevent its extension. Whether the extent of the loss, under all the circumstances of the case, is remote or reasonably proximate is ordinarily a question for the jury. 1 In Kyan v. N. Y. Central E. K. Co., 2 it was held that where a house in a populous city takes fire through the negli- gence of the' owner or his servant, and the flames extend to and destroy an adjacent building some one hundred and thirty feet distant, the owner of the first building is not liable to the owner of the second building for the damage sustained thereby. So far as the Ryan case stands for the proposition that where the facts, with respect to the question of proximate cause, are sufficiently plain they present a question of law for the court, its doctrine has been very recently approved by the Court of Appeals. 3 But as an exposition of the law, applicable in general to the question of proximate loss by the spread of fire, it is opposed by the current of judicial opinion, and has been so far 1 Milwaukee, &c, R. R. Co. v. Kel- ! 35 N. Y. 210. logg, 94 U. S. 469. a Read v. Nichols, 118 S. Y. 229. § 168 Limit of Time to Sue. 193 distinguisned by the courts of the same State as to have lost much of its authority. 1 The coui'se of reasoning exhibited in the opinion of the court must have had its origin in a feeling of sympathy in view of the momentous consequences which might be in- volved in the negligent use of fire, rather than in any sense of justice. 2 § 168. Limitation of Time to Sue. — No suit or action shall be sustainable until after full com/plian&^'by the insured with all the foregoing requirements, nor unless, com- menced within twelve months next after the fire. A compliance with all the provisions of the contract is expressly made a condition precedent. "Without this provision, it had been said that the appraisal clause was an independent and collateral agreement, and that suit might be brought by the insured upon the policy without complying with the requirements of the appraisal clause. 3 The limit of one year for bringing suit is valid, and must be observed, and under the wording of this clause the twelve months begin to run from the time of the fire, 4 and not from the time of service of proofs of loss, which, under the former wording of the policy, was held to be the effect of it. 5 A provision limiting the insured to a particular place or forum for his action at law would be invalid. 6 The Federal Supreme Court was of opinion that the inter- vention of war would override this clause of the policy. 7 The Massachusetts clause names as the limit of time for bringing suit two years from the time the loss occurred. Some of the States have passed statutes upon this subject. (See appendix.) ' Webb v. Rome W. & 0. E. R. Co., 4 King v. Watertown Fire Ins. Co., 49 N. Y. 430. Tanner v. N. Y. Cen- 47 Hun, 1. tral Co., 108 N. Y. 623. Hinev. 6 Steen v. Niagara Fire Ins. Co., Cashing, 53 Hun, 519. 89 N. Y. 315; s. c, 43 Am. Rep. 4 -Perley v. Eastern R. R. Co., 98 297. Mass. 418; s. c, 96 Am. Dec. 645. " Nute v. Hamilton Mut. Ins. Co., "Hamilton v. Home Ins. Co., 137 6 Gray, 174. U. S. 370. Reed v. Washington Ins. ' Semmes v. City Fire Ins. Co., 13 Co., 138 Mass. 572. Wall. 158. 13 194 Insurance : Fibe, Life, Marine. § 169 § 169. Mutual Companies. — If this policy be made by a mutual company having special regulations, such regulations shall form apart of the, policy as the same may be written or printed upon, attached or appended hereto. The regulations or by-laws of mutual companies often affect the particulars of the contract. These regulations are binding upon the policy holders, who in mutual companies constitute the members of the company, and some of the courts have held that they were peculiarly and conclusively binding, to such an extent that even the officers of the company would have no authority to waive them where they constitute essential pro- visions of the contract. 1 This direction of the standard policy wisely and equitably provides that such regulations must be disclosed in connection with the contract itself. This clause does not appear in the Massachusetts policy, but the Massachusetts public statutes and the statutes of other States provide that provisions of the by-laws or the application which form a part of the contract must be set forth in the policy. § 170. Last Clause of the Policy— Authority of Agents to Waive. — The importance of this clause to the insurance companies is illustrated by the frivolous and often- times false testimony by which, under the doctrine of waiver and estoppel, the essential conditions of the written policy are subverted. The provisions of the clause are not invalid upon their face or contrary to public policy, and are to be enforced, except as the facts amounting to a waiver of the clause itself, or to an estoppel against the company, are clearly established. 8 But the embarrassing question arises whether a clause which provides for an exclusive method of waiver may itself be waived in some other manner ; in other words, how far the doctrine of waiver and estoppel derives its sanction from a rule of law independent of the contract and superior to it. This question has already been discussed and illustrated by a numerous cita- tion of authorities in Chapters VII. and VIII. 1 Brewer v. Chelsea Mut. Fire Ins. 2 Allen v. German Araer. Ins. Co., Co., 14 Gray, 203. Pitney v. Glens 123 N. Y. C (1890). Messelbach. v. Falls Ins. Co., 65 ST. Y. 21. Norman, 122 N. Y. (578 1890). § 170 Authority of Agents to "Waive. 195 The clause seems to have been framed with reference to the ruling in Walsh v. Hartford Fire Ins. Co., 1 which held that a somewhat similar stipulation in the policy operated to curtail the more ample ostensible authority vested in the agent. But in that case the agent was not an officer, and the clause of that policy did not purport to prevent all possible representatives of the company from granting a waiver, nor was any testimony adduced by the plaintiff showing that the company had allowed its agent to exercise a broader authority than that denned by the policy. This clause of the standard policy is ingeniously worded in an attempt to abolish altogether the doctrine of parol waivers established by law ; and in a recent case, rightly decided upon its facts, the New York Court of Common Pleas apparently were of opinion that this result had been accomplished. 2 Such also appears to be the doctrine of the Massachusetts court. 3 But for the reasons already given it seems to accord better with the current of authority to say broadly that the insurers may, in spite of this contract stipulation, effect an oral waiver through their agent as to this or any other clause of the policy, pro- vided, as a matter of fact, the agent has the requisite authority as defined by the relations existing between the company and himself. The clause in question purports to cover two points which are quite distinct and ought to have been kept distinct : (1) The authority of the agent, which is properly the subject of a notice rather than a stipulation ; and (2) the method of exercising that authority, which it is altogether appropriate to incorporate into the contract as one of its conditions. The prevailing opinion with reference to the first point, as we have seen, appears to be that such notice or stipulation is not binding upon the insured during the preliminary negotia- tions or execution of the application, unless it is inserted in the application itself ; 4 as to the second point, it has repeatedly been 1 73 N. Y. 5. * Kyte v. Commercial Union Assur. 2 Hill v. London Assur. Co., 16 Co., 144 Mass. 46. Daly, 120 ; see also the later well-con- * Kister v. Lebanon Mut. Ins. Co., sidered opinion of Judge McAdam in 128 Pa. St. 553 ; s. c, 15 Am. St. Rep. the same case, in the City Court of 696. New York, 26 Abb. N. C. 203. 196 Insurance : Fiee, Life, Makine. § 170 held that it may be waived by parol by any representative of the company who has in fact sufficient authority. Lately this was decided by the Second Department of the Supreme Court of New York upon a construction of this identical clause. 1 The practical result in New York amounts very much to this, that as to the ordinary commissioned or so-called general agents of fire companies, the policy restriction or stipulation is generally conclusive evidence of their limited powers after it is received, so far as effecting waivers is concerned, inasmuch as in most cases the insured is unable to produce any testimony which will avail to establish a broader authority than that de- fined by the policy. But in the absence of special action by the directors, the officers of the company are held to have the same authority, to control and vary their contracts, which they possessed before a standard form of policy was filed in Albany . by the committee of the New York Board of jFire Under- writers. 2 This clause is omitted from the Massachusetts policy, but it must be remembered that the Massachusetts courts have shown much less indulgence to the insured in the application of the doctrine of waiver and estoppel as regards proceedings whether antecedent or subsequent to the inception of the contract. 3 ' Baldwin v. Citizens Ins. Co., 60 297. Ward v. L. & L. Fire Ins. Co., Hun, 389 (1S91), by Barnard, P. J. 116 N. T. 106. Pechner v. Phenix See also Baumgartel v. Prov. Wash. Ins. Co., 65 N. Y. 207. Ins. Co., 61 Hun, 118 (1891). s Kyte v. Commercial Union Assur. 2 Baldwin v. Citizens Ins. Co., 60 Co. , 144 Mass. 43. Batchelder v. Queen Hun. 3S9. Steen v. Niagara Fire Ins. Ins. Co., 135 Mass. 449. Co., 89 N. Y. 315 ; s. c, 42 Am. Eep. CHAPTER XVI. LIFE INSURANCE POLICY. In life insurance there is no standard form of policy, and the different companies use forms which vary considerably, and which are more or less favorable to the insured, as the case may be. The Equitable of New York has adopted a very short form of policy, which, after providing for the payment of premium, promises to pay the insurance moneys upon satisfactory proof of death, and recites that the application is made a part of the contract. At the foot it gives notice that no person except one of the executive officers is authorized to make, alter, or dis- charge contracts or waive forfeiture, and on the back it con- tains a list of privileges to the insured. A fair and convenient specimen for examination in detail is the policy of the Mutual Benefit Life Insurance Company of New Jersey, the principal clauses of which will require our consideration in this chapter, although it may be premised that the general principles which govern the fire policy are also applicable to the life policy. § 171. The Beneficiary. — Payable to A. B., or to his executors, administrators, or assigns. A policy in this form is the property of the assured, is subject to the claims of his creditors, and upon his death is collectible by his executors or administrators like any other personal assets of his estate, unless he has previously assigned the policy ; 1 but oftentimes the policy is made payable to other beneficiaries, and frequently they are designated by such in- definite terms that it is not easy to determine to whom the description is intended to be applicable. In such a case the > Bishop v. Grand Lodge, 112 N. Y. 627 (1889). 198 Insurance: Fiee, Life, Maeine. §171 words are liberally construed, and parol evidence is freely received to arrive at the real meaning of the insured. 1 In the case last cited in which the policy was made payable to the " legal representatives " of the insured, the court refused to allow the proceeds to fall into the general assets of the estate for the benefit of creditors, and held that the insured intended to designate his wife and children. And in another case it was held that the phrase " lawful heirs " was used in a col- loquial sense and might include the widow. 2 In case of a policy to " my wife Mary and children," a child by a former wife is a beneficiary. 3 To " be paid to his wife M. K. and chil- dren," means to his children by this wife or others, not M. K's children. 4 If the policy is payable to wife and children, they all divide the proceeds equally and not in accordance with the statute of distributions. 5 Children born after the contract are included, unless the children are specifically named. 6 Any one of those named as beneficiaries may assign his expectant inter- est, and the assignee will take the right to which he was en- titled. 7 In order to effectuate the apparent intent of the in- sured, "child" was held to mean an adopted child. 8 "Children" does not mean " grand-children." 9 A designation of bene- ficiaries can be made only in accordance with the charter and by-laws of the company, so far as they may govern the subject. 10 So, also, any change of appointment must conform to the regu- lations of the company ; but here, too, the court will, so far as possible, give effect to the intention of the parties, and will con- sider an attempted change of beneficiary complete without undue regard to technicalities. 11 The change of appointment may be sustained without the issuance of the certificate of in- surance. 13 Although the designation of beneficiary may be ' Griswold v. Sawyer, 135 N". Y. 411. e Martin v. Mtua, Life Ins. Co., 73 2 Hannigan v. Ingraham, 55 Hun, Me. 25, 257. » U. S. Trust Co. v. Mut. Ben. Life "McDennott v. Centennial Mut. Ins. Co., 115 N. Y. 152. Life Asso.,, 24 Mo App. 73. 10 Sanger v. Rothschild, 123 N. T. 4 Koehler v. Centennial Mut. Life 577. Marsh v. Amer. Legion of Ins. Co., 66 Iowa, U25. Honor, 149 Mass. 515. Britton v. • Jaekman v. Nelson, 147 Mass. 300. Royal Arcanum, 46 N. J. Bq. 102. 6 Thomas v. Leake, 67 Texas, 469. » Luhrs v. Luhrs, 123 N. Y. 367. 1 Conn. Mut. Life Ins. Co. v. Bald- I2 Bishop v. Grand Lodge, 112 N. Y. ■win, 15 R. I. 106. 627. § 173 Life Policy : "Warranties. 199 irregular, or may altogether fail, the court will enforce the con- tract if possible and not allow it to fall. 1 Statutory provisions permitting the insured to make a new appointment are not applicable where the interest of the first-named beneficiary has become vested for value paid. 3 § 172. Application Incorporated. — In consideration of the statements in the application made apart of this contract, etc. This form of words incorporates the representations of the application into the contract and makes them express war- ranties. 3 . If the alleged warranty were contained in the application alone, and that were not expressly made a part of the contract, it would simply amount to a representation, inasmuch as the policy would in that case supersede it. § 173. Statements as to Health or Freedom from Disease.— Health is a relative term, for probably no one is altogether free from ailments. To violate a warranty of good health it must appear that the sickness was one having a tendency to shorten life or permanently impair the health ; in fact, that it amounted to a vice in the constitution. 4 In answer to the question, " Have you ever had any diffi- culty with your head or brain?" the applicant said "No;" and the court decided that the question called for a functional or organic derangement, and that periodic headaches though severe did not constitute a ground for forfeiture. 5 Good health is consistent with a touch of dyspepsia 6 and with a mere cold. 7 A congestion or disorder of the liver is not necessarily a disease of the liver within the meaning of the policy ; and in 1 Addison v. New Eng. Comml. N. Y. 292 ; 36 Am. Rep. 617. Ban- Travellers' Assoc, 144 Mass. 591. croft v. Home Ben. Asso., 120 N. Y. 8 Smith v. National Ben. Soc, 123 14. jj y_ gg_ 6 Higbie v. Guardian Mut. Life Ins. 3 Cushman v. U. S. Life Ins. Co., 63 Co., 53 N. Y. 603. N. Y. 404. ' Morrison v. Wis. Odd Fellows Mut. * Peacock v. New York Life Ins. Co., Life Ins. Co., 59 Wis. 162. 20 N. Y. 293. Grattan v. Metropolitan 7 Metrop. Life Ins. Co. v. McTague, Life Ins. Co., 93 N. Y. 274 ; s. c, 80 49 N. J. Law, 587. 200 Insurance : Fire, Life, Marine. § 173 these and similar cases, if the testimony leaves it in doubt whether the disorder is a slight attack or a permanent or serious disease, the question is for the jury. 1 So in a case of pharyngitis, 3 gastritis, 8 bronchitis, 4 Bright's disease, 5 consumption, 6 gout ; T and the jury must determine whether a slight attack of pneumonia or sunstroke is a disease ; 8 but in one case an attack of vertigo was so slight that the court refused to send the issue to the jury. 9 The fact that the applicant was afflicted with dyspepsia six months or more before the application was signed did not make untrue his statement that he was not subject to dyspepsia at the time of the policy. 10 Where the testimony is undisputed that the applicant was affected with a certain disease or disorder — as, for example, rupture or tonsilitis — his statement to the contrary in the appli- cation is a breach of warranty, and it would be error to submit the question to the jury. 11 If the warranty is that the assured has not had spitting of blood, and the testimony shows that this statement is not true, there is no question for the jury. 18 The insured said in her application that she was in sound health. She died of phthisis nine months after the policy was .issued, and was sick three years before her death. Held error in refusing to instruct for the company. 13 The answer " never sick," made by a German unfamiliar with our language, was construed to mean that he had never 1 Cushman v. U. S. Life Ins. Co., 70 Co., v. Trefz, 104 U. S. 197. Moulor N. Y. 72. v. Ins. Co., 101 U. S. 708. Conn. ' Mutual Ben. Life Ins. Go. v. Wise, Mutual Life Ins. Co. v. Union Trust 34 Md. 582. Co., 112 U. S. 250. 3 Price v. Phoenix Mut. Life Ins. Co., "Mutual Benefit Life Ins. Co. v. 17 Minn. 497. Daviess, 87 Ky. 541. * Campbell v. New England Mut. 10 World Mut. Life Ins. Co. v. Life Ins. Co., 98 Mass. 381. Schultz, 73 111. 586. 6 Contl. Life Ins. Co. v. Yung, 113 " (Hutting v. Metropolitan Life, 50 Ind - 15 9- N. J. L. 287. Mtua, Life Ins. Co. v. 8 Vose v. Eagle Life & Health Ins. France, 91 TJ. S. 510. Pratt v. Dwell- Co., 6 Cush. 42. ing House Mut. Ins. Co., 53 Hun, 103. 7 Fowkes v. Manchester & L. Life la Smith v. .Sltna Life Ins. Co., 49 Ins. Co., 3 Fost. & F. 440. ST. Y. 211. " Boos v. World Mutual Life Ins. Co., "Metropolitan Life Ins. Co. v. 64 N. Y.236. Knickerbocker Life Ins. Dempsey, 72 Md. 288. § 175 Life Policy : Warranties. 201 had any of the list of diseases enumerated in the applica- tion. 1 § 174. Statements as to Medical Attendance. — If the applicant names a doctor as his attending physician, this may not avoid the policy although the physician is not the usual medical attendant, for the statement may still be true. 8 And the question as to the truth of the statement in regard to the medical attendant or usual medical attendant or family physician, if the testimony is in doubt, is for the jury. 3 But medical consultation or treatment means for the pur- pose of procuring or furnishing medical aid, and not necessarily for a specific disease ; and giving medicine by a physician to relieve suffering is prescribing medicine within the meaning of an application. 4 And if on the undisputed testimony the answer is untrue, the court must dismiss the complaint. 5 In one case the question was, " Name and residence of fam- ily physician ? " and the answer was, " Refer to Doctor Corn- ing." The proofs showed that Doctor Corning was not the physician of the insured, but the court held that upon this ambiguous form of response it was proper to leave the question of forfeiture to the jury. 6 The insured stated in the application that he had had no medical attendance within the year. A physician testified that he had attended him and prescribed for him within that time in the presence of certain members of the family, who testified that they had no recollection of it. Held, that the question o'f breach was for the jury. 7 § 175. Statements as to Other Insurance. — In- quiry is sometimes made in the application upon this point, and 1 Knickerbocker Life Ins. Co. v. 4 Cobb v. Covenant Mutual Benefit Trefz, 104 U. S. 197. Assn., 153 Mass. 176 (1891). 2 Cushman y. U. S. Life Ins. Co., 70 5 Phillips v. New York Life, 9 N. N. Y. 72. Y. Suppl. 839. 3 Gibson v. Amer. Mut. L. Ins. Co., 6 Higgins v. Phoenix Mut. Life Ins. 37 N. Y. 580. O'Hara v. U. B. Mut. Co., 74 N. Y. 6. AidSoc., 134 Pa. St., 417. Edington 'O'Hara v. United Brethren Mut- v. Mutual Life Ins. Co., 67 N.Y. 185. ual Aid Society, 134 Pa. State, Huckman v. Pernie, 3 M. & W. 505. 417. 202 Insurance : Fire, Life, Marine. § 176 it is a matter of special importance to the company where the character or financial condition of the applicant is suspected. A deceptive or misleading disclosure or concealment upon this subject will be fatal. 1 § 116. Statements as to Age. — The rate of premium being based upon the age of the insured, it is quite mate- rial that the response to this question should be correct. The policy was held void where the applicant erroneously represented his age to be fifty -nine instead of sixty-four. 2 And where the true age was thirty-five and the application represented it to be thirty, it was held to be a material vari- ation. 3 But this requirement, like all others, may be waived, or the company may be estopped from taking advantage of the mis- take. 4 § 11V. Statements as to Family Relationship. — The untrue statement of the applicant that he was a widower was held to be fatal to a recovery under a policy. 5 A breach of the warranty that the insured was a single man, when in reality a married man, forfeited the • policy, al- though the risk was not thereby increased. 6 •But the erroneous statement by the applicant that the person named in the policy as beneficiary was a cousin of the applicant, was considered too trivial to vitiate the con- tract. 7 § 178. Habits. — The statement that the applicant is of temperate habits does not mean that he totally abstains from drinking wines or liquors. 8 1 London Assurance v. Mansel, 11 Co., 107 N. T. 292. O'Brien v. Home L. R., Ch. Div. 363. Clapp v. Mass. Ben. Soc, 117 ST. T. 310. Ben. Assoc, 146 Mass. 519. Edington * United Brethren Mut. Aid Soc. v. v. JEtna Life Ins. Co., 77 N. Y. 564 ; White, 100 Pa. State, 12. . s. c, 100 N. Y. 536. " Jeffries v. Life Ins. Co., 22 Wall. 2 Swett v. Citizens' Mut. Relief So- 47. ciety, 78 Me. 541. ' Britton v. Royal Arcanum, 46 N. 3 -SBtna Life Ins. Co. v. Prance, 91 J. Equity, 102. U. S. 510. 8 Van Valkenburgh v. Amer. Popu- 4 Miller v. Phoenix Mut. Life Ins. lar Life Ins. Co., 70 N. Y. 605. § 180 Life Policy: Waeeanties. 203 A statement of habits is of a fact, and not of an opinion. 1 In any case of doubt, the question of habits must go to the jury. 2 And the United States Supreme Court, with what would seem to be an over-indulgence to the insured, expressed the opinion that a man might have the delirium tremens once, without necessarily violating this warranty. 3 The English court thought this was too liberal. 4 § 179. Statements as to Occupation. — Where the applicant warranted that he was a soda-water maker, and was, in fact, a soda-water seller, it was held to be no breach of warranty. 5 But the statement being a warranty, it must be in effect true, or the policy will be avoided. 6 § 180. Statements or Requirements as to Resi- dence and Travel. — If these are restrictions contained in the policy, they must be complied with ; 7 and if statements in the application, they must be true. The settled limits of the United States, means within the bounds of the Union, and not the portions of the country that are thickly settled. 8 If a permit is given to travel by a particular route or to remain in a hazardous region for a particular time, the limitation must be strictly obeyed. 9 An inability to return will he no ex- cuse. 10 And a subsequent receipt of the money by the company, without knowledge of the forfeiture, will not revive the policy. 11 1 Thomson v. Weems, 9 App. Cas. Co., 80 N. Y. 292 ; s. c, 36 Am. Rep. 686. 617. Kenyon v! Knights Templar & 2 Meacham v. N. Y. State Mut. Ben. M. Mut. Aid Assoc, 122 N. Y. 247. Assoc, 120 N. Y. 237. Pelton v. " D wight v. Germania Life Ins. Co., Wesichester Fire Ins. Co., 77 N. Y. 103 N. Y. 341. 615. .aStna Life Ins. Co. t. Davey, 7 Nightingale v. State Mut. Life Ins. 123 U. S. 739. Northwestern Life Ins. Co., 5 B. I. 88. Co. v. Muskegon Bank, 122 U. S. 501. e Casler v. Conn. Mut. Life Ins. Co., Miller v. Mutual Ben. Ins. Co., 34 22 N. Y. 427. Iowa, 222. ' Hathaway v. Trenton Mut. L. & F. ' Insurance Co. v. Foley, 105 U. S. Ins. Co., 11 Cush. 448. 350. 10 Evans v. U. S. Life Ins. Co., 64 4 Thomson v. Weems, 9 fApp. Cas. N. Y. 304. 686. " Bennecke v. Insurance Co., 105 6 Grattan v. Metropolitan Life Ins. U. S. 355. 204 Insurance : Fiee, Life, Maeine. § 181 But the company or its representative may waive the re- quirements of the policy. 1 Where an English policy required notice to the directors, and written consent to visit a foreign country, it was held that notice under the policy to an agent of the company was suffi- cient, where the agent, for several years afterwards, collected the premiums and remitted them to the company, although he had not express authority to waive the contract conditions. 2 § 181. Statements about Bodily Injuries. — The rule of construction is very similar to that applicable to state- ments concerning health. A temporary or trivial injury, of which no permanent effects remain, is not a serious personal injury, and what is serious under the testimony of most cases would be made a question for the jury. 3 A cut from which a little blood flows, is not a hurt or a wound. 4 And the omission to recollect a temporary injury to an eye, caused by sand which was thrown into it and inflamed it, was not considered necessarily fatal to the policy where the appli- cant had answered in the negative the question whether he had ever had any illness, local disease, or injury in any organ. 5 1 Bevin v. Conn. Mut. Life Ins. Co., * Bancroft v. Home Ben. Assoc, 120 23 Conn. 244. N. T. 14. 2 Wing v. Harvey, 5 DeG. M. & G. ' Fitch v. Amer. Popular Life Ins. 265. Co., 59 N. Y. 557. ' Ins. Co. v. Wilkinson, 13 Wall. 222. CHAPTER XVII. ' LIFE POLICY CONTINUED. § 182. Payment of Premiums.— The policy to cease unless premiums paid, when due, at the home office, and upon production of receipts signed by president or treasurer, and policy not to take effect until first premium actually paid. The payment of the premium is of the essence of the contract, and, in fact, constitutes all that the company receives under the contract, and a failure to pay on or before the days named will avoid the policy unless the company is in some way responsible for the omission, or waives it. 1 Punctuality in payment is essential. 2 So, also, if the premium is paid by a note, and the policy provides for forfeiture upon non-payment of the note, no relief can be granted in case of breach. 3 A local agent has no authority, simply by virtue of his position, to receive anything but cash. 4 But if he is intrusted with the closing of the contract by delivering the policy, accord- ing to the better opinion he has an implied authority to decide how the premium then due may be paid. 5 This authority to waive contract provisions as to the method of paying the first premium does not extend to sub- sequent premiums, except as the plaintiff can show authority in the agent emanating from, the insurers, either express instructions, or a known practice of the agent sanctioned by the company. 6 1 Klein v. Ins. Co., 104 U. S. Y. St. Rep. 573. Aoey v. Fernie, 7 88. M. & W. 151. ! Holly v. Metrop. Life Ins. Co., 105 * Critohett v. Am. Ins. Co., 53 Iowa N. Y. 437. 404; s.c, 36 Am. Rep. 230. Boehen v. 3 Knickerbocker Life Ins. Co. v. Williamsburgh Ins. Co., 35 N. Y. 131. Pendleton, 112 U. S. 696. 6 McAllister v. New Bng. Mut. Life 4 Raub v. N. Y. Life Ins. Co., 14 N. Ins. Co., 101 Mass. 558. 206 Insurance : Fibe, Life, Marine. § 183 The president or secretary of the company, however, may waive a forfeiture for non-payment of premium, or give uredit, although the terms of the policy forbid it. 1 And the plaintiff is at liberty to show, as matter of fact, if he can, that the company has given the agent sufficient authority to waive this or any condition of the contract. 2 If the previous course of dealing between the company and bhe insured warrants it, payment may be by check instead of cash. 3 Where the beneficiaries named in a life policy had no knowledge of the existence of the policy, which had been fraudulently surrendered to the company by the insured before his death, the court decided that there was a valid excuse for bhe non-payment of premiums. 4 But, in general, as we have already seen, sickness, paralysis, or other inability to comply with the terms of the contract Eurnishes no excuse, 5 but the receipt and retention of the pre- mium at the home office constitutes a waiver of any informal- ity in the method of payment, and also of all known breaches of the policy. 6 § 183. Assessments. — In mutual companies the pre- miums are often paid in the form of assessments, and it is sustomary on the happening of the loss to call for an assess- ment with which to meet it. Notice of the time and place of payment is given by the company. 7 The jury determines whether or not the notice has been received. If not received there is no forfeiture, 8 unless the policy provides that sending or mailing of the notice is suffi- jient. 9 1 Dilleber v. Knickerbocker Life s School District v. Daucby, 25 :ns. Co., 76 N. Y. 567. Church v. Conn. 530. liafayette Fire Ins. Co., 66 N. Y. • Rice v. New Eng. Mut. Aid So., !33 - 146 Mass. 348. McGurk v. Met. Life 2 Wyman t. Phoenix Mut. Life Ins. Ins. Co., 56 Conn. 528. "o., 119 N. Y. 274. Van Schaick v. 7 Covenant Mut. Ben. Assoc, v. Niagara Fire Ins. Co., 68 N. Y. at Spies, 114 111. 463. 139 • " McCorkle v. Texas Ben. Assoc, 71 3 Kenyon v. Knights Templar & M. Tex. 149. Hut. Aid Assoc, 122 N. Y. 247. • Union Mut. Ace. Assoc, v. Miller, ' Whitehead v. N. Y. Life Ins. Co., 26 111. App. 230. Yoe v. Howard, .02 N. Y. 143. &c, Ben. Assoc, 63 Md. 86. § 184 Suicide. 207 § 184. Suicide. — Exemption of insurers from liability for suicide, sane or insane. The insurer is still liable, in spite of this clause, where the death is purely accidental without any intent to commit suicide. 1 "Where the insured is named as beneficiary, a criminal act of suicide or a death by hanging would vitiate the contract without any express provision, inasmuch as a contract of insur- ance presupposes good faith. 2 Though a recent writer on life insurance suggests the contrary view. 3 But if the interest in«the policy is vested in other benefici- aries, and the contract is valid at the time when it was entered into, the guilty act of the insured does not vitiate it to the prejudice of the beneficiaries. 4 If, however, the insured took out the policy with the guilty intent of committing suicide, the contract would be void ab initio. 5 So, also, if the beneficiaries intentionally compass the death of the insured after the policy is taken out, they can recover nothing upon it. 6 Frequently in life policies, and almost invariably in accident policies, there is a provision that the company shall not be liable in case the injuries named are self-inflicted, or, as it is often worded, if the insured dies by "suicide," or "by his own hand," or " takes his own life," which have been held to be equivalent forms of expression.' The proper meaning of the suicide clause, where the words " sane or insane " do not form a part of it, has been the subject 1 Phillips v. La. Equitable Life Ins. s Cooke on Life Ins., Sec. 41. Co., 26 La. Ann. 404 ; s. c, 21 Am. 4 Darrow v. Family Fund Society, Rep. 549. Equitable Life Assur. Soc. 116 N. Y. 5b? ; s. c, 15 Am. St. v. Paterson, 41 Ga. 338. Knights of Rep. 430. Fitch v. American Popular Golden Rule v. Ainsworth, 71 Ala. Life Ins. Co., 59 N. Y. 557 ; s. c, 17 436. Lawrence v. Mutual Life Ins. Am. Rep. 372. Co., 5 Bradw. (111.) 280. , 6 Smith v. Kational Benefit Soc, * Knights of Golden Rule v. Ains- 123 N. Y. 85. worth, 71 Ala. 436. Hartman v. 6 Prince of Wales, &c., Assoc, v. Keystone Ins. Co., 21 Pa. State, 466. Palmer, 25 Beav. 605. Manhattan Life Ins. Co. v. Brough- ' Accident Ins. Co. v. Crandal, 120 ton, 109 U. S. 121. U. S. 527. 208 Insurance: Fire, Life, Marine. § 184 of much discussion bj T the courts, which is traced historically at great length in May on Insurance. 1 Where the exemption from liability is simply death from suicide or other equivalent form of expression, without the words "sane or insane," it has been held that the exception does not avail the insurers as a defence if it appears that the assured was devoid of reason when he took his life. This con- clusion is put upon the ground that an act beyond the control of the assured is, in effect, nothing but an accident. As to the degree of insanity which will operate in such a case as an excuse to the insured to prevent the application of the excep- tion, two rules have been laid down. The English, New York, and Massachusetts courts, and others, have adopted the view that to take a case out of the proviso of the policy on the ground of insanity the assured must have been so mentally disordered as not to understand that the act he committed would cause his death, or he must have committed it under the influence of some uncontrollable insane impulse. These courts hold that it is not sufficient to show that his mind was so im- paired that he was not conscious of the moral obliquity of the act. 2 The United States. Supreme Court and others following its authority have, on the contrary, defined the rule as follows : " This court on full consideration of the conflicting authorities upon that subject has repeatedly and uniformly held that such a provision, not containing the words ' sane or insane,' does not include a self-killing by an insane person, whether his un- soundness of mind is such as to prevent him from understand- ing the physical nature and consequences of his act or only such as to prevent him, while foreseeing and premeditating its physical consequences, from understanding its moral nature and aspect." 3 The distinction between these two rules of law is probably too metaphysical to make it of any practical consequence whether the jury is charged in terms of the one or in terms of the other. 1 Chapter XV. Ins. Co., 102 Mass. 227 ; s. c, 3 Am. 2 Van Zandt v. Mutual Benefit Life Rep. 451. Ins. Co., 55 N. Y. 169 ; s. c, 14 Am. 3 Ace. Ins. Co. v. Crandal, 120 U. S. Rep. 215. Borradaile v. Hunter, 5 M. 531. Bigelow v. Berkshire L. Ins. Co., & (i. 639. Cooper v. Mass. Mut. Life 93 U. S. 284 ; s.c, 19 Am. R. 628, note. § 185 Violation of Law. 209 To secure the benefit of the restriction, which it is hardly necessary to say was really intended to be secured by the earlier forms of expression, the insurers have generally added to the suicide clause the words "sane or insane," and with this addition the exemption covers all cases of intentional self- destruction. The insurers are thus relieved from responsibility, unless the death of the insured was purely accidental. 1 In one case it was held, by a strict construction against the insurers, that the taking of poison through mistake or igno- rance would not avoid the policy, although the words of the suicide exception clause were, whether " voluntary or other- wise," instead of "sane or insane" ; which forms of expression the court regarded as synonymous. 2 If the company sets up the defence of suicide, the burden of proof rests upon it, and if the facts are equally susceptible of either construction, it will be presumed that death was the result of an accident and not of a criminal intent. 3 But, on the other hand, every man is presumed to be sane, and the burden of proving insanity is on him who alleges it, and the fact of suicide is not of itself sufficient to establish it." Missouri has adopted a statute that suicide will not avail as a defense. § 185. Exception of Death by the Hands of Jus- tice or in Violation of Law. — This, though similar to the last clause, is considered distinct from it. 5 In the Cluff case it was held that a forcible taking of property under the ill-founded claim of legal right was not a violation of this clause, which is generally confined to those cases in which the act is known to be a violation of law ; and by the better view the clause is further confined to cases of vio- lation of criminal law, in which the violation of law and the 1 De Gogorza v. Knickerbocker Life * Weed v. Mutual Benefit Life Ins. Ins. Co., 65 N. Y. 232. Co., 70 N. Y. 561. McClure v. Mutual 2 Penf old v. Universal Life Ins. Co., Life Ins. Co., 55 N. Y. 651. Meacham 85 N. Y. Ill ; s. c, 33 Am. Rep. 660. v. N. Y. State Mutual Benefit Assn., 'Mallory v. Travellers' Ins. Co., 47 120 N. Y. 237. N. Y. 52 ; s. c, 7 Am. Rep. 410. 6 Cluff v. Mutual Benefit Life Ins. Travellers' Ins. v. McConkey, 127 U. S. Co., 13 Allen, 308. 661. 14 210 Insurance : Fiee, Life, Makine. § 186 act causing death are a part of one and the same continuous transaction. Thus where the insured met his death by being shot- by a person with whose property he was interfering, it was held that this clause of the policy would not avail the insurer as a defense. 1 But where the insured was killed by a shot fired in provo- cation caused by an affray that had ended, a judgment in favor of the insurer was sustained on the ground that if the acts of the insured were such as to produce in his slayer a high degree of passion, and while he was in such a state he shot and killed the insured, the death was the natural consequence of the assault. 2 Where the insured was engaged in the lawful defense of his person, there being reasonable cause to apprehend a design to do him personal injury, the exemption clause was held to furnish no defense to the insurers. 3 But the death was held to be " in the known violation of the law" where the insured died within a few hours from wounds inflicted by the husband of a woman upon whom he was committing assault and battery. 4 § 186. Authority of Agents. — Agents not authorised to make, alter, or discharge this or any other contract in rela- tion to the matter of this insurance, 'or to waive any forfeiture hereof, or to grant permits, or to recei/oe for cash due for pre- miums anything but cash. The effect of this clause has been discussed under the sub- ject of general principles, in Chapters VII. and VIII. As was observed in the introductory chapter, there is ordi- narily nothing in the usual course of business, as transacted by the local agents of life insurance companies, from which any one dealing /with them has the right to infer that they possess any authority to make or unmake a policy, or to alter its terms, except in some instances in regard to the method of 1 Bradley v. Mutual Benefit Life Ins. 'JOverton v. St. Louis Mutual Life Co., 45 N. Y. 432; s. c, 6 Am. Rep. Ins. Co., 39 Mo. 122; s. c, 90 Am. 115. Dec. 455. 8 Murray v. N. Y. Life Ins. Co., 96 ' Bloom v. Franklin Life Ins. Co., 97 N. Y. 614 ; s. c, 48 Am. Rep. 658. Ind. 478 ; s. c, 49 Am. Rep. 469. § 188 Assignments. 211 paying premiums. 1 But, as we have also seen, the agent may, by his conduct in connection with the execution of the written application, estop the company where the misstatement is in reality his act, within the scope of his authority, and without fault on the part of the insured. 2 Neglecting, however, to read the application without sufficient excuse is fault on the part of the insured. 3 § 187. Errors in Age. — Any error made in understat- ing the age of the insured will he adjusted by paying such amount as the premiums paid would purchase at the table rate. This provision is liberal to the insured, and more reasonable than a stipulation providing for absolute forfeiture in case of an error in stating the age. This clause illustrates the disposition on the part of insur- ance companies to make an equitable arrangement with the insured, so far as they can do so without exposing themselves to unscrupulous and fraudulent claims. § 188. Assignments. — No assignment of this policy shall take effect until written notice thereof shall be given to the company. This provision, be it observed, does not prohibit an assign- ment of the policy. It is desirable that the insured should have the opportunity of making free use of this form of prop- erty, for it may often be convenient to secure money, by loan or otherwise, upon it. Unlike the case of a fire policy, as we have seen, a life policy was considered assignable at common law. And, by the better opinion, if the policy is valid when taken out, it may be assigned or made payable to one who has no insurable interest; though in the Federal'* Supreme Court a different rule has been suggested. A pledge or deposit of the policy is not of itself an assign- ment. 4 "Where, with the consent of the insurers, an assignment 1 Critchett v. American Ins. Co., 3 N. Y. Life Ins. Co. v. Fletcher, 53 Iowa, 404 ; s. c„ 36 Am. Eep. 230. 117 U. S. 519. Kyan v. World Life Boehen v. Williamsburgh City Ins. Co., Ins. Co., 41 Conn. 168 ; s. c, 19 Am. 35 N. T. 131 ; s. c, 90 Am. Dec. 787. Rep. 490. ! Ins. Co. v. Wilkinson, 13 Wall. * Griffey v. N. Y. Central Ins. Co., 222. Miller v. Phenix Mut. Life Ins. 100 N. Y. 417 ; s. c, 53 Am. Rep. . Co., 107 N. Y. 292. 202. 212 Insurance : Fire, Life, Marine. § 189 has been consummated, this amounts to a new contract be- tween the company and the assignee. 1 As to the past, however, the assignee simply steps into the position of the assignor, and can only recover under the policy in case the assignor has not been guilty of any breach. No one except the company can, in any event, make objec- tion to the assignment from the original insured to the assignee, unless the policy is payable to other beneficiaries, who have a vested interest therein. 2 After the death of the insured, the interest in the policy is a chose in action which can be assigned without consent of the insurers, and without regard to the provisions of the policy. 3 § 189. Incontestable. — This policy, after two years, will be incontestable, except for fraud or non-payment of pre- mium. Insurers have been somewhat stimulated, no doubt, by the statutory requirements, which will be found in the appendix, to insert this liberal provision. ' Fogg v. Middlesex Mut. Fire Ins. s Mellen v. Hamilton Fire Ins. Co., Co., 10 Cush. 337. 17 N. T. 609. Hall v. Dorchester 2 Leinkauf v. Caiman, 110 N. T. Mut. Fire Ins. Co., Ill Mass. 53 ; s. c, 50. 15 Am. Rep. 1. CHAPTER XVIII. THE ACCIDENT POLICY. Accident insurance is a branch of life insurance, and is governed by the same principles. The latter protects against loss by death, whether caused by old age, disease, or accident. The former is limited to loss caused' by accident, whether occasioned by a bodily disability or fortuitous death. § 190. Accident. — An accidental injury is one that hap- pens to the insured without the concurrence of his will or intent, but it may be the result of his intentional act provided only such result was not foreseen ; thus in case of an injury to the insured caused by intentionally jumping from the platform of a train of cars under such excusable circumstances that no harm could have reasonably been expected to follow. 1 So of an injury to the insured caused by a blow from the handle of a pitchfork slipping through his hands while he was loading hay, which produced peritoneal inflammation and ultimately death, the beneficiary was allowed to recover on the ground that the loss was by accident. 2 So of a sprain caused by lifting heavy weights. 3 So of an unintentional draught of poison. 4 Unless expressly excluded by the terms of the policy, an accident covers an injury intentionally inflicted upon the in- sured by another ; as, .for example, in an affray. 5 But where the terms of the policy expressly exclude an injury of that character, the restriction of the contract will prevail. 6 1 U. S. Mutual Accident Asso. v. App. 509 (1890). But see Bayliss v. Barry, 181 U. S. 100. But see Southard Travellers Ins. Co , 6 I\ L. J. 109. v. Railway Pass. Assur. Co., 34 Conn. Preferred Mut. Ace. Asso. v. Beidel- 574. man. 1 Monaghan (Pa.), 481. 2 North Am. Ins. Co. v. Burroughs, * Order of Chosen Friends v. Gar- 69 Pa. St. 43. rigus, 104 Ind. 133. 3 Martin v. Travellers Ins. Co., 1 F. " DeGraw v. National Ace. Society, & F. 505. 51 Hun, 143. Travellers Ins. Co. v. 4 Mut. Ace. Asso. v. Tuggle, 39 111. McConkey, 127 U. S. 661. 214 Insurance : Fiee, Life, Marine. § 191 Sunstroke, when not expressly excluded from the opera- tion of the policy, is generally considered to be a disease rather than an accident. 1 In regard to negligence of the insured, where the policy is . silent, the rule is the same as in other branches of insurance ; but, as we shall soon see, the usual conditions of the policy modify the insurer's liability in this respect. 2 Accidental injury is a phrase of such broad scope that, as might be expected, the insurers have limited its application by many restrictive provis- ions, differing somewhat in the forms of policies adopted by the different companies. § 191. Amount of Recovery and for What Acci- dents. — The sum of dollars per week against loss of time not exceeding twenty-six consecutive weeks, resulting from bodily injuries effected .through external violent and accidental means which shall, independently of all other causes, immedi- ately and wholly disable him from transacting any and every kind of business pertaining to his occupation above stated, or if loss by severance of one entire hand or foot, etc., or if death results from such injuries alone within ninety days. Death by accidental drowning is by external, violent, and accidental means. 3 Death during a plunge bath, in the house, was held not to be within the policy. 4 But where a boat was overturned by the waves and the insured was drowned, the death was covered by the policy. 5 Where an accident produced a weakened condition of the system, from which cold and pneumonia resulted,, it was held that the whole chain of events was caused by the accident as a proximate cause ; 6 and within the same princinle of law was classed an accident which caused physical injuries which, in turn, resulted in apoplexy and death ; ' but where disease is 1 Sinclair v. Maritime Passengers' " Tennant v. Travellers' Ins. Co., 81 Assn. Co., 3 Ellis & El. 478. Dozier Fed. Rep. 322. v. Fidelity & Casualty Co., 46 Fed. <■ Tucker v. Mutual Benefit Life Rep. 446. Co., 50 Hun, 50 ; s. c, 121 N. Y. 2 Schneider v. Providential Life Ins. 718. Co., 24 Wis. 28 ; s. c, 1 Am. Rep. 157. • Isitt v. Railway Passengers' Assur. 3 Trew v. R'y Pass. Assur. Co., 6 H. Co., L. R. 23 Q. B. Div. 504. & N. 839. Mallory v. Travelers' Ins. ' National Benefit Assn. v. Grau- Co., 47 N. Y. 52 ; s.c, 7 Am. Rep. 410. man, 107 Ind. 288. § 192 Accident Policy. 215 specially excepted from the chain of causation, the rule is otherwise. 1 So, also, where intentional injuries, inflicted by the insured or any other person, are expressly excepted from the operation of the policy, the wider liability of the insurers must be limited by the terms of the contract. 3 The provision that the injury insured against must be effected by the specified means, " independently of all other causes," is so unreasonable, indefinite, and repugnant to the main purpose of the contract, that the courts construe it very strictly against the insurers; and sometimes really seem to dis- regard it altogether. Thus, though the policy excepted death arising from fits, acting^ directly or jointly with accidental injury, the insurance was held to cover a case where the in- sured was seized with a fit and fell under the wheels of an engine which caused his death. 3 And in another case, although the policy expressly excepted " injuries from taking poison in any manner," the Illinois court allowed a recovery for death from an overdose of laudanum taken by mistake. 4 The insured was shot in the back, causing a paralysis which involved the loss of the use of his feet. It was held to be a loss of " two entire feet." 5 The meaning of total disability is considered in Young v. Travelers' Ins. Co., 6 and depends very much upon the wording of the particular policy. By a strict construction of the policy against the insurers, the same court allowed a recovery where the immediate cause of death was fright. 7 § 192. Exception of Hazardous Employment.— Whether one occupation is more hazardous than another 1 Smith v. Accident Ins. Co., 22 L. 6 Sheanon v. Pacific Mutual Life T. N. S. 861. Ins. Co., 77 Wis. 618 (1890) : s. c, 20 5 De Graw v. National Accident So- Am. St. Rep. 151. ciety, 51 Hun, 142. Phelan v. Trav- 6 80 Me. 244. See also Lyon v. Rail- elers' Ins. Co , 38 Mo. App. 640. way Pass. Assur. Co., 46 Iowa, 631. * Lawrence v. Accidental Ins. Co., Hooper v. Accidental Death Ins. Co., 7 Q. B. D. 216. Pitton v. Acciden- 5 H. & N. 54) ; s. c, 6 H. & N. 833. tal Death Ins. Co., 17 C. B. N. S. Rhodes v. Railway Pass. Assur. Co., 5 122. Lans. 71. 4 Tuggle v. Mut. Ace. Asso., 39 111. 7 McGlinchey v. Fidelity & Casualty App. 509 (1890). Contra, Hill v. Ins. Co., 80 Me. 251 ; s. c, 6 Am. St. Rep. Co., 22 Hun, 187. 190. 216 Insurance : Fire, Life, Marine. § 193 would be a question for the jury, unless the policy contained its own classification. 1 An employment or occupation does not refer to some unusual and incidental act, which a person may chance to be engaged in temporarily, but to his regular and usual occupation or calling in life. 2 § 193. Injuries excluded of Which there is no Visible Mark on the Body, the Body Itself in Case of Death not being Deemed such Mark. — The courts are not inclined to pay very much respect to the provisions of the policy which purport to control the laws of evidence, and the question of proof of accidental injury in case of any disputed material fact must go to the jury. They will decide the fact upon the evidence before them, without much regard to any rule of evidence that may be specified in the contract. 3 Under the requirement that the evidence of injury must be direct and positive, the character of the injury itself may furnish sufficient evidence where there is no presumption that the injury was intentionally inflicted. 4 § 194. Poison, etc. — Voluntary or involuntary talcing of poison or contact with poisonous substances or inhaling of any gas or vapor. This exception covers the accidental taking of poison. 5 The courts have construed this clause very strictly against the insurers, and in a recent case it was even held that " breath- ing gas " involuntarily was not the " inhaling of gas," though the distinction seems to be a very fine one. 6 In another case it was held that the word " poison " did not apply to death from ) Eggenberger v. Guarantee Mutual Am. Kep. 410. Paul v. Travelers' Accident Assoc, 41 Fed. Rep. 178. Ins. Co., 112 X. Y. 472 ; s. c, 8 Am. Tiicker v. Mutual Benefit Life Co., 50 St. Rep. 758. Hun, 50. Knapp v. Preferred Mutual ' Travellers' Ins. Co. v. McConkey, Accident Assoc, 53 Hun, 84. 127 IT. S. 661. Utter v. Travelers' * Stone v. U. S. Casualty Co.-, 34 N. Ins Co., 65 Mich. 515 ; s. c, 8 Am. St. 3- L. 371. Rep. 913. 3 Peck v. Equitable Accident Asso., 'Cole v. Accident Ins. Co., 61 L. 52 Hun, 255. Cited with approval, in T. N. S. 227 (1889). Contra, Mut. O'Brien v. Home Ben. Society, 117 N. Ace. Assoc, v. Tuggle, 39 111. App. 509 Y. 319. Reynolds v. Equitable Ace. (1890). Assoc, 59 Hun, 15. Mallory v. Trav- • Paul v. Travelers' Ins. Co., 112 N. elers' Ins. Co., 47 N. Y. 52 ; s. c, 7 Y. 473 ; s. c, 8 Am. St. Rep. 758. § 196 Accident Policy. 217 a malignant pustule resulting from the touch of an abraded part of the lips with a putrid animal substance, but that the word was confined to the internal reception of a poisonous sub- stance. It was, however, held, that the pustule in question amounted to a disease, and so brought the case within another exception in favor of the company. 1 § 195. Exception of Injuries Resulting from Violating Law. — The meaning of this clause was considered under the subject of the life policy. The .exemption was con- strued in a recent case where it was held that an accident from slipping upon frozen ground while returning from hunting on Sunday, in violation of law, was not covered by the policy, and the insurer was discharged. 2 § 196. Exception of Injuries Happening from Voluntary Exposure to Unnecessary Danger. — This provision modifies the rule which would otherwise prevail, that the negligence of the person insured constitutes no defense to the insurers. This exception as specified in the policy is applicable to a death where the insured is struck by a railroad train while walking on the track. 3 But another court was of the opinion that it was not appli- cable to a death where the insured stepped from the train through a hole in the floor of a bridge, where the train tem- porarily stopped, the existence of which hole he had no reason to suspect. 4 Where the exemption was worded to except injuries from " exposure to obvious risk," the English court gave the following rule : " Two classes of accidents are excluded from the risks insured against ; viz., (1) accidents which arise from an exposure by the insured to risk of injury, which risk is obvious to him at •Bacon v. IT. S. Mut. Accident Mass. 175; s. c, 45 Am. Rep. 316. Assn , 123 N. Y. 301 ; s. c, 20 Am. Cornish v. Accident Co., L. R., 23 Q. St. Rep. 748. 13. D. 453. 2 Duran v. Standard Life and Acci- 4 Burkhard v. Travellers' Ins. Co., dent Ins. Co., 20 Ins. L. J. 1035 (Vt. 102 Pa. State, 262 ; s. c, 48 Am. Rep. Apl. 14, 1891). 2(15. Scheidererv. Travelers' Ins. Co., 3 Tuttle v. Travellers' Ins. Co., 134 58 Wis. 13 ; s. c, 46 Am. Bep. 618. 218 Insurance : Fire, Life, Marine. § 197 the time he exposes himself to it ; (2) accidents which arise from an exposure by the insured to risk of injury, which risk would be obvious to him at the time, if he were paying reason- able attention to what he was doing." 1 This question will oftentimes be one of fact for the jury. 2 §191'. Entering or Trying to Enter or Leave a Moving Conveyance Using Steam as a Motive Power, etc. — This provision is similar in principle to the last, and aims to limit liability to those cases where the assured has been fairly prudent. 3 § 198. Requirement that the Insured shall Use all Due Diligence for Personal Safety and Protec- tion. — The burden -will be upon the insurer to show that due diligence was not exercised. 4 If the insured is killed by falling from the second story of a barn which he is having built, in consequence of the breaking of a joist, this does not conclusively show a breach of the stipulation ; but the question of due dili- gence is properly left to the jury. 5 § 199. Insurance against Injuries received while Traveling. — Some policies are confined to an insur- ance against loss while traveling by public or private convey- ances. Under this restriction the assured was allowed to recover for an injury received by a fall on a sidewalk while walking from a steamboat landing to a railway station, this walk being usual for travelers on that route, although he might have ridden in a hack; 6 but, generally speaking, walking could not be held to be a " traveling by public or private conveyance." ' 1 Cornish v. Accident Ins. Co., L. * Freeman v. Travelers' Ins. Co., 144 R. 23 Q. B. D. 453 (1889). Mass. 572. 2 Shaffer v. Travelers' Ins. Co., 31 6 Stone v. TJ. S. Casualty Co., 34 N. 111. App. 112. Mair v. Railway Pas- J. Law, 371. sengers' Assur. Co., 37 L. T. N. S. 356. * Northrup v. Railway Passenger 3 Miller v. Travelers' Ins. Co., 39 Assur. Co., 43 N. Y. 510 ; s. c, 3 Am. Minn. 548. Hull v. Equitable Acci- Rep. 724. Theobold v. Railway Pas- dent Assn., 41 Minn. 231. Bon v. sengers' Assur. Co., 10 Ex. 45. Railway Passengers Assur. Co., 56 ' Ripley v. Ins. Co., 16 Wall. 336. Iowa, 664 ; s. c, 41 Am. Rep. 127. CHAPTER XIX. THE MARINE POLICY. 1 The purpose of marine insurance, as was pointed out in Chapter I., is to enable the merchant or ship-owner to carry on his ventures undisturbed by that element of uncertainty which is brought in by the dangers of navigation. Another element of uncertainty, that arising from the fluctuation of the market, the merchant or ship-owner retains for himself. The combination of these two uncertainties is affected by a third ; namely, the ordinary variation in the length of a voyage, which may arise either from accident or without accident, inasmuch as one vessel may be a quicker sailer than another, or may meet with better winds or fewer calms, or may be more skillfully or more fortunately navigated. A delay arising from such causes may occasion loss or gain as the market chances to go up or down. If there be a gain, this must not belong to the underwriter. The underwriter, therefore, cannot be asked to pay for the loss. The chances of a longer or a shorter voy- age, as affecting the market, must remain with the assured. Again, it is of the essence of insurance that it shall be on both sides a fair speculation. The underwriter must have a chance of gaining to counterbalance his risk of loss. It follows that the losses he has to pay for must be such as may, not such as must, happen. 3 This excludes ordinary wear and tear for damage necessarily suffered in driving the ship through the water by sail or steam, and this notwithstanding the degree of such damage may vary with the variations of the weather", and the winds, and other incidents common to all voyages ; it likewise excludes loss arising from natural wastage, corruption ' In the following discussion of the Marine Insurance by MacArthur and clauses of the policy I have drawn Lowndes, heavily upon the practical treatises on 2 Paterson v. Harris, 1 B. & S. 353. 220 Insurance : Fire, Life, ISIarine. § 200 through lapse of time, heating from the confined atmosphere of the hold, and other causes inevitable under the given condi- tions. These are matters which a merchant can with more or less accuracy estimate beforehand, and they must be taken into account in determining the market price of his ventures ; or, at all events, the underwriter does not make himself responsible for them. For the same reason, an underwriter must in no case be liable for losses caused by the bad faith or misconduct of the assured himself, since such a liability would destroy the fairness of the speculation. The marine policy, a specimen of which is given in' the appendix, is found upon examination to contain three distinct stipulations. The first and principal is the promise on the part of the insurers that they will take upon themselves certain . specified perils or causes of loss which may come to the hurt or detriment of the thing insured, which is specified, for a voy- age or for a term which.is likewise specified. A second- stipu- lation is what is called the "sue and labor" clause, which is an encouragement to the assured to use exertion in the saving of his property when in peril, by a promise to contribute to the expenses he may thereby incur ; and, third, the modern addition known as the memorandum clause, which sets a limit to these two promises by exempting the insurer except in events therein named from claims below a certain percentage or from claims for damage to certain kinds of goods which are regarded as exceptionally hazardous. The promise of the insurers is given to a person named or described ; it is given whether the thing insured is at the time lost or not lost ; it has relation to a subject matter or thing which must be specified; this thing at risk is the ship, or in the ship, and under the command of a master; it is for a voyage or term marked out, together with the precise point of place or time at which the voyage or term com- mences and terminates; the amount of liability may be left open, or it may be fixed by an agreed valuation ; arid, lastly, the promise is a guarantee against loss from certain specified perils subject to certain conditions or warranties. § 200. Name of the Assured. — All persons except alien enemies, that is, subjects of a foreign state at war with § 202 Lost oe not Lost. 221 the home country, have the right to protect their property by insurance. The name of the insured should be inserted after the words " on account of." The reason for the exception of alien enemies is that it is considered impolitic on public grounds to permit subjects to make good the losses sustained by an enemy's commerce. It is therefore an understood condition of insurances upon foreign property that they do not cover any loss which may happen while hostilities are being carried on between the respective countries of the assured and the underwriter. 1 § 201. L.ost or not Lost.— The effect of this stipulation is that the insurer takes upon himself not only, the risk of future loss but also loss, if any, that may have already hap- pened. The necessity for such a retrospective application in policies is evident; for, owing to the time occupied in the trans- mission of advices from abroad or other unavoidable causes, property is often exposed to marine risks before the parties interested are cognizant of the fact or have had an opportunity to protect themselves by insurance. If the assured is aware of the loss at the time when the insurance is effected he cannot recover from the underwriter who undertook the risk in ignorance of the fact ; nor is it permissible for an underwriter to retain the premium if at the time of such insurance he is privately informed of the ship's arrival. 2 But if at the time when the insurance is effected the vessel has arrived in safety, the underwriters will be entitled to the premium, provided they and the assured were alike ignorant of the fact. 8 Where a policy of insurance has been effected by one party on behalf of another without authority, it may be ratified after loss by the party on whose behalf it is made though the latter be informed of the loss at the time of such ratification. 4 § 202. At and From. — These words precede the blank / for the description of the voyage. There is a material differ- ' Ex parte Lee, 13 Vas. Jr. 64. Bradford v. Symondson, 4 Asp. Mar. Sands v. N. T. Life Ins. Co. , 50 N. Y. L. C. 455. 626 ; s. c, 10 Am. Rep. 535. ' Williams v. North China Ins. Co., 8 Carter v. Boehm, 3 Burr, 1909. L. R. 1 C. P. D. 757. 8 People v. Dimiok, 107 N. Y. 13. 222 Insurance : Fike, Life, Mabine. § 203 ence between insurance " from," and one " at and from," any place. The first form of description attaches to the vessel on sailing, but the second covers, also, the risk in port. 1 "When a vessel is insured " at and from " a home port where she is then lying, the risk commences as soon as the insurance is effected, and continues during the whole time she remains there in preparation for the voyage insured. "When a vessel is insured " at and from " a port abroad to which she is bound, the policy attaches on the arrival of the vessel within the limits of such port, provided she is then in a state which will admit of a fair inception of the risk insured. If the vessel arrive at the port where risk is to have its inception in«uch a crippled condition that she is unable to lie there in safety until made fit for the homeward voyage, the policy will not attach. 2 But, on the other hand, if the vessel, though damaged, be in a condition consistent with her security in port, the risk will commence from the first moment of her arrival within the port specified. 3 It is generally the case that on a vessel's arrival at the port where the homeward insurance attaches she is under the pro- tection of an outward policy, which, by its terms, continues in force for a period varying from twenty-four hours to thirty days after her arrival. During this interval, therefore, both policies are in force, and the vessel is doubly insured. To pre- • vent the outward and homeward insurances thus overlapping, a stipulation is often inserted in the latter policies, when an insurance is effected " at and from " an island, or other district comprising. several places of trade, that the risk commences on the ship as soon as the vessel has arrived in good safety at any port within such district, and on cargo upon its shipment. § 203. The Voyage.— The voyage must be described in such a manner that a mercantile man conversant with the usages of trade ought to be able clearly to understand what is intended, and the voyage thus described must be rigidly adhered to, except in the case of unforeseen necessity. 1 Nelson v. Sua Mutual Ins. Co., 71 s Houghton v. Empire Marine Ins. N - T 453 - Co., L. B., 1 Ex. 206. 2 Parmeter v. Cousins, 2 Camp. 205. § 204 The Subject of Insurance. 223 From first to last there must be no unreasonable delay or divergence from the usual mode of conducting the adventure, otherwise the policy will be void from the moment of commit- ting the deviation, though not antecedently. 1 There are three ways of describing a voyage : Either every port which the ship is to visit may be named, or general words may be used which cover a certain range, and leave room for variations within it ;• or, lastly, where there is a clear known custom as to the track, and that custom is intended to be fol- lowed, it may suffice to name the termini only, and rely on the custom. If the insurance is from or to a district comprising several ports, these ports must be visited in their natural or geograph- ical order, unless there is an established custom of the trade to vary this order, in which case the customary order must be observed. 2 But a clause is often inserted in the policy giving permission to touch and stay at certain ports without prejudice to the insurance. Whether liberty to call at a port gives liberty to land or load cargo there, must depend on whether such an intention may naturally be inferred from the description of the voyage in the policy taken in conjunction with the customs of the particular trade ; 3 and wherever a ship has liberty to call at a place, she may always land or load goods there, provided this can be done without additional delay. 4 Sometimes a deviation clause is inserted, providing that the property is covered in the event of a deviation, at a premium to be agreed upon. §204. The Subject of Insurance.— Upon the body, tackle, apparel, and other furniture of the good ship, or upon all kinds of lawful goods and merchandise laden or to be laden on board the good ship, or upon the freight of all kinds of lawful goods and merchandises laden or to be laden, etc. This phraseology covers the descriptions of ship, cargo, and freight in the three classes of American policies, respectively. 1 Burgess v. Equitable Marine Ins. • Urquhart v. Barnard, 1 Taunt. Co., 126 Mass. 70; s. c, 30 Am. Rep. 450. 654. 4 Raine v. Bell, 9 Bast. 195. 8 Beatson v. Haworth, 6 T. R. 533. 224 Insurance : Fire, Lite, Marine. § 204 Lloyd's English policy covers ship and cargo in one general form, which is filled in to suit the particular case. This general description in the printed form is controlled by the written description of the particular interest which it is intended to insure. The terms of the description in the policy of insurance upon ship are evidently not to be confined to the body or hull of the vessel, but extend to her materials and outfit ; and it has been decided that the provisions of the crew are included under the word "furniture." A policy on "ship" in the ordinary form will cover hull, materials, machinery, boilers, coal, and engine stores ; in the case of a steamer, the provisions for the crew and all the appurtenances necessary, suitable, or usual, or that may be presumed to belong to a vessel of such description for the purposes of navigation on a voyage such as that described. The scope of an insurance on the ship is limited by the usage of the trade to such an outfit as is necessary to make the vessel seaworthy for the voyage insured, to the exclusion of that further portion which may be supplied to fit her for a particular trade. Thus, in the case of a vessel engaged in the Greenland trade, it was held that the fishing tackle and stores, such as harpoons, lances, etc., for catching whales and seals, as well as the casks, cisterns, etc., for receiving the oil and blubber, were not covered by a general policy on ship, as it was the custom to insure such articles in express terms. 1 But permanent passenger fittings are allowed as appertain- ing to the ship where the vessel is regularly employed in the passenger trade; permanent cattle fittings, where she is in the cattle trade ; a permanent grain ceiling, where she is in the grain trade, etc. Temporary fittings or ballast, such as is supplied for the voyage only, dunnage, provisions for the pas- sengers, and provender for live stock are excluded. " Goods " or " merchandise " denotes whatever is carried on board ship for purposes of traffic. Here, again, the usage of trade enters to restrict the full meaning of the term, by excluding therefrom, in the absence of established custom, goods laden on deck, and also live stock with the provender for their maintenance, master's clothes, and 1 Hoskins f. Pickersgill, 3 Dougl. 222. § 205 Master's Name. 225 the ship's provisions. Money or jewels, if carried to trade with, are insurable under the name of goods. In insuring freight it matters little whether the interest is described as freight, freight per charter party, or the like. Freight must be either a ship owner's profit from carrying goods of his own, or the price of working for others under a contract. The former kind is recoverable under the ordinary policy on freight. 1 As to the latter, the actual contract must necessarily in case of loss be referred to, in order to ascertain what was insured. Speaking generally, a policy on freight must be taken to cover all the ordinary stipulations of the con- tract of affreightment, whether bill of lading or charter party. Where the interest consists of a ship owner's profit by carrying his own goods, though this, as has been said, may with perfect propriety be insured separately as freight, yet generally speak- ing the method most advantageous to the owner is to insure it in the same policy as the goods, and to value both together, describing them as goods including freight. It is usual to insure passage money under a distinct name, since the incidents of this risk are in many respects different from that of the freight or merchandise. 2 o § 205. Master's Name. — Provision is made in the policy for the insertion of the master's name, partly as a means of distinguishing the ship insured from others of the same name, and partly because the personal character and professional reputation of the captain are not infrequently taken into ac- count by the underwriters in their estimation of the risk. But in practice the blank left for that purpose is often left unfilled. In immediate sequence to this blank are the words, " or whoever else shall go for master in the said vessel, etc." In case the person originally mentioned to the underwriter as the master of the vessel is prevented from going in her, and an- other is substituted for him, the insurance is not vitiated, even though the original name may have been inserted in the policy, and may never have been altered, provided the assured has acted throughout in good faith. Again, if the master resign his command, or become incapacitated during the voyage ' Flint v. Flemyng, 1 Barn. & Ad. 5 Denoon v. Home & C. Assur. Co., 45. L. R., 7 C. P. 341. 15 226 Insurance : Fiee, Life, Maeine. § 206 through sickness and another is appointed in his place, the validity of the insurance is not compromised by the - change. A mistake in the ship's name, however innocently made, will vitiate the policy if it materially mislead the underwriter as to the character of the risk, but otherwise not. 1 Sometimes, especially in insuring consignments from abroad, the ship is not named, the goods being insured per ship or ships. The usual course in such cases is to " declare " the interest by an indorsement on the policy as soon as the ship they are to come by is known. 2 Declarations made on the policy are always subject to rec- tification in case it shall subsequently appear that the advices have come forward, and that the declarations in fact have therefore been made in an order different from that of the actual shipment of the goods. The shipments declare them- selves, so to speak, and take rank under the policy in the order in which they occur ; so that the declaration written on the policy is merely provisional, and must be set right in case of need. 3 § 206. Commencement of the Risk. — 1 t/ie adventure upon the said goods and merchandises from and immediately following the loading thereof etc. Goods are not insured under the general form of policy until they are loaded aboard the ship. If, therefore, the mer-' chant desires to cover the risk in boats or lighters from the shore to the ship, he should insert the clause, " to include all risk of craft whilst loading." If property in the goods does not pass to the insured until a certain point in the process of shipment, the policy will not attach until that point is reached; as, for example, where, by the terms of a contract for the purchase of a cargo of rice, no interest in the rice passed to the buyers until the ship- ment of the cargo was completed, it was held that the latter had no insurable interest in the cargo while in course of ship- ment.* If it is to cover goods shipped at some place other 1 Ionides v. Pacific F. & M. Ins. Co., 3 Stephens v. Australasian Ins. Co., L. R., 6 Q. B. 674. L. 11., 8 C. P. 18. 2 Snowden v. Guion, 101 N. T. * Anderson v. Morice, 3 Asp. Mar. 458. L. C. 291. § 207 Termination of Bisk. 227 than the port of departure, that intention ought clearly to appear by the terms used. § 207. Termination of the Risk.— Until the ship hath moored anchor twenty-four hours in good safety, until the goods and merchandises shall be safely landed. Between the termini designated the policy protects the goods during the whole time, not on ship-board merely, but while they are in the warehouse at an intermediate port, always supposing that they are put there legitimately, as from some enforced necessity, or because a landing and transship- ment falls within the regular course of the voyage • insured. 1 The ship continues protected at port before the voyage is com- pleted, during all time properly taken in discharging cargo, effecting needful repairs, or otherwise making ready for the voyage. 2 The policy likewise covers all delay occasioned by accidental causes during these operations, such as being frozen in for the .winter, or the like. 3 It is important to understand clearly what is meant by moor- ing in good safety, after which the ship is no longer covered by the policy. 4 In the first place, these words presuppose the ar- rival of the vessel at the terminal point of the voyage, which is, in the case of a cargo-laden ship, the usual place of discharge ; 5 and, secondly, they provide that she shall have been securely anchored at that spot for the period described. The term "good safety" does not mean absolute immunity from danger, for that would be a condition impossible of attain- ment at any stage of a marine adventure, but such a measure of security as will suffice to enable the vessel to discharge her cargo and accomplish the other ordinary purposes of a stay in port. Two kinds of security are included in the term " good safety ; " namely, physical and political safety. Good physical safety means not the safety of the moorings, but of the ship ; not absolute freedom from damage, for then the loss of a rope or sail or spar would prevent the vessel from being considered in safety : but, on the other hand, she must not be in a sink- 1 Harrison v. Ellis, 7 B. & B. 465. * Leeds v. Mechanics Ins. Co., 8 N. 2 Phillips v. Irving, 7 M. & G. 328. T. 351. 'Brown v. St. Nich. Ins. Co., 61 6 Samuel v. Royal Exchange Assur. N. T. 332. Co., 8 B. & C. 119. 228 Insurance : Fire, Life, Marine. § 207 ing condition, as was the case with a vessel which arrived at her port of destination a complete wreck, and after being kept afloat for a few days, lashed to a hulk, sank in the harbor. 1 Good political safety means immunity from capture or arrest; thus a British vessel, which the day after herarrival at a French port was laid under an embargo then existing against all Brit- ish ships, was held to have never moored at anchor twenty-four hours in good safety. 2 A cargo-laden ship must be moored at her usual place of discharge before the twenty-four hours will commence to run, and accordingly in the case of a vessel which arrived at her moorings" in the Thames, but the same day was ordered into quarantine, and was subsequently destroyed by fire before ob- taining her release, it was held that the policy was still running at the time of loss because the vessel had not been moored at anchor twenty-four hours in good safety. 3 Though it is necessary that a vessel should have arrived at her place of discharge, it is not necessary that the discharge should have actually commenced ; for if the vessel has arrived at her moorings and remained there the specified period, await- ing her turn to unload, the risk is off. Policies on outward bound vessels are sometimes so framed as to continue in force for thirty days after arrival at port of destination. 4 "With regard to time policies, the precise date of commence- ment and termination is named in the policy. The day, unless 6therwise expressed, begins and ends at midnight. The risk on cargo continues until the goods have been de- posited upon the wharf or their customary place of discharge. It then ceases, for the underwriter is not liable for loss arising from theft, fire, or any other perils to which the goods may be subjected while lying on the wharf or in dock, unless an express clause to that effect has been inserted in the policy. In order that the policy may continue to protect the goods while in course of landing, they must be taken from the ship to the shore in the mode which is usual in the trade at the port where the discharge takes place. If it is customary in the trade to convey goods from the ship to the shore in lighters, launches, 1 Shawe v. Felton, 2 East, 10!). " Waples v. Eames, 2 Str. 1243. 8 Minett v. Anderson, Peake's R. * Lidgett v. Secretan, L. R., 5 C. P. 211. 190. § 207 Termination of Eisk. 229 or other small craft, they are protected by the policy during such transport. 1 If, however, the assured depart from the usual course of trade by taking charge of the goods at an earlier period than they would have been delivered to him under ordinary circumstances, the underwriters will be dis- charged from responsibility. 3 The policy only covers goods while they are at the risk of the assured ; and consequently, if cargo be sold afloat, without an assignment of the policy, and the buyers take delivery of the cargo in lighters sent alongside, the risk of lighterage from ship to shore will not be covered, as the underwriters' risk would, under such circumstances, cease on delivery. 8 Cargo should be landed within a reasonable time after the ship's arrival ; otherwise it will cease to be covered by the policy. What is a reasonable time in any particular case depends upon the usages of the trade. When goods are insured by vessel bound to several ports in succession, the risk ends at the final port of discharge named in the policy. But the insurance may be prolonged by the addi- tion of the words " the risk to continue until arrival of the goods at a market at their final port of discharge." 4 The underwriters' risk upon the bill of lading freight may be considered coincident with the risk on goods, since it does not commence until the cargo is shipped, and then only applies to such portion, of it as may be actually on board, unless cargo has been contracted for under a valid agreement, and is lying in readiness to be placed on board, the ship also being ready to receive it. The termination of the risk on cargo and freight respectively is in general simultaneous. For concurrently with the landing of the goods in safety the ship-owner earns the freight upon them, and the risk of the underwriter on freight is proportionately reduced ; so that, in the event of the ship being lost after a part of her cargo has been discharged, the loss on the freight policy will be limited to the freight on the cargo remaining on board. In the case of chartered freight, however — that is, money payable for hire of a ship under a ' Matthie v. Potts, 3 Bos. & P. Archangel M. Ins. Co., L. B., 10 Q. B. 23. 249. 2 Sparrow v. Oaruthers, 2 Str. 1236. 4 Richardson v. London Assurance 3 North of England P. O. C. Co. v. Co., 4 Camp. 94. 230 Insurance : Fibe, Life, Marine. § 208 charter party — the risk commences as soon as there is an incep- tion of performance under the charter party (i. e., when the owner or hirer has incurred expenses and taken steps toward earning freight) irrespective of the question whether any cargo has been placed on board or is in readiness to be so placed, and continues until the vessel has performed her contract. But the words " from the loading thereof " in a freight policy exclude the goods not actually loaded, and also the freight for them. 1 § 208. Touch and Stay. — And it shall be lawful for said vessel in her voyage to proceed and sail to, touch and stay at, any ports or places if thereunto obliged by stress of weather, etc., without prejudice to this inswrance. The words " if obliged by stress of weather, etc.," practi- cally nullify the important privilege which would otherwise be extended to the insured by this clause. If such a privilege is given to touch and stay at any ports or at certain ports named; it is understood in the case of a voyage policy that the ports visited must lie within the ordinary track of the voyage, and that they must be visited for some purpose connected with the object of the adventure. 8 Where steamers or sailing vessels of a particular line or in a. particular trade habitually follow a specific route or call at certain ports, the usage so to do will be tacitly incorporated in a policy in the ordinary form without the addition of any special clause. 1 Jones v. Neptune Marine Ins. Co., Bragg v. Anderson, 4 Taunt. 229. L. R., 7 Q. B. 702. Williams v. Shee, 3 Camp. 469. 8 Lavabre v. Wilson, 1 Dougl. 284. CHAPTER XX. MAEINE POLICY CONCLUDED. § 209. Perils of the Seas.— These denote all marine casualties resulting from the unusual or violent action of the elements as distinguished from their natural and silent influence upon the fabric of the vessel. But they do not, as has been already observed, include the deterioration of a vessel's hull and materials, commonly called wear and tear, which is incidental to her employment in navigation and her exposure to the or- dinary action of the elements ; nor do they include injuries to the machinery incident to its ordinary operation. 1 Yessels cannot be navigated without encountering the action of wind and wave, and are often liable to be on the ground or to come into contact with piers without the happening of any- thing abnormal. At the same time, it is to be remembered that any ordinary occurrence will become extraordinary if qualified by unusual conditions, but there must be something fortuitous to constitute a peril of the sea. Thus a transport in government service was ordered into Boulogne, where there is a dry harbor, and was moored near one of the quays. The vessel took the ground on the ebb of the tide, as was inevitable; but, owing to the presence of a considerable swell in the harbor, she struck the ground with unusual violence, and subsequently eighteen of her knees were found to be broken. The court held that this damage was the result of a peril of the sea. 2 In another case, the ship, which was insured under a time policy, proceeded in the course of her trading to Sunderland, where she was moored head and stern, and took the ground in the usual way at the ebb of the tide. The beach was hard and 1 Thames & Mersey Marine Ins. Co. * Fletcher v. Inglis, 2 B. & Aid. v. Hamilton, L. E., 12 App. Cas. 484. 815. 232 Insurance : Fire, Life, Marine. § 210 steep, and the ship lay with a slight list toward it. She ap- peared to strain in this position, especially when taking the ground and floating, and after remaining some time in the place it was found that she was hogged. The Court of Com- mon Pleas held that the damage received under the above cir- cumstances was not caused by perils of the seas, but fell within the designation of wear and tear. Here the .vessel on her arrival at Sunderland went up the river, and, in consequence of the rising and falling of the tide, rested upon the river's bed and received damage. There was nothing fortuitous, no peril, no accident. 1 Where live cattle carried between decks were thrown violently together and killed by the tremendous rolling of the sea, though not touched by the water, this was held to be a loss " directly by the sea." 2 Sails split by the wind or blown away while set, unless oc- casioned by the ship's grounding or coming into collision, or in consequence of damage to the spars to which the sails are bent, are not, according to the general practice, chargeable to under- writers, although the weather may have been stormy at the time of the occurrence. This custom is to be supported rather on grounds of ex- pediency than of principle. A sail which is blown away in a hurricane is as truly lost by the operation of sea perils as a mast which is carried overboard by the same cause. On the other hand, if the splitting or carrying away of sails in use were to be allowable, whenever they were subjected to an extraordinary strain, there would be much practical difficulty in the endeavor to discriminate between ordinary and extraor- dinary weather, especially in view of the fact that the resistance which a sail is capable of offering to the wind depends to a considerable extent upon its quality and condition. There is a similar rule of practice relative to rigging, which is, that rigging injured by straining or chafing is not charged to underwriters, unless such injury is caused by blows of the sea, grounding, or contact, or by displacement through sea perils of the spars, channels, bulwarks, or rails. § 210. Foundering at Sea. — Foundering at sea is included among the perils of the sea if caused by the violence 1 Magnus v. Buttemer, 11 C. B. 876. a Snowdon v. Guion, 101 N. T. 458. § 212 Grounding — Collision. 233 of the winds or waves or any other accidental occurrence, but not so if caused by overloading, defect, or .inherent weakness. If a ship has not been heard of for so long a time after sail- ing that there remains no reasonable hope of her safety, she is presumed to have foundered at sea. There is neither in this country nor in England any fixed rule as to when that pre- sumption arises. In England, after an interval of time sup- posed to be sufficient to cover the reasonable chances of arrival, the ship is posted at Lloyd's as missing, and then the under- writers are expected to pay. § 211. Grounding.*— -Grounding, whether arising from stress of weather, ignorance of the locality, blunder or stupidity, the desire to avoid some approaching vessel or other danger, in short, for any reason out of the ordinary course of things in the voyage, is considered one of the perils of the sea. § 212. Collision. — Collision is also a peril, and this whether it be the result of inevitable accident or fault on the part of the ship insured, or of fault on the part of the other ship ; for, on the principle of causa proximo,, the underwriter must pa}', be the fault whose it may. What he pays for is the damage to the thing he has insured. As for the liability of the owner of the ship in fault to p«y for the damage suffered by the other, that is a matter with which his underwriter has, under the body of his policy, nothing at all to do. It is usual however, to provide for this liability by a distinct contract called the collision clause, a specimen of which will be found in the appendix. 1 The principle of the collision clause is that the underwriters will relieve the insured of three-fourths of his liability to pay damages for loss of property in and on board the other ship. He is to take one-fourth himself, as a check upon carelessness in the choice of servants ; and his responsibility in respect of loss of life and personal injury, as well as for damage to the cargo in his own ship, is left untouched. There is a difference to the insured in the language of dif- ferent collision clauses in respect to the matter of costs, a pro- 1 London Steamship, &o., Ins. Co. v. Grampian S. Co., L. K., 24 Q. B. D. 663 (1890). 234 Insurance : Fiee, Life, Marine. § 213 vision for which is sometimes omitted from the clause, in which case the underwriters are not responsible for their share of costs. The liability under the collision clause is not particular average ; consequently is not subject to the limitation of five per cent. § 213. Stress of Weather. — Under the head of sea perils is damage suffered through stress of weather; as by blows of the seas which carry away bulwarks, boats, deck houses, and the like ; by losing masts and yards in a gale ; springing of a leak through violent straining ; shifting of the cargo, or becoming water-logged. The only difficulty in such cases consists in distinguishing between sea peril and wear and tear. § 214. Fire. — Fire may. arise from a varietj T of causes — from lightning, the spontaneous combustion of the cargo, the negligence of the master or crew, the acts of enemies, or the precautionary measures of rulers (as in case of a vessel burned by the municipal authorities for fear of being infected). The underwriter is liable for loss occasioned by fire, whether its origin is inexplicable or whether it can be assigned to one of the above-named or some other kindred cause, with the ex- ception of combustion generated through the inherent defect of the subject insured, or in consequence of the goods having been shipped in a damaged state. But if the combustion is originated by sea damage sustained by the goods after ship- ment, it is covered by the policy ; and however the fire may have been occasioned, if it extend to other goods which are un- connected with the cause of the disaster, or to the ship herself, the underwriter is responsible. 1 Damage to cargo caused by pouring water into the hold, scuttling the ship, or taking other extraordinary measures to extinguish a fire, is recoverable in general average ; 2 or it may be claimed direct in the first instance under the policy if the latter include the risk of particular average. If, however, a package is on fire, and water is poured upon 1 Amould, Mar. Ins. 760. a Whitecross Wire & Iron Co. v. Savill, L. R., 8 Q. B. D. 653. § 215 Perils of War. 235 it to extinguish the fire, no allowance is made in general aver- age for any damage by water to the package so affected, but the loss is particular average. The reason for this exception in practice appears to be, that an article which is ignited is deemed to be virtually lost, so that the action of pouring water upon it involves no sacrifice, but is intended to reduce the loss or effect a salvage. 1 The risk of fire is covered during the whole of the transit of goods, on shore as well as on shipboard, provided the transit is for one entire or unbroken voyage, as with insurance on goods it almost always is. It was held in one case that an explosion of steam caused by the bursting of a marine boiler, though not identical with fire, is a peril of a sufficiently like kind to be covered by the clause comprehending "all other perils, losses, and misfor- tunes." 2 But that case was subsequently criticised by the House of Lords and substantially overruled. 3 § 215. Perils of War. — The common feature in this list of perils is violence at the hands of man. The underwriter takes upon himself the burden of all loss or damage thus occasioned, whether it consist of injury to the vessel's hull, spars, and rigging, by an enemy's shot or shell, or by other hostile acts, or the total destruction of the property insured by the operation of the same causes. As, however, merchant vessels are not, in general, able to offer a successful resistance to the attack of an armed ship, the casualty which most frequently results from hostilities is capture. Capture, in the proper signification of the term, is the forcible appropriation of property by an enemy or belligerent with intent to keep it ; 4 and also covers all losses directly occasioned by capture or seizure, whether legal or illegal, by mutinous passengers or slaves, regularly commissioned vessels of war, privateers, or pirates, with the single exception of capture of Americans' property by American ships in time of war. 1 Arnould Mar. Ins., 723. * Thames & Mersey Marine Ins. Co. 8 West India & P. Tel. Co. v. Home, v. Hamilton, L. R., 12 App. Cas. 484 &o., Marine Ins. Co., 4 Asp. Mar. L. C. (1887). 341. * Cory v. Burr, 8 App. Cas. 405. 236 Insurance : Fibe, Life, Marine. § 215 The words " men-of-war " and " enemies " obviously refer to those who, authorized by a prince or sovereign state, make war in the mode sanctioned by the law of nations as dis- tinguished from " pirates," " rovers," and " thieves," who are unauthorized depredators. " Letters of mart " are commissions granted by the sovereign power to those persons whose property has been seized by sub- jects of other states, authorizing the former to indemnify them- selves for the loss sustained by making reprisals. "Letters of countermart " are letters issued in favor of those threatened by such reprisals, authorizing them to resist the privateers furnished with letters of mart. Captured property is not considered to have been divested from its original owner until it has undergone sentence of con- demnation in a legally constituted court of the enemy. But the assured may abandon to the underwriter, and claim for a total loss, on first hearing of the capture. If the abandonment is accepted by the underwriter, the matter is settled. If it is declined, the assured may take legal proceedings, and will recover, provided the property is not restored before action is brought. Necessary expenses incurred in the redemption or recovery of captured property are, in general, recoverable undeivthe policy. The word "thieves," as used in the English policy, has been held to be applicable only to persons proceeding from outside of the ship, not to the crew or passengers. The robbery con- templated, according to that rule, is that which is committed with violence, and does not extend to mere theft which it is considered might be prevented by the exercise of ordinary vigilance on the part of those in charge of the vessel. Conse- quently the master or owner is alone responsible for this species of loss, which is not attributable to accident, but to the negligence of those who were bound to take proper care of the property. The same interpretation has been given by the English court to the word " thieves" in the bill of lading as in the policy of insurance. 1 A different rule, however, has been followed in America, and the word "thieves" as used in the marine policy here is 1 Taylor v. Liverpool & G. W. Steam Co., 2 Asp. Mar. L. C. 277. § 216 Arrests, Kestraints, etc. 237 not confined to assailing thieves, but extends to thefts by mariners, passengers, or others. 1 § 216. Arrests, Restraints, etc.— This clause refers only to acts of state, or acts authorized by the sovereign authority in the country. An unauthorized seizure or detention, as by a mob in a meal riot, does not come within the clause, though the underwriter would be liable for it as a loss by pirates or thieves. 3 Capture is taking possession with intent to change the property ; arrest is taking with intent ultimately to restore to the owner ; restraint is a prevention of the goods from going. The species of arrest to which shipping has been most fre- quently subject is an embargo, which is a decree issued by the government of a state to prohibit the departure of vessels lying within its jurisdiction. An embargo laid upon any ves- sel entitles the assured to give notice of abandonment, and, if the embargo continues to the time action is brought, to recover as for a total loss ; unless, in the first place, the arrest is only temporary, without occasioning any permanent loss of control over the ship, or unless the assured is a foreigner and the em- bargo is imposed by his own government in contemplation of hostilities with this country. The acts and restraints of princes and rulers mentioned in the policy and bill of lading have reference to a forcible inter- ference, "and do not extend to legal proceedings conducted in a constitutional manner. 8 A blockade operates as a restraint of princes with respect to property detained within its compass ; but, according to an English decision, exclusion from a port is not restraint, and, accordingly, a loss resulting from the aban- donment of the voyage owing to the blockade of the port of destination was not recoverable under the policy, such a loss being excluded by the rule cauxa proximo, non remota spectaturJ The term " people " is to be understood not in the sense of 1 Am. Ins. Co. v. Bryan, 1 Hill, 25. W. Steamship Co., 23 L. T. N. S. Spinetti v. Atlas Steamship Co., 80 251. N. Y. 71. * Rodocanoehi v. Elliott, 28 L. T. 1 Nesbitt v. Lushington, 4 T. R. N. S. 845. See Richardson v. Maine 783. F. & M. Ins. Co , 6 Mass. 102 ; s. c, * Finlay v. The Liverpool & G. 4 Am. Deo. 9?. 238 Insurance : Fire, Life, Marine. § 217 a mob or multitude, but as the ruling power, however it may be composed. 1 Sometimes vessels are seized and detained, and even' confis- cated, by the authorities under whose jurisdiction they are lying in consequence of some violation of the law having been com- mitted by the persons connected with them. This, however, is not an arrest, restraint, or detainment of princes, though it may amount to barratry of the master or mariners. § 217. Barratry of the Masters and Mariners.— This term signifies any wilful misconduct, either fraudulent or in violation of the law, which is committed by the captain or crew without the connivance of the ship-owner, and which tends to the ship-owner's prejudice, either as injuring or expos- ing to risk of injury his property or the property intrusted to his care, or as exposing it to the risk of forfeiture or seizure for penalties on account of the breach of law. Barratry is a crime, and therefore no mere error of judg- ment can amount to it; 2 but a willfully improper stowage of cargo on deck, instead of under deck as instructed, will consti- tute barratry by a master. 3 - The act of barratry need not be intended for the private benefit of the master or mariners, for any unauthorized breach of law exposing the owner to penalties is barratry, though it were intended for the advantage of the owner ; 4 but negligence is not barratry. Examples of fraudulent barratry are scuttling, burning, or stranding, or selling or disposing of a ship, or running away with her, 5 embezzling the cargo and unlawfully selling it, or making away with the proceeds, or any mischief done to ship or cargo by mutineers. 6 Examples of barratry through mere illegality aro smuggling, 7 illegal trading, 8 breach of port regula- 1 Simpson v. Charleston P. & M. Ins. Dederer v. Delaware Ins. Co. , 2 Wash. Co., Dudley (S. C), 239. C. C. 61. 2 Parkhurst v. Gloucester Mut. Fish- s Falkner v. Ritchie, 2 M. & S. 290. ing Ins. Co., 100 Mass. 301 ; s. c, 97 Lawton v. Sun Mut. Ins. Co., 2 Cush. Am. Dec. 100. Patapsco Ins. Co. v. 500. Coulter, 3 Peters, 232. • Elton v. Brogden, 2 Str. 1264. 3 Atkinson v. Great West. Ins. Co., ' Havelock v. Hancill, 3 T. R. 277. 65 N. Y.531, overruling s.c., 4 Daly, 1. 8 Earle v. Rowcroft. 8 East, 126. 4 Grill v. General Iron Screw Col- See Carrington v. Merchants' Ins. Co., liery Co., L. R. 3 C. P. 476. See 8 Pet. 495. § 218 Jettison. 239 tions, exposing the ship to seizure or penalties, 1 and the like. But it should be clearly understood that complicity of the owner in any of these misdemeanors will exclude them from the category of barratry and discharge the underwriter from all responsibility for the consequences. Complicity may be inferred from a want of reasonable vigi- lance, as where a captain had gone on smuggling for three suc- cessive voyages without interference on the part of the owner. 2 By the owner must here be understood that owner who has the immediate control over the master and crew ; that is to say, the power of dismissing them. A shipowner who is also part owner can commit barratry as against his co-owners and their underwriters, though, of course, not against the underwriters of his own share. 3 If the policy contains a warranty against capture and seizure, and the barratry is smuggling, and the loss claimed is a penalty inflicted as the price of releasing a ship after seizure, this is not recoverable, being a loss by seizure and therefore barred by the warranty. 4 The liability of underwriters for the consequences of the barratrous acts of the master and crew may be limited by .express agreement. § 218. Jettison. — This is the intentional throwing over- board of a part of the cargo, or any article on board of a ship, or the cutting or casting away of masts, spars, rigging, sails, or other furniture, for the purpose of lightening or relieving the ship in case of necessity or emergency. For such losses, the underwriter of the goods jettisoned is in the first instance directly liable ; 5 the loss, though by the hands of man, being necessitated or justified by the accidents of navigation. When goods or effects are jettisoned for the common safety, all who have derived benefit, that is to say, the owners of the. ship and the entire cargo, are bound to join in replacing the loss by the contribution called general average. If the under- writer of the article thus sacrificed has paid his assured the 1 Knight v. Cambridge, referred to Wilson v. General Mut. Ins. Co., 12 in 8 Bast, 136. Cush. 860 ; s. c, 59 Am. Dec. 188. 2 Pipon v. Cope, 1 Camp. 434. ' Cory v. Burr, 8 Q. B. D. 813. * Jones v. Nicholson, 10 Ex. 28. * Dickenson v. Jardine, L. R., 3 C. Contra, where part owner is master, P. 639. 240 Insurance : Fire, Life, Marine. § 219 loss, he is entitled to stand ,in the place of the assured, and to receive his share of the indemnity furnished by the general contribution. "When goods are jettisoned, the freight is, so to speak, jettisoned with them, and is likewise recoverable in general average. Loss, which is the necessary and immediate consequence of a jettison, is reimbursed in the same way as the jettison itself. Such, for example, is damage caused by the entrance of water into the ship's hold while a jettison is being effected; or by holes being cut in the deck for the same purpose. By general mercantile usage, the loss by jettison of goods stowed on deck is not allowed in general average. To this usage there is, however, the well-recognized exception, that, in case, the carriage of a deck load is customary in the particular trade, contribution is made for the value of goods jettisoned from the deck in the absence of any agreement to the con- trary. A jettison may be induced by motives other than the com- mon safety, as, for instance, where the ship, being in imminent danger of capture, the master dropped a bag of specie into the sea lest it should fall into the hands of the enemy, for which the underwriter was held liable under the head of jettison ; ' but when goods are thrown overboard on account of their inherent vice, the underwriters are not liable. 2 § 319. All Other Perils, Losses, or Misfortunes. — The terms of this clause are so comprehensive as at first sight to convey the impression that they embrace every kind of mishap, not already enumerated, to Which property at sea can be subjected. Such, however, is not the case ; for here the rule of construction applies that general terms following par- ticular ones apply only to matters which are of the same kind with those specified. Accordingly, the effect of the general undertaking, expressed as above, is to bring within the scope of the contract all casualties which, though not identical with, are similar to, the risks enumerated. Thus, the expression of " all other perils, losses, and misfortunes " has been held to include damage to a ship which had been heeled over by the 1 Butler v. Wildman, 3 B. & Aid. " Taylor v. Dunbar, L. E., 4 C. P. 398. 206. § 220 Proximate Cause. 241 wind in a graving dock ; the loss of dollars thrown overboard from a vessel on the point of capture, in order that they might not be taken possession of by the enemy ; the wrecking of a steamer through the bursting of the boiler, etc., if from the unusual action of the sea. 1 Damage directly done by rats, as, for instance, by the gnawing of holes in the ship's bottom, whereby she was ren- dered unfit for sea, has been decided not to be a peril insured against. 2 If, however, a rat should gnaw through a leaden pipe, and thereby let in water which sinks the ship, the under- writer would no doubt be liable. 3 If a sword-fish drives its snout through a plank, the underwriter must pay for the damage. Damage done by worms to the planking or timbers of wooden ships can be effectually prevented only by copper or metal sheathing. If, through accident, such as a grounding, the sheathing is anywhere rubbed off and worms get in through the unprotected part, such damage must be borne by the underwriters; not so, if a ship unprotected by metalj sheathing is sent into seas infested by worms. 4 Loss or dam-i age by explosion, whether of gunpowder, acids, or chemicals, is recoverable under the policy. So is damage done to one kind of goods as the effect of sea damage done to another. kind. 5 § 220. Proximate Cause. — "Where there is no question of personal misconduct on the part of the assured the law has regard only to the proximate or immediate cause of the loss. But in case of fraud or personal misconduct by the assured himself, all consequences thereof, remote as well as direct, are to be excluded from the claim on the policy. It is a settled rule of law that any loss directly caused by a peril insured against is to be paid- for by the insurers, notwith- standing that the loss may have been brought about by bad navigation, neglect, or fault of the master or seamen, or, ex- 1 West India & P. Tel. Co. v. Home & * Laveroni v. Drurj, 8 Ex. 166. C. Mar. Ins. Co. , 4 Asp. Mar. L. C. 341. ' Bohl v. Parr, 1 Esp. 444. 2 Hunter v. Potts, 4 Camp. 203. See B Koebel v. Saunders, 17 C. B. N. S., Garrigues v. Coxe, 1 Binn. 592; s. c, 71. 2 Am. Deo. 493. 16 242 Insurance : Fire, Life, Marine. § 220 cepting only the misconduct of the assured himself, any other cause not directly insured against. 1 Thus, where a ship was destroyed by fire because a careless mate had lighted a fire in the cabin and then left the ship without a watchman on board. 2 "Where a ship fell over on her side in harbor and was bilged because the rope provided to secure her was not strong enough to hold her. 8 Where the sloop drifted on the rocks while the seamen in charge of her had all negligently fallen asleep. 4 "Where a ship is damaged by collision, though the collision may have occurred in calm, clear weather, through similar want of lookout, or the mis- take of a helmsman. 5 In these and similar cases the insurers have been held liable on the ground that the peril insured against is the proximate cause. The question of proximate cause presents itself under dif- ferent aspects, and a brief statement of some of them will make the subject clearer. Sometimes the starting point is a casualty negligently caused — for instance, a fire — and the inquiry is directed to one of two points, as the case may be : (1) How far shall the spread of the fire be considered a proximate result of the negligence, or (2) shall the loss.by fire be said to include consequences like theft, or injury by water used to put out the fire, or loss of business and profits, which, though quite distinct from combustion, are caused by it? Then, again, in another class of cases the starting point is a given damage to the sub- ject of an insurance where different causes have conjoined to produce it, for one of which the insurers are liable and for the other of which they have assumed no express responsibility. The vital question then arises, which cause shall be considered the efficient controlling cause of the loss, and upon the solution of this question turns the liability or exemption of the insurers, as, for example, where a ship is wrecked upon a rock by a storm, but the master was careless in steering it. 6 1 Orient Ins. Co. v. Adams, 123 2 B. & Aid. 73. American Ins. Co. TJ. S. 67 (1887). Phoenix Ins. Co. v. v. Bryan, 26 Wend. 563. Erie & W. Tr. Co., 117 U. S. 312. s Bishop v. Pentland, 7B.&C. 219. The Titania, 19 Fed. Rep. 101. Ma- ' Walkerv.Maitland,5B.&Ald.l71. thews v. Howard Ins. Co., 11 N. Y. 14. « Smith v. Scott, 4 Taunt. 126. ' Dudgeon v. Pembroke, L. R., 2 App. "Dudgeon v. Pembroke, L. R., 9 Cas. 297. Q. B. D. 581. Thompson v. Hopper, " Busk v. Royal Exchange Ass. Co., 6 E. & B. 191. § 222 Peril Excepted and Sea Pebil. 243 § 221. A Peril Excepted and Sea Peril When a policy is effected with express exemption from some particular peril, as, for instance, with the clause, " free from all conse- quences of hostilities," if a loss arises from the jdnt operation of the peril insured and the peril thus excluded, we are to inquire which of the two was the proximate cause. This appears from the following decision: During the American civil war the light on Cape Hatteras was extinguished by the Confederate troops for military reasons. Owing to the absence of this light the captain of a ship missed his reckoning, struck on a reef of rocks, and the ship became a wreck. The cargo consisted of 6,500 bags of coffee, of which 1,020 would have been saved if the salvors had not been prevented by the Confederate troops, who themselves only succeeded in saving 170 bags, which they kept for their own use. This coffee was insured " free from all consequences of hostilities." On these facts the English Court of Common Pleas held that the under- writers were liable for the loss of all but 1,020 bags. The case was to be dealt with, the court said, as if there were two policies, one on the war risk and the other on the sea risk, and the question here was which of the two was the proximate cause of the loss. As to the 1,020 bags, it was the Confederate forces which directly prevented the saving, and so caused the loss of that portion. But the extinguishing of the light was only the remote cause of the loss of the remainder, the proxi- mate cause being the striking on the reef, which could not be said to follow as a natural or ordinary, still less as a necessary consequence of the extinguishing of the light. 1 Where the policy contained an exemption in the form of an ice clause, and the delay and consequent loss were occasioned partly by the ice and partly by a peril insured against, a recovery was allowed on the ground that the peril was the proximate cause. 3 § 222. Proximate Cause as Limiting Insurers' Liability. — The rule looking only to the proximate cause of loss sometimes operates in favor of the insured, but sometimes in favor of the insurers. From this principle it follows that a number of accidental or secondary losses springing out of the 1 Ionides v. Universal Marine Ins. s Brown v. St. Nicholas Ins. Co., 61 Co., 14 C. B. N. S. 259. N. Y. 332, by D wight, C. 244: Insurance : Fire, Life, Marine. § 223 damage to the thing insured, and falling on 'the owner of it, cannot be recovered from the insurer. For example, when a ship is damaged by sea peril the insurer is liable for the cost of repairing but not for the ship- owner's loss because the ship is laid up and unable to earn freight while being repaired. Nor, again, supposing that during that period it is necessary to retain the ship's crew, or any portion of them, is he liable for the owner's loss in having to pay and feed them while the ship is so unemployed. 1 These losses result not from the damage but from the delay incidental to the damage, so that the damage suffered by the ship, it may be argued, is only the remote cause of them. So if fruit, meat, or any other article of like perishable nature putrefies by reason of delay springing out of sea peril, the insurer is not liable. 2 Nor, except under the special provision of the collision clause, is the insurer of a ship liable in case the assured is obliged to pay damages to the owner of some other ship on account of a collision occasioned by the fault of his crew. § 223. Wear and Tear. — "Wear and tear is distin- guished from sea peril in not being occasioned by unusual violence or any accident, but by the mere " silent, natural, gradual action of the elements upon the vessel itself." The chief seat of wear and tear is naturally that portion of the fabric which is directly used in urging the vessel through the water— the sails, rigging, and lighter spars of a sailing vessel, and the screw-shaft of a steamer. Wear and tear must be discriminated from sea-damage, not so much by. the kind of weather it occurs in as by the kind of damage done ; what is ordinary weather for one season or voyage being storm for another. Besides that, the language of ship-masters varies greatly in intensity of epithet as descriptive of weather. To distinguish what is wear and tear in particular cases must, to a great extent, be left to the trained judgment of experts in such matters. Some general rules for their guid- ance, however, are adopted in the practice of adjusters, which may be brought under the following heads : Sails split or blown away while set are ordinarily treated as wear and tear ; 1 DeVaux v. Salvador, 4 Ad. & Ell. » Taylor v. Dunbar, L. B., 4 C. P. 420. 20fi. § 223 Weak and Teak. 245 but not so, if set when the ship is aground, or if lost in con- nection with spars carried away, or if blown adrift when furled, or in the act of furling or setting them ; and a further excep- tion ought probably to be made in the case of sails split when the ship is lying to, or scudding before the wind, or when she broaches to. The ground of this rule is, that the mere press- ure of the wind upon the sails while the ship is under canvas subjects them to an ordinary continuous strain, the effects of which are every now and then shown by their splitting or giving way. Where rigging is chafed, or stays or running gear parted, from no assignable cause beyond the continuous strain upon them, it is for the same reason treated as wear and tear ; but not so, if the cause of the breakage or chafing is something unusual and accidental, such as the carrying away of a mast, or the like. The same rule, with the same exception, is appli- cable to light spars, as studding sail booms, royal and top- gallant yards, and the like. What, for this purpose, are light spars, must be left to the judgment of experts. It seems hardly reasonable that the same rule should serve for small coasters, or yachts, which frequently lose their little spars by carrying on sail, and ships of the largest class, whose top- gallant masts may be bigger than the others' topmast, or even mainmast. Spars carried away when no sail is set on them are always admissible as particular average. The breaking of a screw shaft, through mere wear and tear, is perhaps one of the most ordinary dangers of steam naviga- tion. It is supposed that by the constant revolution of the shaft some process of crystallization is set up, which by degrees renders the iron brittle, so that it may snap under the mere ordinary strain in fine weather ; and this takes place at periods so varying in different cases that it is hardly practicable to guard against it. Such a breakage, where there is no accident or violence to account for it, can, of course, be treated only as wear and tear. But there is a good deal of floating wreckage in the sea, and cases do occur in which the breakage of a shaft is not improbably attributable to contact with some such thing. A ship's ground-tackle, windlass, and hawsers used for mooring, are of necessity subjected to much constant ordinary 246 Insurance : Fire, Life, Marine. § 224 strain, or wear and tear. For this reason, the rule of prac- tice formerly was to treat the breakage of a hawser, or parting of a chain cable, or breaking down of a windlass, as mere wear and tear, unless it could in some way be traced to an accident out of the common course, such as the falling of another ship athwart the hawser, so as to bring a double strain upon it, or the like. Latterly, there has been a tendency to relax this strictness, particularly with regard to chain cables ; a duly tested chain, it is argued, ought not to give way except under some extraordinary strain, so that its giving way is itself a proof, not that the chain was faulty but that the strain was exces- sive. As for a ship's calking — if, without being struck by seas, thrown on her beam ends, or meeting with bad weather, a ship on a long voyage gradually becomes leaky, this is a suspicious symptom of wear and tear, as affecting the hull. If, in such a , ease, it shall appear that the ship has not been calked for a long time, the ship-owner will probably have difficulty in estab- lishing: a claim on his insurers. But these are cases as to which it is hardly possible to lay down a rule ; the principle is, that, before an underwriter can be made liable for the calking, it must be shown that the leakiness has been occasioned by more than ordinarily bad weather : and ordinarily bad weather is a relative term, varying with the season and kind of voy- age ; and the application of this principle to individual cases can only be made with the aid of experts. 224. Original Defect. — Underwriters are not liable for any loss which is the immediate result of an original defect in any part of the hull or materials. For instance, where a chain parts owing to a defective link, the consequent loss of the anchor and chain is not recoverable. Again, there may bean original flaw in the welding of a stern- post, shaft, or otherpart of thelaull or machinery, which, though at first so slight as to be imperceptible, gradually reveals itself and becomes enhanced by the working of the vessel at sea, until it culminates in a breakdown of the part affected. In such a case the cost of making good the injury will not form the subject of a claim under the policy. 1 1 Thames & Mersey Marine Ins. Co. v. Hamilton, L. B,., 12 App. Cas. 484. § 225 Sea Damage and Deterioration. 247 § 225. Sea Damage and Ordinary Deteriora- tion, Combined — When the repair of sea damage is com- bined with that of ordinary deterioration, it is often a work of considerable nicety for the adjuster to resolve the complica- tions which ensue, and refer each description of damage to its proper head. Preparatory to the consideration of a few of the cases of mixed damage which most frequently occur, it will be advis- able to inquire how far such matters can be dealt with upon general principles. (1) In the first place it is to be remem- bered, that, where deterioration of any kind exists to such an extent as to make a vessel unseaworthy on sailing, the risk under a voyage policy will not attach. (2) "Where the war- ranty of seaworthiness is not implied, or has been satisfied, the underwriters are liable for all loss or damage proximately caused by the perils insured against ; and there is no other con- dition of the ordinary policy, whether express or implied, which exonerates underwriters from loss or damage by the perils in- sured against on the ground that the peril only became opera- tive through the weakness of the thing exposed to it. (3) De- terioration by wear and tear is provided for by the deductions for improvement ; but when an article is worn out, those de- ductions are inapplicable, as the article is practically lost by the ordinary deterioration. (4) The liability of the under- writer for the repair or renewal of any part of a ship's hull or materials, lost or damaged by the perils insured against, is unaffected by the presence of ordinary deterioration, excepting where that deterioration is so extensive that it would have involved the condemnation of the subject of it, irrespective of the further injury, in which case there is no liability on the part of the underwriter, as the ship-owner has sustained no loss by the perils insured against. In applying these principles, we may first take a case where the combined damage was so great as to amount to a construc- tive total loss of the ship. A ship insured with the clause "allowed to be seaworthy for the voyage " encountered a, vio- lent storm, in consequence of which she was much damaged and had to put into a port of refuge. On examination it was found that many of the beams were broken, and many of the bolts and fastenings loosened ; and that the vessel being old, and in 248 iNstrKANCE : Fiee, Life, Maeine. § 226 many parts decayed, the decayed parts could not be again made use of, as they would not bear rebolting, but would re- quire to be replaced with new timbers. There was, however, no reason to doubt that the decayed parts were strong enough to have enabled the ship safely to perform the voyage, had it not been for the heavy weather encountered. It was estimated that the aggregate cost of the necessary repairs would exceed the value of the vessel when repaired. On an action upon the policy to recover for a constructive total loss, the learned judge who tried the case left it to the jury to say whether the cost of the repairs of the damage arising from the perils insured against would have»exceeded the value of the vessel when re- paired, directing them, if they were of that opinion, to find for the plaintiffs. The jury returned a verdict for the plain- tiffs. A new trial was then moved for, on the ground that the jury should have been directed, in considering the repairs that were necessary, to exclude from the estimate all such re- pairs as the decayed state of some parts of the ship made nec- essary ; but the court held that there had been no misdirection, adding that, having carefully examined the evidence, they saw no ground to suppose that any repairs had been included in the estimate which were not fairly referable to the perils of the sea. 1 In this case, it is to be observed that the deterioration which the vessel had suffered by wear and tear was, in effect, cast upon the underwriter, as the necessity to make it good arose from the operation of the perils insured against. § 226. Application of these Principles to Par- ticular Average. — We have next to consider the application of the foregoing principles to the adjustment of particular average. For the sake of illustration, let it be supposed that a mast has been sprung by a peril of the sea, and has likewise an inherent defect. If that defect existed on the sailing of the vessel to such an extent as to render her unseaworthy, the risk, under a voyage policy, would not attach. On the assump- tion that the warranty of seaworthiness had been complied with, or was not implied, the underwriters would be' liable for the loss sustained by the assured through the springing of the mast by sea perils, though the inherent defect may have con- 1 Phillips v. Nairne, 4 C. B. 343. § 226 Particular Avebage. 249 tributed to that result. If, however, the weather were only ordinary, and the mast, which could have resisted the strain exerted upon it in the absence of the defect, were sprung in consequence of the defect, the underwriters would be. free from liability. The extent of the loss sustained by the assured through the springing of the mast by sea perils has next to be ascertained. If the inherent defect were so great as to involve the condem- nation of the mast, irrespective of the injury by sea perils, the assured, having sustained no loss by the latter, would have no claim under the policy. t If, however, but for the injury by sea perils, the mast would still have been serviceable, the under- writers would be liable for the cost of repairing that injury. Should the injury involve the renewal of the mast, either on account of the spring alone, or because the latter, though it could have been repaired by fishing the mast, had the latter been sound, cannot be so repaired on account of the defect, the underwriters will be liable for the cost of the renewal, less the ordinary deduction for improvement. If, however, the spring occur in one part of the mast, and the defect in another, so that the spring might have been repaired by fish- ing the mast, but in consideration of that injury, coupled with the defect, it is decided to have a new mast, the liability of the underwriters will be confined to the estimated cost of fishing the old mast, less the usual deduction for improve- ment, that being the extent of the loss by sea perils. A similar case occurs where, in the course of repairing injuries caused by sea perils to a ship's bulwarks and stan- chions, or upper deck beams, it is necessary to remove several deck-planks ; and the latter, owing to the wood being old and frail, cannot be removed without spoiling them, though if there had been no such defect they could have been replaced. In that contingency, if the deck-planks, though defective, would still have been serviceable had it not been for the dis- turbing effect of the sea perils, the underwriters are liable for the cost of replacing them, less the ordinary deduction for improvement ; though they would not be liable if the planks were so defective as to necessitate their renewal, irrespective of the accident. When injury to iron-work by the perils insured against is 250 Insurance : Fire, Life, Marine. § 227 combined with the effects of corrosion, the liability of under- writers for the combination should be tested according to the, same method as has been applied to the case of similar injuries to wood-work combined with the effects of decay. In case of the fracture of a steamer's shaft, or the breaking down of her machinery, in consequence of inherent defect alone, there is no liability on the part of underwriters for the consequent damage ; but, if the damage be aggravated owing to the action of sea perils upon the injured parts, the under- writers will be liable for the enhancement. For instance, should a propeller get loose upon the shaft, owing to a defect in the key, the cost of making good that defect would not be recoverable ; but should heavy weather ensue, and the violence of the sea acting upon the displaced propeller cause injury to it or to the shaft, the damage so caused would be claimable as particular average. In the event of a shaft being fractured, or a steam-engine breaking down, on account of sea perils com- bined with inherent defect, the extent of the loss arising from the former cause must be ascertained upon the same principles as have been stated in relation to other repairs. § 227. Limitation of the Liability of Under- writers. — The principal losses which are not covered by the terms of the policy, and for which the underwriters are not liable, are arranged, as below, in a summary form under the four heads specified. 1. Loss by deterioration and ordinary outlay in navigation, such as the splitting or carrying away of sails by the wind ; the breaking and straining of the rigging while navigating ; the parting of hawsers and ground-tackle, unless subjected to an extra strain owing to some accidental occurrence; the rolling away of small spars, such as studding-sail booms or top-gallant and royal yards, with the exception last mentioned ; injury to pumps ; the breakage of a steamer's shaft, unless attributable to heavy weather, or some other peril insured against ; damage to the hull of a vessel through taking the ground in the ordi- nary course of navigation ; slackness of seams, resulting from wear and tear; the wastage of metal sheathing consequent upon use and exposure ; damage by rats or worms ; decay of wood-work ; corrosion of iron-work ; and; in general, the ordi- § -'-7 Limitation of Liability. 251 nary deterioration of a vessel's hull and materials ; ordinary- leakage and breakage of cargo; and all ordinary charges incurred during the prosecution of the adventure, including wages and victualing of the crew, though enhanced in amount owing to the prolongation of the voyage through sea perils. 2. Loss by the inherent defect of the subject insured, as where fish or meat becomes putrid, rice or flour heated, fruit rotten, wine sour, or hides tainted, not by contact with sea water, but by natural decomposition, even though the latter arise from the prolongation of the voyage by sea perils ; * disease and natural death of animals ; original defects in the hulls or mate- rials of vessels ; flaws in the machinery of steamers, etc. 3. Loss remotely caused by the perils insured against. This limitation includes loss of interest on capital embarked at sea, or loss of market on cargo, owing to the protraction of the voyage by bad weather ; loss arising from the compulsory abandonment of the voyage consequent upon blockade, hostile occupation, or other deterrent cause ; the liability of ship- owners for loss or injury caused to persons or property through the default of their servants ; the liability of ship-owners for the charges incurred in the removal of wreck, even though the underwriters have paid a total loss and claimed the salvage ; loss by the forced sale of goods at a port of refuge to provide funds for the repair of the ship, or to defray other expenses necessary for the prosecution of the voyage ; 2 the liability of the cargo-owner to make up the deficit in the payment of a bottomry bond, on ship and cargo, arising from the ship and freight being of insufficient value ; s loss by the forced sale of property under admiralty decree to realize the amount of a claim thereon ; 4 loss by a prejudice, or suspicion of damage ; 5 the forfeiture of freight, arising from the exercise of a power of mulct or canceling option by the charterer, etc. 6 4. Loss directly attributable to the misconduct of the as- sured or his agent. 7 The following are instances of this limita- 1 Taylor v. Dunbar, L. R., 4 C. P. 6 Cator v. The Great Western Ins. 206. Co., 2 Asp. Mar. L. C. 90. * Powell v. Gudgeon, 5 M. & S. 431. • Inman SS. Co. v. Bischoff, 5 Asp. * Greer v. Poole, 4 Asp. Mar. L. C. Mar. L. C. 6. Mercantile SS. Co. v. 300. Tyser, 5 Asp. Mar. L. C. 6, note. 4 Thompson v. Eeynolds, 7 El. & B. 7 Thompson v. Hopper, 6 B. & B. 173. 172, 937. 252 Insurance : Fire, Life, Marine. § 228 tion : Loss by unseaworthiness ; loss in the shipping or landing of cargo, directly attributable to the negligence of the ship- owner's servants, or to defect in the ship's tackle ; damage by bad stowage, rats or other vermin ; loss by American capture or hostile arrest for illegality ; loss resulting from the act of a foreign state, of which the assured is a subject, when com- mitted with a hostile intention against this country (the assured being, in such a case, identified in the eye of the law with his government in the proceeding) ; the loss of articles placed in improper or insecure situations, such as water-casks on deck, and hawsers or other ropes lying on deck, unless the vessel is just entering or leaving port. Under the same head may be placed the custom by which an underwriter is exonerated from liability for the loss of cargo laden on deck, unless its carriage there is sanctioned by special agreement in the policy, or by established custom of the trade. § 228. The Sue and Labor Clause. — This clause is to be treated as an engagement distinct from the main body of the policy, 1 and therefore not subject to the restrictions con- tained in the memorandum. The liability under it is not a liability for particular average. 2 It is distinct from the rest of the policy in this further sense, that, although the underwriter's liability for a loss of the thing insured resulting from a single casualty is restricted to the amount of his subscription, he may be liable be}'ond that amount for such a loss when coupled with a claim under the sue and labor clause, as when expense is in- curred in an unsuccessful attempt to save a ship which never- theless is totally lost. 8 Two conditions are requisite to constitute a claim under the sue and labor clause : the apprehended mischief must be some- thing for which the underwriters would have been liable, and the measure for safety which gives rise to the expense claimed must be the act of the assured himself or of his agent or ser- vant. If, for example, goods are insured " free of capture," it is clear that an expense incurred to prevent a capture could not 1 Lohre v. Aitohison, 3 Q. B. D. • Alexandre v. Sun Mutual Ins. Co., 509. 51 N. Y. 253. Lohre v. Aitohison, 3 2 Kidston v. Empire Marine Ins. Co., Q. B. D. 558. Providence & S. SS. L. R., 1 C. P. 535. Co. v. Phoenix Ins. Co., 89 N. Y. 563. § 230 Other Assurance. 253 be claimed under this clause ; nor, if " against total loss only," an expense incurred merely to diminish damage or avert a loss other than total. *» "Where salvors pick up a ship derelict at sea, or as volunteers, and bring the property to port in safety, without being in any sense hired by an agent of the assured, the payment for salvage is not a claim under the sue and labor clause. The cost of re- pairing a damaged ship is not a claim under the sue and labor clause, while the cost of earning freight by a justifiable trans- shipment is ; because in the latter case there is a worse evil averted, while in the former case there is not. § 229. Exemption under Five Per Cent.— No partial loss or particular average shall in any case he paid unless amounting to five per cent. The purpose of this restriction is to relieve the insurers from such small injuries as may very probably be caused by the natural deterioration of perishable articles, and to exempt them from- trifling losses often arising more from wear and tear than from perils insured against, and almost certain to occur in any event. By the English view, successive losses may be added to- gether to make up the required percentage ; 2 but the Massa- chusetts court was of the contrary opinion and held otherwise in respect to successive losses happening to the ship. 3 For a further consideration of percentage clauses see § 232. § 230. Other Assurance. — If the assured shall have mads other assurance prior in date to this policy, this company shall he answerable only for so much as the amount of such prior assurance may he deficient towards fully covering the premises hereby assured, and this company shall return the premium upon so much of the sum hy them assured as they shall he by such prior assurance exonerated from / and in case of any assurance ■upon said premises subsequent in date to this policy, this com- pany shall nevertheless be answerable for the full extent of the 1 Kidston v. Empire Ins. Co., L. R., " Brooks v. Oriental Ins. Co., 7 Pick. 1 C. P. 543. 259. Paddock v. Commercial Ins. 8 Blackett v. Royal Exchange Ass. Co., 104 Mass. 521. Co., 2 Cr. & J. 244. 254 Insurance: Fire, Life, Marine. §230 sum by them subscribed without right to claim contribution from such subsequent assurers, and shall accordingly be entitled to retain the premium by them received in the same manner as if no such subsequent assurance had been made. This is the American rule in marine insurance, and it differs from the rule in fire insurance, and also differs from the Eng- lish marine rule, under which all policies share proportionately in the interest irrespective of the dates when they were sub- scribed, unless there is some stipulation to the contrary. 1 This difference in the laws of different countries is incon- venient and leads to confusion when part of an interest happens to be insured in one country and part in another. It is a general principle of law that fractions of a day are hot regarded, but if two or more policies are made on the same day, insuring the same property against the same risks, and the question of priority is material, this priority will be determined by ascertaining at what time on that day the first was made. 2 Priority is determined according to the time of effecting the insurance rather than the inception of the risk, and for this purpose the written date of the policy is not conclusive. 3 This clause of the policy is only applicable to other or double insurance, which has been already explained. It is sometimes expressly stipulated that other insurance of the same date as the policy in question shall be deemed simul- taneous therewith. If the property is fully covered by the prior insurance, the subsequent insurance does not attach ; but it has been held that if the prior for any reason fails during the term of the subsequent insurance, the latter may then attach, but not if it is because the first company becomes insolvent. 4 If all the policies, or several of them, of different dates do once attach, and the property is diminished below their aggre- gate amount during their life, the question arises whether the insurance shall abate pro rata on all the policies, or first on the latest policies. On principle, the former rule would seem to be 1 American Ins. Co. v. Griswold, s Lee v. Mass. Ins. Co., 6 Mass. 208. 14 Wend. 399. « Kent v. Manufacturers' Ins. Co., 18 2 Potter v. Marine Ins. Co., 2 Mason Pick 19. Ryder v. Phcenix Ins. Co., 475. 98 Mass. 185. § 231 Free of Capture. 255 the more satisfactory, though there is a decision to the con- trary. 1 The effect of violating a provision against other insurance has been considered in connection with the clauses of the fire policy. § 231. Warranted Free of Capture.— The meaning of the term " warranted free," when employed to introduce an exception to the underwriters' liability, is to guarantee that the interest insured shall be free from any of the excepted perils as a cause of loss for which the underwriter is responsi- ble. This kind of warranty means that although the general terms of the policy would have covered the peril, yet consider- ing the special hazard incident to the particular subject, the underwriters, unless they are paid the premium for consenting to take it, do not choose to be liable for the risk. The words " capture " and " seizure " are not to be under- stood as having sole reference to the acts of belligerents. It is true that the proper meaning of the word " capture " is, as already stated, a hostile taking with intent to keep ; but this signification is extended by the addition of the word " seizure," the ordinary and natural meaning of which is a forcible taking possession, however effected. 2 Thus a ship had got ashore on the west coast of Africa, where she was boarded by natives, who, after plundering the vessel, left her in such a condition that she was abandoned as not worth repairing. In an action for the loss thus caused it was found by the jury that the natives took possession of the ship to plunder the cargo, and not for the purpose of keeping her, but it was held by the court that this seizure, though only temporary, was a seizure within the meaning of the words in the guaranty, and that the underwriters were consequently exonerated.* The words "capture " and " seizure " occurring in juxtaposi- tion will therefore be understood to include every forcible pro- ceeding, arising out of the perils insured, whereby the assured 1 American Ins. Co. v. GriswoJd, 14 " Johnston v. Hogg, 5 Asp. Mar. Wend. 399. L. C. 51. s Johnston t. Hogg, 5 Asp. Mar. L. C. 53. 256 Insurance : Fibe, Life, Marine. § 232 is deprived of the control or possession of his property, whether such proceeding be permanent or only temporary in effect, and "whether it be the act of an enemy, a friendly power mistaking the vessel for an enemy, 1 mutinous passengers, 2 or a lawful authority, with the exception of piratical seizure, where that exception is made in the policy. 3 If the liability of the insurers depends upon the legality of the seizure, this legality must be determined by the govern- ment of the country to which the vessel belongs, and the courts of such country must recognize as conclusive the claims of the executive branch of their government in regard to the sovereignty of any island or country and the right of a vessel to be in its waters. 4 § 232. The Memorandum Clause. — The exemption of this clause. is not applicable to total loss nor to losses calling for general average contribution, for which, in spite of it, the underwriters are liable; nor in Lloyd's form of policy is it applicable in the case of the stranding of a ship. Aveeage properly signifies a proportionate or equitable dis- tribution. This word is loosely employed both in law and in the trade of insurance, and care is needed to escape confusion. As here used it means partial loss. 5 " Free of average unbss general or the ship be stranded," has been construed to mean, " Free of average except general, or unless the ship be stranded;" that is, the underwriters, if such is the form of exemption, are free from all average or partial loss on the articles named, if not a general average loss, and they are liable for all partial loss on the articles named in case the ship be stranded, no matter whether the stranding caused the damage or not. 6 The damage may even have been discovered and repaired before the stranding takes place, but nevertheless the under- writers would be liable. A stranding at any time during the term insured has the effect of a condition, and effaces the 1 Powell v. Hyde, 5 El. & B. 607. 4 Williams v. Suffolk Ins. Co., 13 " Kleinwort v. Shepard, 1 El. & El. Pet. 415. 447. ' Wadsworth v. Pacific Ins. Co , 4 3 Swi'nnerton v. Columbian Ins. Co., Wend. 33. 37 N. Y. 174 ; s. c, 93 Am. Dec. 500. « Burnett v. Kensington,7 T. R. 310. § - ; j2 Memorandum Clause. 257 remainder of the clause. By average unless general is meant particular average. 1 The term particular average is confined to the deterioration or actual loss of part of the subject insured. Whence it fol- lows that the percentages specified in the memorandum must be similarly confined as regards their composition. Accord- ingly, neither general average, particular charges, nor the extra charges incurred to substantiate a claim on underwriters are admissible to form part of the amount requisite to constitute a claim for the particular average, which must be composed ex- clusively of the loss, consisting either in the deterioration or actual destruction of a part of the subject insured by the oper- ation of the perils insured against. 2 Expenses incurred to restore goods to their proper state which have arrived at their destination in a sea-damaged con- dition are admitted to make up the percentage of a claim for particular average, and are payable by the underwriters when, either alone or in conjunction with other partial loss, they amount to the requisite percentage. The earlier cases held that under the restriction of the memorandum clause, the under- writers would not be liable for a total loss unless actual as con- trasted with constructive. 3 The later cases would seem to point out a contrary rule upon this important point. 4 Where the exemption in the policy is worded, " free of par- tial loss," the Massachusetts court is of opinion that the under- writers are liable for a constructive total loss as well as for an actual total loss. 5 Total physical loss is not necessary, but only total loss of value to the owner, in order to constitute total loss. Conse- quently, when the exemption clause is worded, " free of partic- ular average only," the underwriters- are liable if there has been a justifiable abandonment for a total loss of value, though some of the goods may ultimately be saved and brought into port in specie. 6 Whether the court in the Wallerstein case 1 Wright v. Williams, 20 Hun, 320. Mayo v. India Mut. Ins. Co., 152 Mass. 2 Price v. Ins. Ass., L. R. 22, Q. B. D. 173 (1890). 580 (1889). 6 Mayo v. India Mut. Ins. Co., 152 3 Burt v. Brewers & Malts. Ins. Co., Mass. 172 (1890). 9 Hun, 333 ; affirmed but not involv- 8 Wallerstein v. Columbian Ins. Co., ing this point in 78 N. T. 400. 44 N. Y. 204; s. c, 4 Am. Kep. 604. 4 Chadsey v. Guion, 97 N. T. 333. Ins. Co. v. Fogarty, 19 Wall. 640. 17 258 Insurance : Fiee, Life, Marine. § 233 considered the loss actually or constructively total is not alto- gether clear. But the exemption relieves the underwriters, unless there has been either a total or a constructive loss of the entire cargo insured. Hence when the ship sank and was lost, but before the loss a portion of the cargo had been safely delivered, no recovery was permitted against the underwriters. 1 If a ship is afloat, or it is practicable to put her afloat, or if she is in such a condition that she is capable of being repaired at any expense, she cannot be held to be " an actual total loss ; " but the underwriters may take pos- session of her under'a rescue clause in such a case, and con- vert the loss into " an actual total loss." 2 Under the exemption,- "free from average unless general," or liable "for total loss only," the underwriter is not accountable for a partial loss of any one species of goods, except for general average, although separate boxes or packages of such species may be totally lost. 8 In order to mitigate the severity of this rule, it is usual to insert what are called "average clauses," the effect of which is to subdivide the subject matter insured, whether ship or cargo, into smaller parcels, so as to give the assured a chance of re- covery in case this or that portion be seriously damaged while the bulk is uninjured. For example, with cotton a clause may be inserted, " average payable on every ten bales running landing numbers." This means that if in any parcel of ten bales, as they are entered in the dock landing book, there is a damage above the memorandum restriction, the insured may recover, although the damage on the entire bulk of that species' of goods named in the policy would fall below the memoran- dum percentage of its value. § 233. What Constitutes Stranding 1 . — A vessel is stranded within the meaning of the memorandum clause, " free of average unless the ship be stranded," when, in consequence of some unusual or accidental occurrence, she comes in contact with the ground or other obstruction, and remains hard and fast upon it. 4 In examining the conditions which are necessary to consti- 1 Chadsey v. Guion, 97 N. Y. 333. ' Chadsey v. Guion. 97 N. Y. 333. a Can v. Security Ins. Co., 109 N. Y. * McDougle v. Royal Exchange As- 504. surance, 4 Camp. 283. § 233 Steanding. 259 tute such a stranding, we have first to notice that a literal lying upon the strand is not essential ; for whether the ship be cast upon the shore of the sea, the bank of a river, a rock, a heap of stones or rubbish, piles driven into the shore, or the wreck of another vessel, is immaterial, so long as she comes into contact with and remains resting upon some hard substance in the manner about to be described. Two specific features are necessary in order that a ground- ing may amount to a stranding within the meaning of the memorandum ; first, it is essential to constitute a stranding that the grounding should be accidental*— not one that occurs in the ordinary course of navigation. To determine whether a grounding was ordinary or extraordinary, inquiry must be made as to whether the ship took the ground in the accus- tomed place and manner, and in a tidal harbor upon the ebb of the tide, or whether she took the ground in an unusual place or manner, owing to the happening of something fortuitous. The circumstance that the damage was or was not sustained by the ship or cargo through taking the ground, is in general immaterial in deciding as to the ordinary or extraordinary character of the grounding. 1 Circumstances of an extraordi- nary nature occurring in connection with an ordinary ground- ing will not convert that class of grounding into a stranding, unless they affect the mode in which the vessel takes the ground. A vessel grounded at Dunkirk merely through the ebbing of the tide, but after she had settled it was found that she had received injury by striking upon some hard substance. The court, while allowing that any damage caused to ship or goods by this accident would be attributable to perils of the seas, held that the ordinary character of the grounding was not removed thereby. 2 % A different conclusion was arrived at in a case where the mode of taking the ground was affected by an accident. Thus a vessel had grounded in the usual place and manner in a tidal river, but had afterwards, owing to the stretching of a rope, been moved somewhat astern by the force of the wind, so that she came into' contact with a heap of rubbish and sustained 1 Hearne v. Edmunds, 1 Brod. & ' Kingsford v. Marshall, 8 Bing. Bing. 388. 458. 260 Insurance : Fire, Life, Marine. § 233 damage. This was held to be a stranding within the meaning of the memorandum. 1 Where a vessel, which was moored in a tidal harbor, fell over and was stove in on the ebb of the tide because the rope by which she was lashed was of insuffi- cient strength ; this was also held to be a stranding. 2 Where, by a temporary change of circumstances, however caused, the bottom of a river or harbor is in a particular place in a condi- tion different from its ordinary condition, and thereby a vessel intended to take the ground comes in contact with the ground at that place in a different manner from usual, that is a strand- ing within the memorandum. Accordingly, a vessel was held to have stranded where, in taking the ground in a tidal harbor, instead of resting upon an even keel, she pitched by the head into a hole, which had been caused by the paddles of steamers in leaving the harbor at low tide, and the existence of which had not previously been discovered. 3 The second essential feature in the constitution of a strand- ing is that the grounding must amount to a settling down upon the obstruction, as opposed to a mere " touch and go." A striking of the ship upon the ground, however violent, will not of itself suffice to constitute a stranding, nor will a mere temporary stoppage of the ship's way. In practice it is deemed sufficient to amount to a stranding if a vessel is hard and fast, without reference to the extent of her surface which is in actual contact with the obstruction. No definite period can be fixed as the time during which a vessel must remain quiescent in order to have stranded. In one case which came before the courts, it appeared that the vessel had struck upon a rock, and after remaining for a minute and a half, had floated off and proceeded upon her voyage. It was held by Lord Ellenborough that this detention was insuf- ficient ; for a stranding meant lying on the shore or something analogous to that. If it is merely " touch and go " with the ship, there is no stranding. Every striking must necessarily produce a retarding of the ship's motion. If by the force of the elements she is run aground, and becomes stationary, it is immaterial whether this be on piles, or on the muddy bank of 1 Wells v. Hopwood, 8 B. & Adol. * Letchford v. Oldham, L. R., 5 Q. 20. B. D. 538. 8 Bishop v. Pentland, 7 B. & C. 219. § 235 Cakgo on Deck. 261 a river, or on the rocks, or on the seashore. But a mere strik- ing will not do, no matter where that may happen. 1 As a mere striking the ground with a temporary stoppage will not suffice to constitute a stranding, neither will it suffice if the ship be dragged through the mud, or if she pass over a bar bumping at intervals ; but if she is forced ashore or driven on a bank, and remains for any time on the ground, that consti- tutes a stranding without reference to the degree of damage she may thereby sustain. The shortest time which has been allowed by the English courts as sufficient to amount to a stranding, occurred in a case where it appeared that the vessel had struck upon a rock a*nd remained from fifteen to twenty minutes. This was deemed a sufficiently long detention upon the ground to comply with the condition. 2 "Where a vessel is intentionally run ashore, as, for instance, to keep her from sink- ing, the grounding is equally a stranding as where it is purely accidental. 3 The voluntary stranding of a ship in the presence of an extreme peril is not, by the rule prevailing in England, a general average act which calls for general contribution from the other interests"; but, as we have already observed, the rule is otherwise in the United States. 4 § 234. Cargo on Deck.— Cargo on deck is not covered by this policy unless specially indorsed hereon,' in all cases to be free from loss by wet, breakage, leakage, or exposure. The general rule in regard to deck load, and the effect of custom upon it, have been already considered. Although not entitled to protection by the terms of the policy, the deck load, if benefited by a general average act, must contribute its share together with the other interests. § 235. Blockade. — Warranted not to abandon in the case of blockade, and free from any expense in consequence of capture, seizure, detention, or blockade, but in the event of blockade, to be at liberty to proceed to an open port and there end the voyage. 1 MoDougle v. Royal Exchange As- b Bowring v. BJraslie, 7 T. R. 216. surance, 4 Camp. 283. * Columbian Ins. Co. v. Ashby, 13 8 Baker v. Towry, 1 Stark. 436. Peters, 331. Star of Hope, 9 Wall. 203. 262 Insurance : Fiee, Life, Marine. § 236 This expressly limits a liability which would otherwise be imposed upon the insurers by the general terms of the body of the policy, as has been already explained in detail. § 236. Average Distinguished froni Salvage Loss. — A particular average on goods consists either in a deteriora- tion or total loss of part of the subject insured by the operation of the perils insured against. It is requisite to distinguish between a particular average and a salvage loss on goods, as some confusion has occurred in the use of these terms.- A salvage loss is a total loss diminished by salvage, and takes place, in relation to goods, when there is either an absolute or a constructive total loss of the subject in- sured, but some remains of the property have been recovered by the assured. In that case the claim upon the underwriters is for the difference between the insured value and the net pro- ceeds ; and the latter are computed by deducting from the gross proceeds of the property saved all charges incurred in realizing the salvage. In short, as it has been concisely put by Stevens, the merchant " receives the net proceeds from the per- son who effects the sales, and the balance from the under- writer." Where only a part of the subject insured is sold short of its f destination, the remainder being delivered there, the claim, B though stated in practice after the manner of a sal vage loss, is b in principle one for particular average, which is proved by the fact that it is excluded by a warranty to be " free from average, unless general." x If goods arrive in specie at their port of des- tination sea-damaged and with the marks obliterated, so that they cannot be delivered to their respective owners, there is nevertheless no claim for total loss under such circumstances, for the owners of the goods are tenants in common of the mass, and the claim is to be stated, according to the rules of partic- ular average, as on goods which have arrived at their destina- tion. 8 § 237. Riders. — A variety of forms of policies are in use both in ocean marine and inland marine insurance, and a great 1 Ralli v. Janson, 6 El. & B. s Spence v. Union Mar. Ins. Co., 422- L. R., 3 C. P. 427. § 238 Adjustment. 263 number of special clauses have been framed, and such clauses are often attached in the form of riders, sometimes for the pur- pose of restraining and sometimes for the purpose of extending the liability of the underwriters for special purposes. § 338. Adjustment. — The details of the adjustments of marine losses between the insurers and the insured are fre- quently a matter of great complication, and for the most part are put into the hands of professional experts called average adjusters. The adjusters make up an account, apportioning the loss according to the respective rights of the different interests. If there are general average losses, these must be included ; but if there has been a general average adjustment in a foreign port between the parties primarily interested in it, to- wit, the owners of ship, cargo, and freight respectively, then the results arrived at in that adjustment are taken as conclusive and incor- porated into the adjustment between the insurers and the in- sured. The professional adjuster is supposed to act in a judicial rather than in a partisan capacity, but his adjustment is not binding upon any of the parties unless by special agreement. In practice the adjustment is generally made the basis of an amicable settlement among the different interests, and law-suits are not as common over marine adjustments as in other branches of insurance business. On the arrival of the ship and cargo partially damaged, the master or owner of the ship ad- vertises for bids for repairs. Bids are accepted, the survey of damage is made, and contracts for rebuilding executed. These, with the bills of lading or invoices, the freight manifest, the charter party, the policies of insurance, and any other proofs of loss, furnish the adjuster with the necessary material for mak- ing up his account. After a loss has been adjusted and paid, the policy becomes merged in the adjustment, and the insurers cannot thereafter avail themselves of any defence, which they might have had under the policy as a ground for opening the adjustment ; but for fraud in obtaining the adjustment itself relief can be ob- tained. 1 This principle is applicable to adjustments in all branches of insurance law. 1 Smith v. Glens Palls Ins. Co., 62 N. T. 85. PART SECOND. LEADING ILLUSTRATIVE CASES.' CHAPTEK I. two of the earlier english cases. Court of King's Bench, 1777. TYEIE v. FLETCHER (Cowp. 666.) The contract of insurance is an entirety. If the risk does not attach the pre* mium is returnable, but if it attaches at all the premium cannot be appor- tioned. This was an action on the case, for money had and received to the plaintiff's use, brought by the plaintiff, the insured in a policy of insurance, against the defendant the underwriter, for a return of part of the premium. The cause was tried before Lord Mansfield, at Guildhall, at the sittings after last Trinity term, when, by consent, a verdict was found for the plaintiff, subject to the opinion of the court upon the question, whether, under the circumstances of the case, a proportionable part ought to be returned or not. If the court should be of opinion that a proportionable part of the premium ought to be returned, then a nonsuit was to be entered. It now came before the court, upon a rule to show cause why a nonsuit should not be entered ; and the cause, as it appeared from the report, was shortly this : The policy of insurance was upon the ship Isabella, at and from London to 1 The chapters of Part Second are illustrative of the corresponding chap- ters of Part First, and should be read in connection with them. 266 Insubance : Fibe, Life, Marine, c. i. any port or place where or whatsoever, for twelve months, from 19th of August, 1776, to 19th of August, 1777, both days inclusive, at £9 per cent., warranted free from captures and seizures by the Americans, and the consequences thereof. In all other respects it was in the common form, against all perils of the sea, etc. The ship sailed from the port of London, and was taken by an American privateer about two months afterward. Lord Mansfield, 0. J. — It was very proper to save this case for the opinion of the court, because in all mercantile transactions certainty is of much more consequence than which way the point is decided, and more especially so in the case of policies of insurance ; because, if the parties do not choose to contract according to the established rule, they are at liberty between themselves to vary it. This case is stripped of every authority. There is no case or practice in point; and therefore we must argue from the general principles applicable to all policies of insurance. And, I take it, there are two general rules established applicable to this question. The first is, that where the risk has not been run, whether its not having been run was owing to the fault, pleasure, or will of the insured, or to any otlier cause, the premium shall be returned, because a policy of insurance is a contract of in- demnity. The underwriter receives a premium for running the risk of indemnifying the insured ; and whatever cause it be owing to, if he does not run the risk, the consideration for which the premium or money was put into his hands fails, and therefore he ought to return it. (2) Another rule is, that if that risk of the contract of indemnity has once commenced, there shall be no apportionment or return of premium afterward. For though the premium is estimated, and the risk depends upon the nature and the length of the voyage, yet if it has commenced, though it be only for twenty-four hours or less, the risk is run ; the contract is for the whole entire risk, and no part of the consideration shall be returned ; and yet it is as easy to apportion for the length of the voyage, as it is for the time. If a ship had been insured to the East Indies agreeably to the terms of the policy in this case, and had been taken, twenty- four hours after the risk was begun, by an American captor, o. i. Tyeik v. Fletcheb. 267 there is not a color to say that there should have been a return of the premium. So much, then, is clear, and indeed perfectly agreeable to the ground of determination in the case of Stevenson v. Snow, 3 Burr. 1237 ; for in that case the inten- tion of the parties, the nature of the contract and the conse- quences of it, spoke manifestly two insurances and a division between them. The first object of the insurance was from London to Halifax, but if the ship did not depart from Ports- mouth with convoy (particularly naming the ship appointed to be convoy), then there was to be no contract from Portsmouth to Halifax. Why, then, the parties have said, "We make a contract from London to Halifax, but on a certain contingency it shall only be a contract from London to Portsmouth." That contingency not happening reduced it, in fact, to a contract from London to Portsmouth only. The whole argument turned upon that distinction. Mr. Yates, who was for the plaintiff, put it strongly upon that head ; and all the judges, in delivering their opinion, lay the stress upon the contract com- prising two distinct conditions, and considering the voyage as being, in fact, two voyages : and it was the equitable way of considering it ; for, though it was at first consolidated by the parties, there was a defeasance afterwards, though not in words. I think Mr. Justice Wilmot put it particularly upon that ground, but it was the opinion of the whole court. There was a usage, also, found by the jury in that case, that it was customary to return a proportionable part of the premium in such-like cases, but they could not say what part. The court rejected this as a usage for the uncertainty ; but they argue from it, that there being such a custom plainly showed the gen- eral sense of merchants as to the propriety of returning a part of the premium in such cases. And there can be no doubt of the reasonableness of the thing. • There has been an instance put of a policy where the measure is by time, which seems to me to be very strong, and apposite to the present case ; and that is an insurance for a man's life for twelve months. There can be no doubt but the risk there is constituted by the measure of time, and depends entirely upon it ; for the underwriter would demand double the premium for two years that he would take to insure the same life for one year only. In such policies there is a general 268 Insurance : Fiee, Life, Mabine. c. i exception against suicide. If the person puts an end to his own life the next day, or a month after, or at any other period within the twelve months, there never was an idea in any man's breast that part of the premium should be returned. A case of general practice was put by Mr. Dunning, where the words of the policy are, " At and from , provided the ship shall sail on or before the 1st of August;" and Mr. Wallace considers, in that case, that the whole policy would depend upon the ship sailing before the stated day. I do not think so ; on the contrary, I think, with Mr. Dunning, that can- not be. iA loss in port before the day appointed for the ship's departure can never be coupled with a contingency after the day ; but if a question were to arise about it, as at present advised, I should incline to be of opinion that it would fall within the reasoning of the determination in Stevenson v. Snow, and that there were two parts or contracts of insurance, with distinct conditions. The first is, I insure the ship in port, pro- vided she is lost in port before the 1st of August ; and sec- ondly, if she is not lost in port, I insure her then during her voyage from the 1st of August till she reaches the port speci- fied in the policy. The loss in port must happen before the risk on the voyage could commence ; and, vice versa, the risk in port must cease the moment the risk upon the voyage began. Let us see, then, what the agreement of the parties is in the present case. They might have insured from two months to two months, or in any less or greater proportion, if they had thought proper so to do. But the fact is, that they have made no division of tiine at all ; but the contract entered into is one entire contract from the 19th of August, 1776, to the 19th of August, 1777, which is the same as if it had been expressly said by the insured, " If you, the underwriter, will insure me for twelve months, I will give you an entire sum ; but I will not have any apportionment." The ship sails, and the under- writer runs the risk for two months : no part of the premium then shall be returned. I cannot say, if there had been a recapture before the expiration of the twelve months, that the policy would not have revived. Aston, J. — This case depends upon the words of the policy, and I am of opinion it is one entire contract at a certain gross c. i. Smith v. Scott. 269 sum of £9 per cent, for a certain period of time— viz., twelve months — and that no division is to be implied. The determi- nation in Stevenson v. Snow went expressly upon this consider- ation, that there were two distinct voyages, and no con- sideration received by the insured for the premium upon the second voyage; and there certainly was not, for there never was any point of time when any risk was run from Portsmouth. In Bond v. Nutt, the losses insured against were distinct, and unconnected with each other: 1st, a loss of the ship in port, if any should happen there ; 2d, a loss in her passage home, provided she sailed on a certain day. The risk in some policies may be distinct and divisible in its nature. In the case of an insurance upon a life, the sum is lumped, and the time is lumped for the year. So in this case, I think, the contract is one entire contract, and therefore that there ought to be no return of premium. Mr. Justice Willes and Mr. Justice Ashurst were of the same opinion. Nonsuit. Cotjet of Common Pleas, 1811. SMITH v. SCOTT. (4 Taunt. 126.) Insurance grants indemnity for loss by the perils specified, notmihslanding that the negligence of the assured or others may contribute. This was an action upon a policy of insurance upon the ships Helena and Merlin, at and from the bay of Honduras to their port or ports of discharge in Great Britain, and a loss was averred to have happened to the Helena by circumstance, that, while she was proceeding on her voyage, a certain other ship on the high seas, by and through the force of the winds and waves, was carried and sailed against the Helena, without any neglect or default of the persons on board the Helena, and the Helena became lost and stranded by the perils of the seas. Upon the trial of the cause, at the London sittings, after Trinity term 1811, before Mansfield, C. J., the evidence was, that a ship named the Margaret ran foul of the Helena by the grossest neglect ; for when, upon the shock being given, some of the Helena 's crew went on board the Margaret, they found 270 Insurance : Fire, Life, Marine. o. i. only one man on the deck, and he was asleep. Hereupon it was objected by the counsel for the def 3ndant, that the occasion of the injury was not the perils of the seas, but the gross neg- ligence of the crew of the Margaret, and that this was a fatal variance from the loss averred. The jury, however, found a verdict for the plaintiff, subject to this point, which the chief justice reserved. Accordingly, Lens, Serjt., on this day moved for a rule nisi to set aside the verdict and enter a nonsuit, adding that the plaintiff had his remedy against the owners of the Margaret. Mansfield, C. J. — I do not know how to make this out not to be a peril of the sea. What drove the Margaret against the Helena ? The sea. What was the cause that the crew of the Margaret did not prevent her from running against the other? Their gross and culpable negligence ; but still the sea did the mischief. It is reasonable enough that the plaintiffs should permit the defendant to use their names as plaintiffs against the owners or crew of the Margaret, so as to recover whatever the plaintiffs would be entitled to as against the Margaret, and to apply it in diminution of their loss ; but it would lead to endless discussion if it were required that no cause except the cause of loss alleged in the declaration should be conducive to the loss. Heath, J. — If this doctrine were to prevail, it might go still further, and it might be contended that, if a master conducts his ship so unskillfully as to run it on a rock, that is not a peril of the sea, but a peril of the unskillfulness of the master. Rule refused. CHAPTEK II. GENERAL PRINCIPLES. Nature of the Contract. Exchequer Chamber, 1854. DALBY v. INDIA & LONDON LIFE ASSUE. CO. (15 C. B. 365.) Insurance : how far a contract of indemnity, and when insurable interest must exist. Parke, B. — This case now comes before us on a bill of exceptions to the ruling of my brother Cresswell at nisiprius. It is an action on what is usually termed a policy of life assur- ance, brought by the plaintiff, as a trustee for the Anchor Assurance Company, upon a policy of £1,000 on the life of his late Royal Highness the Duke of Cambridge. The Anchor Life Assurance Company had insured the duke's life in four separate policies — two for £1,000 and two for £500 each — granted by that company to a Mr. Wright. In consequence of. a resolution of their directors, they determined to limit their insurances to £2,000 on one life ; and, this insurance exceeding it, they effected a policy with the defendants for £1,000 by way ofcounter-insurance. At the time the policy was subscribed by the defendants, the Anchor Company had unquestionably an insurable interest to the full amount. Afterwards an ar- rangement was made between the office and Mr. Wright for the former to grant an annuity to Mr. Wright and his wife, in consideration of a sum of money, and of the delivering up the four policies to be canceled, which was done; but one of the directors kept the present policy on foot by the payment of the premiums till the duke's death. It may be conceded for the purpose of the present argument that these transactions 272 Insurance : Fire, Life, Marine. c. n. between Mr. Wright and the office totally put an end to that interest which the Anchor Company had when the policy was effected, and in respect of which it was effected, and that at the time of the duke's death and up to the commencement of the suit the plaintiff had no interest whatever. This raises the very important question, whether, under these circumstances, the .assurance was void, and nothing could be recovered thereon. We are all of opinion that it (the interest of the plaintiff which had terminated before the duke's death) was sufficient, and but for the case of Oodsall v. Boldero, 9 East, 72, should have felt no doubt upon the question. The contract commonly called life assurance, when properly considered, is a mere contract to pay a certain sum of money on the death of a person, in consid- eration- of the due payment of a certain annuity for his life, the amount of the annuity being calculated in the first instance ac- cording to the probable duration of the life / and when once fixed it is constant and invariable. The stipulated amount of annuity is to be uniformly paid on one side, and the sum to be paid in the event of death is always (except when bonuses have been given by prosperous offices) the same on the other. This species of insurance in no way resembles a contract of indem- nity. Policies of assurance against fire and against marine risks are both properly contracts of indemnity, the insurer engaging to make good, within certain limited amounts, the losses sustained by the insured in their buildings, ships, and effects. Policies on maritime risks were afterwards used im- properly, and made mere wagers on the happening of those perils. This practice was limited by the 19 G-. II., c. 37, and put an end to in all except a few cases ; but at common. law, before this statute with respect to maritime risks, and the 14 G. III., 3, c. 48, as to insurances on lives, it is perfectly clear that all con- tracts for wager policies and wagers which were not contrary to the policy of the law were legal contracts ; and so it is stated by the court in Cousins v. Nantes, 3 Taunt. 315, to have been solemnly determined in the case of Lucena v. Craufurd, 2 Bos. & P. 324, 2 K E. 269, without even a difference of opinion among all the judges. To the like effect was the decision of the court of error in Ireland, before all the judges except three, in The British Insurance Co. v. Magee, 1 Cooke & Ale. 182, that the assurance was legal at common law. Their contract, c. ii. Dalby v. India & London Life Assttk. Co. 273 therefore, in this case to pay a fixed sum of £1,000 on the death of the late Duke of Cambridge, would have been unquestionably legal at common law if the plaintiff had had an interest therein or not ; and the sole question is whether this policy was ren- dered illegal and void by the provisions of the statute 14 G. III., c. 48. This depends upon its true construction. The statute recites that the making insurances on lives and other events, wherein the insured shall have no interest, hath introduced a mis- chievous kind of gaming, and for the remedy thereof it enacts (§1.) " that no insurance shall ie made by any one on the life or lives of any person or persons, or on any other events whatsoever, wherein the person or persons for whose use and benefit or on whose account such policy shall be made shall have no interest, or by way of gaming and wagering; and that every assurance made contrary to the true intent and meaning thereof, shall be null and void, to all intents and purposes whatsoever." As the Anchor Assurance Company had unquestionably an interest in the continuance of the life of the Duke of Cambridge, and that to the amount of £1,000, because they had bound themselves to pay a sum of £1,000 to Mr. Wright on that event, the policy effected by them with the defendants was certainly legal and valid, and the plaintiff, without the slightest doubt, could have recovered the full amount if there were no other provision in the act. The contract is good at common law, and certainly not avoided by the first section of the 14 G. III., c. 48. This section, it is to be observed, does not provide for any par- ticular amount of interest. According to it, if there was any interest, however small, the policy would not be avoided. The question arises on the third clause ; it is as follows : " And be it further enacted, that in all cases where the insured hath inter- est in such life or lives, event or events, no greater sum shall be recovered or received from the insurer or insurers than the amount or value of the interest of the assured in such life or lives, or other event or events." Now, what is the meaning of this provision ? On the part of the plaintiff it is said it means only that in all cases in which the party insuring has an inter- est when he effects the policy, his right to recover and receive is to be limited to that amount ; otherwise, under color of a small interest, a wagering policy might be made to a large amount, as it might if the first clause stood alone. The right to 18 274 Insurance : Fire, Life, Marine. c. i. recover, therefore, is limited to the amount of the interest at the time of effecting the policy ; upon that value the assured must have the amount of premium calculated ; if he states it truly, no difficulty can occur ; he pays, in the annuity for life, the fair value of the sum payable at death. If he misrepresents by overrating the value of the interest, it is his own fault in paying more in the way of annuity than he ought, and he can recover only the true value of the interest in respect of which he effected the policy, but that value he can recover. Thus the liability of the assurer becomes constant and uniform, to pay an unvarying sum on the death of the cestui que vie, in consideration of an unvarying and uniform premium paid by the assured. The bargain is fixed as to amount on both sides. This construction is effected by reading the word " hath " as referring to the time of effecting the policy. By the first sec- tion the assured is prohibited from effecting an insurance on a life, or on an event wherein he " shall have " no interest — that is, at the time of assuring; and then the third section requires that he shall recover only the interest that he " hath ; " if he has an interest when the policy is made, he is not wager- ing or gaming, and the prohibition of the statute does not apply to his case. Had the third section provided that no more than the amount or value of the interest should be insured, a question might have been raised, whether, if the insurance had been for a larger amount, the whole would not have been void ; but the prohibition to recover or receive more than that amount obviates any difficulty on that head. On the other hand, the defendants contend that the meaning of this clause is, that the assured shall recover no more than the value of the interest which he has at the time of the recovery, or receive more than its value at the time of the receipt. The words must be altered materially to limit the sum to be recovered to the value at the time of the death, or if payable at a time after death, when the cause of action accrues. But there is the most serious objec- tion to any of these constructions. It is, that the written con- tract, which, for the reasons given before, is not a wagering contract, but a valid one, permitted by the statute, and very clear in its language, is by this mode of construction com- pletely altered in its terms and effect. It is no longer a con- tract to pay a certain" sum as the value of a then-existing c. I. Dalbt v. India & London Life Assuk. Co. 275 interest in the event of death, in consideration of a fixed annuity, calculated with reference to that sum, but a con- tract to pay, contrary to its express words, a varying sum, according to the alteration of the value of that interest at the time of the death or the accrual of the cause of action, or the time of the verdict or execution, and yet the price or the premium to be paid is fixed, calculated on the original fixed value, and is unvarying, so that the assured is obliged to pay a certain premium every year, calculated on the value of his interest at the time of the policy, in order to have a right to recover an uncertain sum, namely, that which happens to be the value of the interest at the time of the death or afterwards, or at the time of the verdict. He has not, therefore, a sum certain, which he stipulated for and bought with a certain annuity ; but it may be a much less sum, or even none at all. This seems to us so contrary to justice and fair dealing, and common honesty, that this construction cannot, we think, be put upon the section. We should, therefore, have no hesitation, if the question were res Integra, in putting the much more reasonable construction on the statute, that if there is an inter- est at the time of the policy it is not a wagering policy, and that the true value of that interest may be recovered, in exact conformity with the words of the contract itself. The only effect of the statute is to make the assured value his interest at its true amount when he makes the contract. But it is said that the case of Godsall v. Boldero, 9 East, 72, has con- cluded the question. Upon considering this case, it is certain that Lord Ellenborough decided it upon the assumption that a life policy was in its nature a contract of indemnity, as policies on marine risks and against fire undoubtedly are ; and that the action was, in point of law, founded on the supposed damnifi- cation occasioned by the death of the debtor existing at the time of the action brought, and his lordship relied upon the decision of Lord Mansfield, in Hamilton v. Mendea, 2 Burr. 1270, that the plaintiff's demand was for an indemnity only. Lord Mansfield was speaking of a policy against marine risks, which is in its terms a contract for indemnity only. But that is not the nature of what is termed an assurance for life ; it really is what it is on the face of it, a contract to pay a certain sum in the event of death ; it is valid at common law, and, if 276 Insurance : Fibe, Life, Marine, o. n. it is made by a person having an interest in the duration of the life, is not prohibited by the statute 14 G-. Ill, c. 48. Judgment reversed, and a venire de novo. StTFEEME CotJET OF JUDICATURE, 1881. RAYNER v. PRESTON. (L. E., 18 Ch. D. 1.) Insurance is a personal contract, and does not run with the title of the property This was an appeal from a judgment of Jessel, Master of the Rolls, dismissing the action. The plaintiffs purchased from the defendants a messuage and workshops. Between the date of the contract and the time fixed for completion, the buildings purchased were injured by fire. The vendors had before the contract insured the buildings against fire, but there was not in the contract any mention of this fact or of the policy. The plaintiffs brought an action to establish their right to a sum received by the vendors from the insurance office, or to have it applied in or towards reinstating the buildings injured. The Master of the Rolls decided against their claim, and from this decision the plaintiffs appealed. It was contended by the appellants that they were entitled to the moneys (1) on general principles, irrespective of any special circumstances alleged to exist in the case ; (2) under the provisions of the Act 14 Geo. III., c. 78, either alone or with the aid of the special circumstances of this case. ' Beett, L. J. — For a reason which will presently appear (viz., the different opinion of Lord Justice James), I give with some fear the result of the (I must say) very clear opinion which I have in this case. This action is brought by the plaintiffs against the defend- ants to recover money which is in the hands of the defendants ; and, therefore, if the action had been brought at common law, it would have been an action for money had and received. That action was always treated at common law as being founded upon equity, and therefore it seems to me that the decision in this case, whatever it ought to be, would be the c. ii. Eatnee v. Pbeston. 277 same whether it should be considered to be a decision at com- mon law or in equity. It seems to me that the question raised between the plain- tiffs and the defendants calls upon us to consider, first of all, the nature of a policy of fire insurance ; and, secondly, what was the relation with regard to the policy and to the property between the plaintiffs and the defendants in this case. Now, in my judgment, the subject-matter of the contract of insurance is money, and money only. The subject-matter of insurance is a different thing from the subject-matter of the contract of insurance. The subject-matter of insurance may be a house or other premises in a fire policy, or may be a ship or goods in a marine policy. These are the subject-matter of insurance, but the subject-matter of the contract is money, and money only. The only result of the policy, if an accident which is within the insurance happens, is a payment of money. It is true that, under certain circumstances, in a fire policy there may be an option to spend the money in rebuilding the premises ; but that does not alter the fact that the only liability of the insurance company is to pay money. The contract, therefore, is a con- tract with regard to the payment of money, and it is a con- tract made between two persons, and two persons only, as a contract. In this case there was a contract of insurance made between the defendants and the insurance company. That contract was made by the defendants, not on behalf of any undisclosed principal, not on behalf of any one interested other than them- selves. The contract was made by the defendants solely and entirely on their own behalf, and at a time when they had no relation of any kind with the plaintiffs. It was a personal con- tract between the defendants and the insurance office, to which they were the sole parties. It is true that under certain cir- cumstances a policy of insurance may, in equity, be assigned so as to give another person a right to sue upon it ; but in this case the policy of insurance, as a contract, never was assigned by the defendants to the plaintiffs. It would have been assigned by the defendants to the plaintiffs if it had been included in the contract of purchase, but it was not. Any valuation of the policy, any consideration of increase of the price of the premises in consequence of there being a policy, was wholly omitted. 278 Insurance: Fike, Life, Marine. c. n. There was nothing given by the plaintiffs to the defendants for the contract. The contract, therefore, neither expressly nor impliedly, was assigned to the plaintiffs ; and, so far as regards the contract of insurance, there never was anv relation of any kind between the plaintiffs and the defendants. But there did exist a relation between the plaintiffs and the defendants, not with regard to the subject-matter of the con- tract, but with regard to the subject-matter of the insurance. -There was a contract of purchase and sale between the plain- tiffs and the defendants in respect of the premises insured. It becomes necessary to consider accurately, as it seems to me, and to state in accurate terms, what is the relation between the two people who have contracted together with regard to premises in a contract of sale and purchase. With the greatest deference, it seems wrong to say that the one is a trustee for the other. The contract is one which a court of equity will enforce by means of a decree for specific performance. But if the vendor were a trustee of the property for the vendee, it would seem to me to follow that all the product, all the value of the property received by the vendor from the time of the making of the contract ought, under all circumstances, to be- long to the vendee. What is the relation between them, and what is the result of the contract ? Whether there shall ever be a conveyance depends on two conditions : first of all, whether the title is made out, and, secondly, whether the money is ready ; and unless those two things coincide at the time when the contract ought to be completed, then the contract never will be completed and the property never will be con- veyed. But suppose at the time when the contract should be completed, the title should be made out and the money is ready, then the conveyance takes place. Now it has been suggested that when that takes place, or when a court of equity decrees specific performance of the contract, and the conveyance is made in pursuance of that decree, then by relation back the vendor has been trustee for the vendee from the time of the making of the contract. But, again, with deference, it appears to me that if that were so, then the vendor would in all cases be trustee for the vendee of all the rents which have accrued due and which have been received by the vendor between the time of the making of the contract and the time of completion ; o. ii. Rayner v. Pbeston. 279 but it seems to me that that is not the law. Therefore, I ven- ture to say that I doubt whether it is a true description of the relation between the parties to say that from the time of the making of the contract, or at any time, one is ever trustee for the other. They are only parties to a contract of sale and pur- chase of which a court of equity will under certain circum- stances decree a specific performance. But even if the vendor was a trustee for the vendee, it does not seem to me at all to follow that anything under the contract of insurance would pass. As I have said, the contract of insurance is a mere per- sonal contract for the payment of money. It is not a contract which runs with the land. If it were, there ought to be a decree that upon the completion of the purchase the policy be handed over. But that is not the law. The contract of insur- ance does not run with the land ; it is a mere personal contract, and unless it is assigned no suit or action can be maintained upon it except between the original parties to it. I therefore, with deference, think that the plaintiffs here cannot recover from the defendants, on the ground that there was no relation of any kind or sort between the plaintiffs and the defendants with regard to the policy, and therefore none with regard to any money received under the policy. James, L. J. — I am unable to concur in affirming the judg- ment of the Master of the Rolls. According to my view of the case, the plaintiff's contention is founded not only on what I may call the natural equity which commends itself to the gen- eral sense of the lay world not instructed in legal principles, but also on artificial equity as it is understood and administered in our system of jurisprudence. I am of opinion that the relation between the parties was truly and strictly that of trustee and cestui que trust. I agree that it is not accurate to call the relation between the vendor and purchaser of an estate under a contract while the contract is in fieri the relation of trustee and cestui que trust. But that is because it is uncertain whether the contract will or will not be performed, and the character in which the parties stand to one another remains in suspense as long as the contract is in fieri. But when the contract is performed by actual convey- ance, or performed in everything but the mere formal act of 230 Insurance : Fuse, Life, Mabine. o. n. sealing the engrossed deeds, then that completion relates back to the contract, and it is thereby ascertained that the relation was throughout that of trustee and cestui que trust. That is to say, it is ascertained that while the legal estate was in the vendor the beneficial or equitable interest was wholly in the purchaser. And that, in my opinion, is the correct definition of a trust estate. Wherever that state of things occurs, whether by act of the parties or by act or operation of law, whether it is ascertained from the first or after a period of suspense and un- certainty, then there is a complete and perfect trust, the legal owner is, and has been a trustee, and the beneficial owner is, and has been a cestui que trust. This being the relation between the parties, I hold it to be an universal rule of equity that any right which is vested in a trustee — any benefit which accrues to a trustee, from whatever source or under whatever circumstances, by reason of his legal ownership of the property — that right and that benefit he takes as trustee for the beneficial owner. If the policy of insurance in this case were a collateral contract, such as the policy which a creditor effects on the life of his debtor, the case would be wholly different. But the policy of fire insurance is not, in my opinion, a collateral contract, it is not a wagering contract, a contract that if a fire happens then a certain sum of money shall be paid to the insurer ; it is in terms and in effect a con- tract that, if the property is injured then the insurance company will make good the actual damage sustained by the property. That damage, and that damage only, gives the right and is the measure of the right, and it seems to me impossible to say that it is not by reason of the legal ownership, and in respect solely of the injury done to that legal ownership, that the right to recover from the insurance company accrued to the insured. If the fire in this case had happened through the wrongful or negligent act of a third person while the contract was in fieri the legal right to sue for the damage would be in the vendor; but on the completion of the contract the purchaser would be entitled to use the name of the vendor as his trustee to sue for the damage so sustained, or, if the damages had actually been recovered in the interval, to recover the damages from the vendor. And it appears to me that there is no distinction in principle between this right and the right to use the vendor's c. ii. Bayner v. Preston. 281 name in an action on the contract of indemnity against loss by fire which the policy of insurance is. It is not, in my view of the case, at all material to consider what would be the case if after actual conveyance and during the currency of the policy a fire had occurred. The vendor in that case would have no right as between him and the insurance office, and the pur- chaser would have no right of action, because one of the conditions of the policy excludes it, and, independently of that condition, the policy would, or might probably be held not to run with the land in the hands of the subsequent owner, and in that case there would not be that which is the foundation of the right — legal ownership and right in one person, and equitable ownership in another. No doubt it is a mere accident that there was such a policy, and there was such a right. The vendee could not have complained if there had been no insurance. But that has occurred in a great variety of cases in which equitable rights have arisen. Where there is a creditor, a debtor, and a surety, and the surety finds out that by something to which he was not privy, and of which he had never heard, somebody else had become surety, or the creditor had obtained security, the surety has a right to obtain contribution from such surety, or to obtain such security as the case may be, and the creditor releasing such surety or parting with such security would probably find himself in considerable peril. In the same city in which this controversy has arisen there occurred, some years ago, a great destruction of property by reason of an explosion of gunpowder, caused by a fire. Houses were damaged, not by fire,- but by the explosion caused by a fire in another neighboring place. The insurance offices thought that it was for their interest to be very liberal, and treat the dam- age from the explosion as a damage by fire within the policies, and to pay accordingly. This was a mere act of liberality. They thought it was for their permanent benefit commercially to be liberal, and they were liberal accordingly. See Taunton v. Royal Insurance Company, 2 H. & M. 135. I cannot my- self doubt, that if a trustee, or a vendor who had become trustee by the completion of his contract, had received this bounty, he would have received it by reason of his trusteeship, and would have had to give it up to his cestui que trust or purchaser. 282 Insurance : Fiee, Life, Marine. o. n. Brett, L. J. — I should like to add to what I have said, that I feel very great doubt whether, as between the defend- ants and the insurance company, the defendants can keep the moneys. In the Court of Appeal, 1883. CASTELLAIN v. PKESTON. (L. E., 11 Q. B. D. 380.) The Doctrine of Subrogation as Related to Indemnity. Appeal of the plaintiff from the judgment of Chitty, J., in favor of the defendants. The plaintiff sued on behalf of the Liverpool and London and Globe Insurance Company, to recover a sum, £330 with interest since the 25th of September, 1878. On the 25th of. March, 1878, the defendants, as owners of certain lands and buildings in Liverpool, effected an insurance on the buildings against loss by fire, and they kept the policy on foot by pay- ment of the premiums until after the fire hereinafter men- tioned occurred. The policy was in the usual form, giving the insurers the option of reinstating the property. On the 31st of July, 1878, the defendants contracted to sell the land and the buildings to their tenants, Messrs. Kayner, for the sum of £3,100, and they received a deposit. The contract provided that the time of the completion should be such day within two years from the date as the vendors should name. On the 15th of August in the same year, a fire occurred, damaging part of the buildings. A claim was made on behalf of the defendants, and after negotiation as to the sum to be paid, the amount of the claim was ultimately fixed at £330, and that sum was in fact paid on the 25th of September, 1878, by the insurers, who were at that time ignorant of the exist- ence of the contract for sale. On the 25th of March, 1879, the defendants named the 5th of May as the day of completion, and on the following 12th of December the conveyance was executed and the balance of the purchase money paid. * Brett, L. J. — In this case the action is brought by the plaintiff as representing an insurance company against the defendants, in respect of money which has been paid by that a n. Castellain v. Pbeston. 283 company to the defendants on account of the loss by fire of a building. The defendants were the owners of property con- sisting partly, at all events, of a house, and the defendants had made a contract of sale of that property with third persons, which contract, upon the giving of a certain notice as to the time of payment, would oblige those third persons, if they ful- filled the contract, to pay the agreed price for the sale of that property, a part of which was a house, and according to the peculiarity of such a sale and purchase of land or real property the vendees would have to pay the purchase money, whether the house was, before the date of payment, burnt down or not. After the contract was made with the third persons, and be- fore the day of payment, the house was burnt down. The vendors, the defendants, having insured the house in the ordi- nary form with the plaintiff's company, it is not suggested that, upon the house being burnt down, the defendants had not an insurable interest. They had an insurable interest, as it seems to me ; first, because they were at all events the legal owners of the property ; and, secondly, because the vendees or third persons might not carry out the contract, and if for any reason they should never carry out the contract, then the vend- ors, if the house was burnt down, would suffer the loss. Upon the happening of the fire the defendants made a claim on the insurance company represented by the plaintiff, and were paid a certain sum which represented the damage done to the house. After that, the contract of sale between the defendants and the third persons, the vendees of the property, was carried out, and the full amount of the purchase-money was paid by the third persons to the defendants notwithstanding the fire. Under those circumstances, the plaintiff representing the insur- ance company brings this action ; I do not say that he brings it to recover back the money which has been paid by the insur- ance company (for that expression of opinion would rather in- terfere with the form of the action), but he. brings the action in respect of that money. The question is whether this action is maintainable. The case was tried before Chitty, J., and he in a very careful and elaborate judgment (8 Q. B. D. 613) has come to the conclu- sion that the insurance company cannot recover against the defendants in respect of the money paid by them. It seems to 284: Insurance : Fire, Life, Marine. o. n. me that the foundation of his judgment is this, that he con- siders that the doctrine of subrogation of the insurer into the position of the assured is confined within limits which prevent it from extending to the present case. I must now consider whether I can agree with him. In order to give my opinion upon this case, I feel obliged to revert to the very foundation of every rule which has been promulgated and acted on by the courts with regard to insur- ance law. The very foundation, in my opinion, of every rule which has been applied to insurance law is this ; namely, that the contract of insurance contained in a marine or fire policy is a contract of indemnity, and of indemnity only, and that this contract means that the assured, in case of a loss against which the policy has been made, shall be fully indemnified, but shall never be more than fully indemnified. That is the funda- mental principle of insurance; and if ever a proposition is brought forward which is at variance with it — that is to say, which either will prevent the assured from obtaining a full indemnity, or which will give to the assured more than a full indemnity — that proposition must certainly be wrong. In the course of this discussion many propositions and rules well known in insurance law have been glanced at. For instance, to speak of marine insurance, the doctrine of a con- structive total loss originated solely to carry out the funda- mental rule which I have mentioned. It was a doctrine intro- duced for the benefit of the assured; for, as a matter of business, a constructive total loss is equivalent to an actual total loss ; and if a constructive total loss could not be treated as an actual total loss, the assured would not recover a full indemnity. But grafted upon the doctrine of constructive total loss came the doctrine of abandonment, which is a doc- trine in favor of the insurer or underwriter, in order that the assured may not recover more than a full indemnity. The doctrine of constructive total loss, and the doctrine of notice of abandonment ingrafted upon it, were invented or promulgated for the purpose of making a policy of marine insurance a con- tract of indemnity in the fullest sense of the term. I may point out that the doctrine of notice of abandonment is most difficult to justify upon principle ; it was introduced rather as a matter of justice in favor of the underwriters, so as to c. ir. Castellain v. Pkeston. 285 prevent the assured from obtaining by fraud more than a full indemnity. That doctrine is to a certain extent technical; that is to say, although the assured has in reality suffered a constructive total loss, and although he is upon general princi- ples entitled to recover, nevertheless he must fail unless he has given a notice of abandonment. I suppose that the doctrine of notice of abandonment was originally introduced by mer- chants and underwriters, and afterwards adopted as part of the law as to marine insurance ; but at first sight it seems a mere encroachment of the judges. I have mentioned the doctrine of notice of abandonment for the purpose of coming to the doctrine of subrogation. That doctrine does not arise upon any of the terms of the contract of insurance ; it is only another proposition which has been adopted for the purpose of carrying out the fundamental rule which I have mentioned, and it is a doctrine in favor of the underwriters or insurers, in order to prevent the assured from recovering more than a full indemnity ; it has been adopted solely for that reason. It is not, to my mind, a doctrine applied to insurance law on the ground that under- writers are sureties. Underwriters are not always sureties. They have rights which sometimes are similar to the rights of sureties, but that again is in order to prevent the assured from recovering from them more than a full indemnity. But it being admitted that the doctrine of subrogation is to be applied merely for the purpose of preventing the assured from obtain- ing more than a full indemnity, the question is, whether that doctrine as applied in insurance law can be in any way limited. Is it to be limited to this, that the underwriter is subrogated into the place of the assured so far as to enable the underwriter to enforce a contract, or to enforce a right of action ? Why is it to be limited to that, if when it is limited to that, it will in certain cases enable the assured to recover more than a full indemnity ? The moment it can be shown that such a limita- tion of the doctrine would have that effect, then, as I said before, in my opinion, it is contrary to the foundation of the law as to insurance, and must be wrong. And, with the greatest deference to my brother Ohitty, it seems to me that that is the fault of his judgment. He has by his judgment limited this doctrine of subrogation to placing the insurer in 286 Insurance: Fire, Life, Marine. c. il the position of the assured only for the purpose of enforcing a right of action, to Avhich the assured may be entitled. In order to apply the doctrine of subrogation, it seems to me that the full and absolute meaning of the word must be used, that is to say, the insurer must be placed in the position of the assured. Now it seems to me that in order to carry out the fundamental rule of insurance law, this doctrine of subrogation must be carried to the extent which I am now about to en- deavor to express, namely, that as between the underwriter and the assured the underwriter is entitled to the advantage of every right of the assured, whether such right consists in contract, fulfilled or unfulfilled, or in remedy for tort capable of being insisted on or already insisted on, or in any other right, whether by way of condition or otherwise, legal or equitable, which can be or has been exercised or has accrued, and whether such right could or could not be enforced by the insurer in the name of the assured, by the exercise or acquiring of which right or condition the loss against which the assured is insured, can be or has been diminished. That seems to me to put this doctrine of subrogation in the largest possible form, and if in that form, large as it is, it is short of fulfilling that which is the funda- mental condition, I must have omitted to state something which ought to have been stated. But it will be" observed that I use the words " of every right of the assured." I think that the rule does require that limit. In Burnand v. Rodocanodhi, 7 App. Cas. 333, the foundation of the judgment to my mind was, that what was paid by the United States Government could not be considered as salvage, but must be deemed to have been only a gift. It was only a gift to Avhich the assured had no right at any time until it was placed in their hands. I am aware that with regard to the case of reprisals, or that which a person whose vessel has been captured got from the English Government by way of reprisal, the sum received has been stated to be, and perhaps in one sense was, a gift of his own Government to himself, but it was always deemed to be capable of being brought within the range of the law as to insurance, because the English Government invariably made the " gift," so invariably that as a matter of business it had come to be considered as a matter of right. This enlargement, or this explanation, of what I consider to be the real meaning of the c n. Castellain v. Pkeston. 287 doctrine of subrogation, shows that in my opinion it goes much further than a mere transfer of those rights which may at any time give a cause of action either in contract or in tort, because if upon the happening of the loss there is a contract between the assured and a third person, and if that contract is immediately fulfilled by the third person, then there is no right of action of any kind into which the insurer can be subrogated. The right of action is gone ; the contract is fulfilled. In like manner, if upon the happening of a tort the tort is immediately made good by the tort feasor, then the right of action is gone ; there is no right of action existing into which the insurer can be sub- rogated. It will be said that there did for a moment exist a right of action in favor of the assured, into which the insurer could have been subrogated. But he cannot be subrogated into a right of action until he has paid the sum insured and made good the loss. Therefore innumerable cases would be taken out of the doctrine, if it were to be confined to existing: rights of action. And I go further and hold that if a right of action in the assured has been satisfied, and the loss has been thereby diminished, then, although there never was nor could be any right of action into which the insurer could be sub- rogated, it would be contrary to the doctrine of subrogation to say that the loss is not to be diminished as between the assured and the insurer by reason of the satisfaction of that right. I fail to see at present, if the present defendants would have had a right of action at any time against the purchasers, upon which they could enforce a contract of sale of their property whether the building was standing or not, why the insurance company should not have been subrogated into that right of action. But I am not prepared to say that they could be, more particularly as I understand my learned brother, who knows much more of the law as to specific performance than I do, is at all events not satisfied that they could. I pass by the question without solving it, because there was a right in the defendants to have the contract of sale fulfilled by the purchasers notwithstanding the loss, and it was fulfilled. The assured have had the ad- vantage, therefore, of that right ; and by that right, not by a gift Avhich the purchasers could have declined to make, the assured have recovered, notwithstanding the loss, from the purchasers, the very sum of money which they were to obtain 288 Insurance : Fire, Life, Marine. c. n. whether this building was burnt or not. In that sense I can- not conceive that a right, by virtue of which the assured has his loss diminished, is not a right which, as has been said, affects the loss. This right, which was at one time merely in contract, but which was afterwards fulfilled, either when it was in contract only, or after it was fulfilled, does affect the loss ; that is to say, it affects the loss by enabling the assured, the vendors, to get the same money which they would have got if the loss had not happened. While I am applying the doctrine of subrogation which I have endeavored to enunciate, I think it due to Chitty, J., to point out what passages in his judgment require some modifica- tion. I find him reading this passage: "I know no founda- tion for the right of underwriters, except the well-known prin- ciple of law, that where one person has agreed to indemnify another, he will, on making good the indemnity, be entitled to succeed to all the ways and means by which the person indem- nified might have protected himself against or reimbursed him- self for the loss." That is a quotation from Lord Cairns, in Simpson v. Thomson, 3 App. Cas. 284-. The learned judge then goes on : " What is the principle of subrogation? On payment the insurers are entitled to enforce all the remedies, whether in contract or in tort, which the insured has against third parties, whereby the insured can compel such third parties to make good the loss insured against." That is, as it seems to me, to confine this doctrine of subrogation to the principle that the insurers are entitled to enforce all remedies, whether in con- tract or in tort. I should venture to add this : "And if the as- sured enforces or receives the advantage of such remedies, the insurers are entitled to receive from the assured the advantage of such remedies." Then, when we come to this illustration, " Where the landlord insures, and he has a covenant by the ten- ant to repair, the insurance office, on payment in like manner, succeeds to the right of the landlord against his tenant ; " I would add this : "And if the tenant does repair, the insurer has the right to receive from the assured a benefit equivalent to the benefit which the assured has received from such repair." Then, dealing with the case of Burnand v. Eodocanochi, 1 App. Cas. 333, the learned judge cites the opinion of Bramwell, L. J. He says that Bramwell, L. J., in his judgment held that c. ii. Castellain v. Peeston. 289 it was not salvage, but " that in the circumstances the sum re- ceived by the ship-owner was but a pure gift, and there was no right on the part of the insurers to recover any part of it over against him." I, for myself, venture to add this as the reason : "Because there was no right in the assured to demand the compensation from the American Government." There was no right to demand it ; it was bestowed and received as a pure gift. Darrell v. Tibbitts, 5 Q. B. D. 560, seems to me to be entirely in favor of the plaintiff in this case. I shall not retract from the very terms which I used in that case. It seems to me that in Darrell v. Tibbitts the insurers were not subrogated to a right of action, or to a remedy. They were not subrogated to a right to enforce the remedy, but what they were subrogated into was the right to receive the advan- tage of the remedy which had been applied, whether it had been enforced, or voluntarily administered by the person who was bound to administer it. That seems to me to be the doctrine. Then with regard to the passage : " The doctrine is well established that where something is insured against loss, either in a marine or a fire policy, after the assured has been paid by the insurers for the loss, the insurers are put into the place of the assured with regard to every right given to him by the law respecting the subject-matter insured," I wish to explain that that was a distinct clause, and it was so intended by me when I stated it. I then mentioned contracts : " And with regard to every contract which touches the subject- matter insured, and which contract is affected by the loss or the safety of the subject-matter insured by reason of the peril insured against." I fail to conceive any contract which gives a right Over the thing insured, which is not affected by the loss or safety of it, and if it is necessary to bring the present case within those terms, it seems to me that the contract of purchase and sale was affected by that loss. I will not go further with the judgment of Chitty, J., except to say this, that at the end my learned brother has put it thus, that " the only principle applicable is that of subrogation as understood in the full sense of that term." There I agree with him, only my view of the full sense is larger than that which he adopted. " And that where the right claimed is under a contract between the insured and 19 290 iNSUBitifaE : Fibe, Life, Mabine. c. ii. third parties, it must be confined to the case of a contract relating to the subject-matter of the insurance, which entitled the insurers to have the damages made good." I think it would be better expressed in this way : " Which entitles the assured to be put by such third parties into as good a position as if the damage insured against had not happened." If it is put in that sense, it seems to me to be consistent with the prop- osition which I laid down at the beginning of what I have said, and to cover this case. I will repeat it : " "Which entitles the assured to be put by such third parties into as good a posi- tion as if the damage insured against had not happened." The contract in the present case, as it seems to me, does enable the assured to be put by the third party into as good a position as if the fire had not happened, and that result arises from this contract alone. Therefore, according to the true principles of insurance law, and in order to carry out the fundamental doctrine, namely, that the assured can recover a full indemnity, but shall never recover more, except, perhapsj in the case of the suing and laboring clause under certain circum- stances, it is necessary that the plaintiff in this case should suc- ceed. The case of Darrell v. Tibbitts, 5 Q. B. D. 560, has cut away every technicality which would prevent a sound decision. The doctrine of subrogation must be carried out to the full extent, and carried out in this case by enabling the plaintiff to recover. Cotton, L. J. — In this case the appellant's company in- sured a house belonging to the defendants, and before there was any loss by fire the defendants sold the house to certain purchasers. Afterwards there was a fire, and an agreed sum was paid by the insurance office to the defendants in respect to the loss. The appellant apparently seeks to recover the sum which the office paid to the defendants, and if the plain- tiff's claim could be shaped only in this form, I think my opinion would be against him. The plaintiff's claim may be treated in substance in another way ; namely, the company seek to obtain the benefit, either wholly or partly, of the amount paid by them out of the purchase money which the defendants have received since the fire from the purchasers. In my opin- ion, the plaintiff is right in that contention. I think that the o. ii. Castellain v. Pkeston. 291 question turns on the consideration of what a policy of insur- ance against fire is, and on that the right of the plaintiff de- pends. The policy is really a contract to indemnify the person insured for the loss which he has sustained in consequence of the peril insured against, which has happened, and from that it follows, of course, that as it is only a contract of indemnity, it is only to pay that loss which the assured may have sustained by reason of the fire which has occurred. In order to ascer- tain what that loss is, everything must be taken into account which is received by and comes to the hand of the assured, and which diminishes that loss. It is only the amount of the loss, when it is considered as a "contract of indemnity, which is to be paid after taking into account and estimating those benefits or sums of money which the assured may have received in dimi- nution of the loss. If the proposition is stated in that manner it is clear that the office would be entitled to the benefit of anything received by the assured before the time when the policy is paid, and it is established by the case of Darrell v. Tihbitts, 5 Q. B. D. 560, that the insurance company is entitled to that benefit, whether or not before they pay the money they insist upon a calculation being made of what can be recovered in diminution of the loss by the assured ; if they do not insist upon that calculation being made, and if it afterwards turns out that in consequence of something which ought to have been taken into account in estimating the loss, a sum of money, or even a benefit, not being a sum of money, is received, then the office, notwithstanding the payment made, is entitled to say that the assured is to hold that for its benefit, and although it was not taken into account in ascertaining the sum which was paid, yet when it has been received it must be brought into account, and if it is not a sum of money, but a benefit that has been received, its value must be estimated in money. Now Lord Blackburn, in the case of Burnand v. Rodocanochi, 1 App. Cas. 339, states the principle in these words : " The general rule of law (and it is obvious justice) is that where there is a contract of indemnity (it matters not whether it is a marine policy or a policy against fire on land, or any other contract of indemnity), and a loss happens, anything which reduces or diminishes that loss reduces or diminishes the amount which the indemnifier is bound to pay ; and if the indemnifier has already 292 Insurance : Fire, Life, Marine. c. ii. paid it, then if anything which diminishes the loss comes into the hands of the person to whom he has paid it, it becomes an equity that the person who has already paid the full indemnity is entitled to be recouped by having that amount back." In Darrell v. Tibbitts, to which I have already referred, the ques- tion which we had to consider was whether the insurance office was entitled to the benefit produced in consequence of a cove- nant to repair if the building should be damaged by an explosion of gas. In my opinion it was not intended in any way to limit the right of the insurer, as an insurer, to cases where the con- tract in respect of which benefit had been received related to the same loss or damage as that against which the contract of indemnity was created by the policy. That was what was before this court in that case, and undoubtedly expressions do occur as to a contract relating to the loss or affecting the loss ; but the principle was not limited to contracts. The principle which I have enunciated goes further, and if there is a money or any other benefit received which ought to be taken into account in diminishing the loss or in ascertaining what the real loss is against which the contract of indemnity is given, the indemnifier ought to be allowed to take advantage of it in order to calculate what the real loss is, even although the bene- fit is not a contract or right of suit which arises and has its birth from the accident insured against. Of course, the difficulty is to consider what ought to be taken into account in estimat- ing that loss against which the insurer has agreed to indemnify, and we have been pressed in argument with many difficulties. One which possibly was put to us most strongly, was that the contract of sale has nothing to do with destruction by fire, and if any part of the purchase money is to be taken into account, why is a gift not to be taken into account ? That may bo said to diminish the loss as well as a contract of sale. The answer is that when a gift is made afterwards in order to diminish the loss, it is bestowed in such terms as to show an intention to benefit the assured, and to give the insurer the benefit of that would be to divert the gift from its intended object to a differ- ent person. That really was what was decided in Burnand v. Bodocanochi. There the money bestowed, not as a matter of right, but as a gift, was intended to benefit the assured beyond the amount which they had got in consequence of c n. Castellain v. Peeston. 293 any insurance. There is another ground which may possibly exclude gifts. It may be that the right of the insurer to have a sum brought into account in diminution of the loss, against which he has given a contract of indemnity, is confined to that which is a right or other incident belonging to the person in- sured, as an incident of the property at the time when the loss takes place. This definition would not include a sum subse- quently bestowed on the assured by way of gift, for it can in no way be said to have been appertaining to him as owner of the property at the time when the loss took place. But, in the present case, what we have to consider is whether the contract of sale is not an incideut of the property, belonging to the owners at the time of the loss in such a way that it ought to be brought into account in estimating the loss, against which the insurer has undertaken to indemnify. What was the position of the parties? The defendants' house was insured, and there was a loss from fire, the damage caused by the fire being estimated by the parties at £330. Ultimately, the prop- erty having been already agreed to be sold at a fixed price, the assured received the whole amount of that price. Now they did that in respect of a contract relating to the subject insured, the house ; and, to my mind, if they received the whole amount of the price which they previously had fixed as the value of the house, that must of necessity be brought into account when it was received, for the purpose of ascertaining what was the ultimate loss against which they had concluded a contract of indemnity with the insurance office. Here the purchasers have paid the money in full, and as the property was valued between the vendors and the purchasers at £3,100, the vendors got that sum in respect of that which had been burned, but which had not been burned at the time when the contract was entered into. They had fixed that to be the value, and then any money which they get from the purchasers, and which together with £330, the sum paid by the office, exceeds the value of the property as fixed by them under the contract to sell, must diminish, and in fact entirely extinguishes the loss occasioned to the vendors of the property by the fire. Therefore, though it cannot, to my mind, be said that the insurers are entitled, because the purchase is completed, to get back the money which they have paid, yet they are entitled to 294 Insurance : Eire, Life, Marine. c. ii. take into account the money subsequently received under a contract for the sale of the property existing at the time of the loss, in order to see what the ultimate loss was against which they gave their contract of indemnity. On the principle of Darrell v. Tibhetts, when the benefit afterwards accrued by the completion of the purchase, the insurance company were entitled to demand that the money paid by them should be brought into account. Therefore the conclusion at which I have arrived is, that if the purchase money has been paid in full, the insurance office will get back that which they have paid, on the ground that the subsequent payment of the price which had been before agreed upon, and the contract for pay- ment of which was existing at the time, must be brought into account by the assured, because it diminishes the loss against which the insurance office merely undertook to indemnif}' them. In my opinion, therefore, the decision below was erroneous. I think Chitty, J., based it upon this, that in this case there was no right of subrogation, no contract which the office could have insisted upon enforcing for their benefit. I think it im- material to decide that question, because the vendors have exercised their right to insist upon the completion of the I- purchase. 1 Judgment reversed. 1 Here follows a long opinion by Bowen, L. J. It is not probable that the doctrine of this case ■will prevail in the United States. Compare Nelson v. Bound Brook Mut. Fire Ins. Co., 43 N. J. Eq. 256. King v. State Mut. Fire Ins. Co., 7 Cush. 1. International Trust Co. v. Boardman, 149 Mass. 161. Insurance Co. v. Updegraff, 21 Pa. St. 513. Clinton v. Hope Ins. Co., 45 N. Y. 454. Smith v. Glens Falls Ins. Co., 62 N. Y. 85. See supra §§ 32, 158. CHAPTER III. GENERAL PRINCIPLES. Consummation and Construction of the Contract. Supreme Cou«t of Judicature, 1889. THOMPSON v. ADAMS. (L. R., 23 Q. B. D. 361.) A valid agreement to insure may be closed eitlier by parol or by a binding slip. Mathew, J. — This was an action brought to recover the sum of £100, which it was alleged by the plaintiffs the defend- ant had agreed to cover by an insurance against fire upon the goods of the plaintiffs in premises of theirs in New Zealand. The action was resisted on the ground that there had been no contract of insurance, or in the alternative, if there had been a contract of insurance, that it was subject to conditions which had not been fulfilled, and, therefore, that the underwriters were not liable. The plaintiffs are merchants carrying on business in New Zealand, and they were represented in this country by a firm of Geard & Sons, who acted for them under a power of attor- ney. They instructed Geard & Sons to effect insurances upon goods on their premises in New Zealand; and Messrs. Geard & Sons, for that purpose, about the month of October, 1886, placed themselves in communication with a firm of insurance brokers of high standing, Messrs. Collins & Co., who undertook to endeavor to effect insurances to the amount of £20,000. Now, insurances had been effected in the same way previously, and amongst the insurances previously effected were some at Lloyd's. It appears, within the last four or five years the underwriters at Lloyd's have undertaken, in addition to their ordinary business, the business of insurances against, risks 296 Insurance : Fibe, Life, Maeine. o. hi. on laud — against fire risks— and insurances had for this period been effected at Lloyd's by Messrs. Thompson ; and Mr. Adams, the present defendant, it appeared, had taken a line on some of the previous -policies. Messrs. Collins & Co., not being members of Lloyd's, had placed themselves in com- munication with Mr. Bray, an insurance broker, who was entitled to effect insurances at Lloyd's ; and Mr. Bray, in ac- cordance with the usual course of business, prepared a slip con- taining the particulars of the proposed insurances, and showing the risk in the same way as if it were a marine risk to the underwriters at Lloyd's. Amongst others the risk was shown to the defendant, who initialed the slip on behalf of others whom he represented for £300, of which £100 represented the amount of his insurance. In the ordinary course with reference to risks of this de- scription, as well as with reference to maritime risks, the slip is followed by a policy of insurance. In the particular case the slip was initialed in October, 1886. The policy ought to have been put forward through the broker and signed by the under- writers ; but, strange to say, no policy was tendered for signa- ture down to the end of the month of February following. On February 28th news reached this country that the premises of the plaintiffs had been burnt down on the previous day, and a quantity of their goods destroyed. Up to this time, as no policy had been issued, no premiums had been paid, but upon March 1st the premiums upon all the insurances were paid by the plaintiffs to Messrs. Collins & Co. The defendant, how- ever, with other underwriters, refused to accept the premium, or to sign a policy, or to pay the amount for which the slip had been initialed. Upon that the claim was put forward against the defendant upon the slip, and it was asserted by the plaintiffs that the slip was a sufficient insurance under the cir- cumstances, and that the fact that no policy had subsequently been signed was immaterial. The defendant set up as a defense the absence of the policy, and declined to pay. Under those circumstances it was that the action was brought against him. Now several lines of defence were adopted by the defend- ant before me, and were argued with great ability on his behalf. In the first place it was said there was no policy of insurance. In the second place it was said, as I have c. in. Thompson v. Adams. ' 297 already mentioned, that if there were any contract of insur- ance, it was a contract subject to the condition that a policy should be subsequently issued. Thirdly, it was said that in the particular, case the conduct of the plaintiffs and their agents showed that they had abandoned the insurance, and elected not to complete it by a policy, and, therefore, that the defend- ant was not liable. It was said that it was a breach of good faith on the part of the plaintiffs to put forward a policy which never would have been put forward if the fire had not occurred. It was said that this alleged contract was only to be gath- ered from the slip initialed by the underwriters, but that the slip was no contract ; that it was only an honorary undertak- ing on the part of the underwriters to make a contract sub- sequently, and that being so, the underwriters chose in the present case not to be bound by it. It was alleged that it was right and fair, under the circumstances, that they should not be bound by it, and that, therefore, there was an end of the matter. I had evidence laid before me with reference to this curious point, for it strikes one at first glance that it was cer- tainly a most extraordinary course of business that the under- writers were setting up. They were suggesting that it should be taken that this slip was procured,' not for the purpose of securing protection to the assured, but of getting a piece of paper with some writing upon it, which had no meaning what- ever in point of law. That did not seem very likely. One knows how important it is that there should be a prompt insur- ance in respect of goods against fire risks. Considering how great the risk is to an individual, and how small a premium he has to pay, the great object is to get himself insured against damage by fire, and according to this theory no man could effect a prompt insurance at Lloyd's against damage by fire. There must be an interval between the slip and the subsequent policy, and that interval would leave the underwriter free, if he thought proper not to accept the risk. Approaching the consideration of the evidence by the light of common sense, I was prepared for the result. The plaintiff's witnesses all said that the slip was a contract, and regarded as a binding legal contract to effect a subsequent insurance. There is no statu- tory difficulty in the way, and no reason why the slip should 298 Insurance : Fire, Life, Marine. c. hi. not be a binding contract, and there is every reason for supposing that such would be the intention of the person presenting the slip to be initialed in respect of the risk. On the other hand, there was the evidence of the underwriters, and the underwriters sought to set up a custom to treat these slips as honorary undertakings only. It has become manifest that they could not rely upon a single fact to prove the existence of the alleged custom, and that they were only treating me with what a judge has so often to hear, an opinion — a strong opinion — of the witnesses on the one side as to the merits of the case, and of what the result of the liti- gation ought to be. All these gentlemen thought it was very wrong under the circumstances of this case that this slip should be anything more than an undertaking, out of which the underwriter could get if he thought fit. Some light was thrown upon the value of their opinion by the evidence of one of the principal witnesses, who said : " I regard this slip against fire risks in the same way as a slip against marine risks, and a slip against marine risks is only an undertaking in honor, because the statute forbids that it should be more, and I con- sider the statute applies to an insurance against fire, and there- fore it is to be treated exactly as the same thing, and that is the custom at Lloyd's." Unfortunately, the reasoning broke down, because the statute does not apply, and there is no reason why a contract should not be entered into by the slip ; there is every reason, indeed, to suppose that the parties would intend it to be a contract, and upon that point I am against the defendant. I think there was a binding contract to insure, and that the contract contained in the slip is not one from which the underwriter could escape on the ground that it was only optional whether or not he should go on with the con- tract, and perfect it by a policy of insurance. Then there was an alternative point, and it was that to which Mr. Barnes bent all his energy; he said, assuming that this slip is to be treated as a protecting note, like that which is ordinarily issued by an insurance company (for insurance com- panies recognize the necessity for prompt insurance, and before the policy is issued they will issue a protecting note which will have all the effect of a policy until the document has been pre- pared), still there ought to be read into this slip an implied con- c. in. Thompson v. Adams. 299 dition. An implied condition is a condition to be proved by cir- cumstantial evidence, not by anything that passes in a particular case in terms between the plaintiff and the defendant, but a con- tract to be inserted because the conduct of the parties shows it is the basis of the whole arrangement. The proviso, said Mr. Barnes, that I ask to read in is this : the contract contained in the slip is to be upon the condition, that within a reasonable time the policy is put forward for signature, and if it be not put for- ward within a reasonable time the insurance is to be at an end. That was the proviso that I was asked to insert, as it were, in this slip ; and really the sole ground upon which that argument rested appeared to me to be*that there is an interval ordinarily between the date of the slip and the time when the policy is sent. The course of business is, that, after the slip has been completely initialed, the policy should be prepared by the broker (Mr. Bray in this case), and submitted to the different underwriters ; and when they have signed the policy, as a mat- ter of business, the amount of the premium appears for the first time in the accounts, and the contract is supposed to be complete in all formal particulars. Now, that is inevitable. That delay between the slip and the policy it is impossible to avoid. In the first place, it is not because a particular under- writer initials a slip, that the matter is completed at Lloyd's, or completed anywhere else. The broker has to go round and get all the risk covered; but, further, he has to obtain in many cases precise information as to the nature of the risk — what is called technically the wording — and when the property insured is property abroad, the interval would be longer, necessarily, than if it were at home. On this point again I had a great body of evidence laid before me on each side. The plaintiff's witnesses said the delay is nothing; the matter is complete when the slip is initialed. That is the business view of the affair. The underwriters are none the worse off for any delay : they very often do not trouble themselves very much as to the time the policy comes forward ; and in support of that view the plaintiffs produced a number of slips, some initialed by the defendant himself, in which it appeared there had been a long interval, of weeks and months in some instances, between the date of the slip and the date of the policy. On the other hand, witnesses were called for the defendant, who said that the 300 Insurance : Fire, Life, Marine. c. hi. understanding was that the policy was to be put forward promptly, and if it was not put forward the transaction ought to be regarded as being at an end. But, again, no single in- stance could be adduced by any of those witnesses to throw light on a supposed course of business, and I am satisfied that the defendant's contention upon this point is wrong. See what the consequences would be of adopting their view. If such a clause was to be written into the policy, there must necessarily be an interval of time between initialing the slip and the com- pletion of the policy, during which preparations would be made for laying the policy before the underwriters for their signa- ture. "What is the position of the underwriter meanwhile? Clearly he is on the risk. Then, according to the argument, if the policy be put forward within a reasonable time he is bound to sign it, legally bound to sign it. Then,. in the interval, he is upon the risk ; but, according to the defendant's argument, this proviso would enable the assured, at the expiration of a reasonable time, to be off.. Having kept the underwriter on the risk, and the interval being so ended, he could say : I avail myself of that proviso, which is to be treated as part of the slip, and I get rid of my liability to pay the premium. "When the defendant's witnesses were examined, they were compelled to prove a course of conduct which was totally in- consistent with such a state of things, because it was proved, that, when there was dela}', repeated demands were made by the underwriters themselves as to the reason for the delay. There was one answer of the defendant which really put him out of court on this matter. He was asked : " Now, if no fire had occurred in this case, and the premium had been tendered to you in the month of February, would you have taken it? " " Yes," he said, " I should have regarded the tender of the premium as an indication of good faith, and I should have signed the policy." That seems to me to make an end of that point which had been made by the defendant. From the evidence, I find, as a fact, that there is necessarily an interval between the slip and the policy in all these cases ; and I am satisfied that it would be most unreasonable to read such an implied contract into the slip. There must be judgment for the plaintiffs upon the issues tried before me. ,..«•* Judgment for the plaintiffs. c. ni. Lipman v. Niagara Fire Ins. Co. 301 New York Court of Appeals, 1890. LIPMAN v. NIAGAKA FIKE INS. CO. (121 N. F. 454.) The contract, wJiethcr closed by parol or binding slip, is subject to the terms of the usual policy. Appeal from judgment of the General Term of the Su- preme Court entered upon an order which affirmed a judg- ment in favor of plaintiff entered upon a verdict. This was an action upon an agreement of insurance evi- denced by what is termed by insurance men a "binding slip," which was in these words : " Pell, Wallace & Co., Insurances, 55 Liberty Street, New York, September 2, 1885. " The undersigned do insure for account of Shaped Seam- less Stocking Co. amounts as specified below at 1J for 12 months from September 2, 1885, on machinery and stock, building No. 3 (as per form, building situate Eandall's Island, N. T.). This receipt binding until policy is delivered at the office of Pell, Wallack & Co. Company. Amount. Accepted by. Niagara $2,500 Pollock." Andrews. J. — The binding slip signed by the defendant was not a mere agreement to insure, but was a present insurance to the amount specified therein. The instrument is informal. It states on whose account the insurance is made, the property covered, the amount insured, the term of insurance, and the date. But it does not specify the risk insured against, nor does it contain any conditions such as are usually found in insurance policies. The evident design of the writing, as disclosed by the testimony, was to provide temporary insurance pending an inquiry by the company as to the character of the risk, or, if that was known, during any delay in issuing the policy. The secretary of the defendant signed the binding slip upon the solicitation of Pell, "Wallack & Co., insurance brokers of the plaintiff, in the after- noon of September 2, 1885. The officers of the defendant, hav- ing made inquiry as to the risk, notified the plaintiff's brokers before one o'clock of the afternoon of September 3, that the 302 Insurance : Fibe, Life, Marine. am. defendant declined it. The property described in the binding slip was destroyed by fire in the afternoon of September 3, the fire having commenced about three o'clock. The claim on the one side is that the binding slip was a complete and perfect contract, binding the defendant, according to its language, " until policy is delivered at the office of Pell, Wallack & Co.," and not terminable, therefore, by notice prior to that time, or, if so terminable, then only upon reasonable notice, which, as is claimed, was not given, nor in any event upon notice to the plaintiff's brokers, they not being agents of the plaintiff for the purpose of receiving such notice. It is insisted on the other side that the contract evidenced by the binding slip was a contract subject to the conditions contained in the ordinary policy in use by the company, one of which contained the following clause : " This insurance may be determined at any time by request of the assured, or by the company on giving notice to that effect to the assured, or to the person who may have procured this insurance, to be taken by this company." The notice given on the 3d of September prior to the fire terminated, as is insisted, the contract of insurance pursuant to this condition. "We think there can be no doubt that the true construction of the binding slip only obligated the defendant according to the terms of the policy in ordinary use by the company. There is no other reasonable interpretation of the transaction. The binding slip Was a short method of issuing a temporary policy for the convenience of all parties, to continue until the execution of the formal one. It would be unreason- able to suppose either that the brokers expected an insurance except upon the usual terms imposed by the company, or that the secretary of the company intended to insure upon any other terms. The right of an insurance company to terminate a risk is an important one. It is not reserved in terms in the binding slip, and could not be exercised at all so long as no policy should be issued, unless the condition in the policy is deemed to be incorporated therein. Upon the plaintiff's contention the company could not can- cel the risk so long as the binding slip was in force, and the only remedy of the company to get rid of the risk would be to issue the policy and then immediately cancel it. The binding c. in. Lipman t. Niagara Fire Ins. Co. 303 slip was a mere memorandum to identify the parties to the contract, the subject-matter, and the principal terms. It refers to the policy to be issued. The construction is, we think, the same as though it had expressed that the present insurance was under the terms of the usual policy of the company to be there- after delivered. The trial judge was of opinion that the binding slip was not a complete and independent contract of insurance, subject to no conditions ; but he ruled that the obligation of the defendant was to be determined by the question, whether the condition in the defendant's policy, that the company might terminate the policy by notice to the " person who procured the insur- ance," was a usual one, and submitted the case to the jury on that issue. The case of DeOrove v. Metropolitan Ins. Co., 61 N. T. 594, is, we think, a decisive authority against the view of the learned trial judge. The General Term dissented from the ruling of the trial judge on this point, and held that notice to Pell, Wallack . & P. 313 : or where he is detained by those in authority, or taken out of his course by a ship of war ; Scott v. Thompson, 1 N. R. 181. In Phelps v. Auldjo, 2 Camp. 350, a master was ordered to sail out and examine a vessel in the offing by a captain of a king's ship, and, it appearing that he complied without remonstrance or threat of force, it was held to be a deviation. In cases of this description there must be a vis major, compelling a departure or delay, which excuses the master. So, where the master is obliged to leave his course, or delay by stress of weather or other peril of the sea, or to go into port to repair or refit, or to re-man or recruit his crew dis- abled by sickness or reduced by casualties, or to avoid capture, or to join convoy in time of war, there is no deviation. It is unnecessary to cite all the cases which fall within these excep- tions ; many of those relied on by the plaintiff are clearly with- in them. Dunlop v. Allan, Millar on Ins., 414 ; Green v. Elmslie, Peake, 212 ; Clark v. United Ins. Co., 7 Mass. 365. The case last cited is put upon the express ground that the ship was prevented by causes insured against from proceeding on her route, and the departure was from necessity. See also Eolsom v. Merchant^ Ins. Co., 38 Maine, 414. Nor is the departure from the route for the purpose of sav- ing human life a deviation ; nor is a policy avoided when the 42i Insurance : Fire, Life, Marine. o. ix. ship goes out of her course to obtain necessary medical assist- ance for those lawfully on board. Bond v. Brig Cora, 2 "Wash. C. C. 80 ; Perkins v. Augusta Ins. Go., 10 Gray, 312. In this class of cases the justification does not rest on the same ground as in those previously noticed. It is allowed from motives of humanity, and cannot be extended to the saving or protection of property. In all cases the necessity must be a real and imperative necessity affecting the vessel — such as actual force preventing tbfe master from exercising his will, peril of the sea, danger of capture, want of repair, disability of the crew, or unseaworthiness — occurring under such circum- stances that the master, acting upon his best judgment for the interest of all parties, has no alternative, and is forced to leave his route or delay its prosecution. When the departure is caused by such a necessity the change of route in no respect alters the insurance, because the course of a sea-voyage must at times be necessarily subject to extraordinary perils of the sea, and contingencies beyond the control of the master, and in the presence of which he is forced to succumb ; and when they occur, and he is obliged to depart from the usual course of the voyage, there is no deviation in the legal sense of the term, for the departure is the necessary incident of the route named in the policy as prosecuted at the time by the ship. The probability of such occurrences is well understood ; they are known perils of the voyage, and enter into the ordinary contract of marine insurance. And when the master, compelled by the necessity, does that which is for the benefit of all concerned, the act is within the intention of the policy as much as if expressed in terms. It would be practically impossible to state in the policy all the perils which might arise in a sea-voyage and excuse departure from the route ; and, therefore, by the rules of interpretation applicable to this species of contract, the policy is held by implication to include them. See Green v. Pacific Ins. Co., 9 Allen, 217, 219. In such a policy as this the necessities justifying a de- parture, in the absence of usage, from the route, and a visit to a port not named, are those Avhich are caused by some peril occurring in the prosecution of the voyage within the limits named in the policy, and not those which arise in the prosecu- tion of the business for which the voyage was undertaken. o. ix. Bubgess v. Equitable Marine Ins. Co. 425 It is true, there is a class of eases, much relied on by the plaintiff, where the test is whether the ship at the time of the alleged deviation was pursuing the object and business of the voyage. But those are cases of delay, where the ship was at the port or place named or permitted in the policy. The per- mission in a policy to go to certain ports or places must always be construed in reference to the purpose of the voyage. Wil- liams v. Shee, 3 Camp. 469 ; 1 Arnould on Ins., §§ 141, 142. Any delay for the prosecution of other business, or any unrea- sonable delay in prosecuting the business of the voyage, at such port, is a deviation. African Merchants v. British Ins. Co., L. R., 8 Ex. 154. But if the delay was necessary in order to accomplish the objects of the voyage, and was reasonable under the circumstances of the case, then there is no deviation. Columbian Ins. Co. v. Catlett, 12 Wheat. 383 ; Phillips v. Irv- ing, 7 Man. & Gr. 325. In other words, if the ship is at a place permitted, the delay shall not be a deviation, if it is necessary in the proper prosecution of the business of the voy- age. But this test cannot be applied to a departure from the route to a port not named or permitted, for the purpose of the adventure. In all trading voyages, for example, the ship is confined to the ports or coasts named in the policy, and she cannot depart to other places simply because she may better prosecute the trade elsewhere. If the departure from the route to insure the success of the adventure can be justified as a necessity, it would be difficult to state any limit to the privi- lege, or to the duration of the insurance, and, in the absence of permission to do so in the policy, it cannot be implied. See Kettett v. Wiggin, 13 Mass. 68 ; Robertson v. Columbian Ins. Co., 8 Johns. 491. The plaintiff's vessel might have delayed for any reasonable time upon the Banks for the purpose of fishing or getting bait, without being guilty of deviation ; and would have been protected by the policy, even without proof of usage, because fishing was the purpose of the voyage, and she could properly prosecute it within the route named in the policy. Noble v. Kennoway, 2 Doug. 510, 513. But she could not go beyond or away from the route for that purpose. The illustration put by the defendant's counsel is apposite : " If a vessel insured to Havana and back should learn, before entering the port, that there was no cargo there with which 426 Insubance : Fiee, Life, Makine. c. ix. she could be loaded, no one would say that her policy pro- tected her in going to the nearest port where a cargo could be had." Other illustrations may be given. If a vessel insured to a particular port, having letters of credit, should find on arrival that the parties on whom they were drawn had failed, she could not go to another port for funds, and return for her cargo, and be protected by her policy. If fish had been scarce on the Banks in 1874, it would hardly be contended that the vessel could have gone to other fishing-grounds to fish, although not more distant than St. Peter's ; and yet, if she was justified by necessity in leaving to obtain bait at St. Peter's and to return in order to make the trip successful, it would be difficult to hold that the same necessity would not allow her to fish elsewhere. In the argument of the plaintiff's counsel, no case was cited which sustains the position he has assumed, and we are not aware of any case which goes to this extent. In Greene v. Pacific Ins. Co., 9 Allen, 217, the voyage was broken up by reason of perils to the ship insured against in the policy, and the question was as to the right to abandon. In Stacker v. Harris, 3 Mass. 409, which is strongly relied on by the plain- tiff, an American ship sailing under Spanish colors, as allowed by the policy, delayed at Vera Cruz five months for the pur- pose of recovering outward cargo which had been seized after landing by the authorities. The captain failed to obtain a restitution, and being unable to obtain a clearance from Vera Cruz to the United States under Spanish colors without giving bond to land his cargo in some part of the dominion of Spain, and there being a partner of a Spanish house in Havana by whose assistance he could restore the character of his ship as an American bottom, he took a cargo and freight and sailed for Havana. It is stated in the opinion, though not necessary to the decision, that the delay at Vera Cruz was not a deviation. And it was said by the court : " It may be understood that the insurers by this policy " (which was on ship, cargo, and freight) " were not interested in the outward cargo, after it had been safely landed from the ship. But the captain is the common agent of the concerned, and it is his duty to manage their distinct and separate, as well as their joint interests, ac- cording to his best judgment ; and whatever is fairly done with c. ix. Burgess v. Equitable Marine Ins. Co. 427 this purpose is within the course of the voyage." This is simply stating, in another form of words, that the object for which the ship was at Vera Cruz was the disposal of her cargo, and if the delay was occasioned by fairly attempting to do so, there was no deviation. But the case was decided for the de- fendant, on the ground that, in sailing for Havana, instead of to a port in the United States as required by the policy, the ship deviated, and that the reason for doing so was not such a necessity as justified the departure. It was suggested, in giv- ing the reasons for this decision, that if the partner had died or had left Havana before the ship arrived, then, by force of the same necessity, a voyage to some other Spanish port or ports would have been equally excused ; and thus the ship might have made several passages, although by the terms of the policy she was only insured from Yera Cruz to the United States ; and that this would have been to engage the insurer in an unlimited voyage and risk. The same suggestion would be applicable in this case. If the master had failed to find bait at St. Peter's, the same necessity would have justified him in visiting port after port until he found it. As in the opinion of the court the trip to St. Peter's was a deviation which discharged the insurer, by the terms of the report there must be Judgment for the defendant. CHAPTEE X. general average. United States Supreme Court, 1869. STAR OF HOPE. (9 Wall. 203.) General average : sacrifices, expenses, stranding. Libels by the shippers of cargo against the ship for non- performance of contract of affreightment by reason of failure to deliver cargo, which had been sold by the master in the course of the voyage to pay for repairs at Montevideo, made necessary by the stranding of the ship. Answer by ship-owners, that the stranding took place under circumstances which made the damage, and all expenses consequent thereon, a subject of general average contribution. The district and circuit courts decreed in favor of the libel- ants, and decided that the loss and expense consequent upon the stranding were a subject of particular average and must be borne by the ship. Clifford, J. — "With a full cargo on board, the ship sailed for her port of destination on the day alleged in the pleadings ; and during the voyage, to wit, on the 14th of April following, it was discovered that great quantities of smoke and vapor were issuing from the fore and after hatches of the ship. She was proceeding on her voyage at the time the discovery was made, in latitude forty-six degrees south, longitude fifty-three degrees west, but the weather was squally, and the sea was rough. Precautions, such as are usual on such occasions, were immediately adopted : the hatches were fastened down, and " everything made tight," in order to check as much as possible c - x - Star of Hope. 429 the progress of the fire, at least until a port of succor could be reached. Great alarm was felt, and the fears of all were much in- creased by the fact, well known to all, that the cargo contained prepared gunpowder and large quantities of spirituous liquors. Under the circumstances the crew refused to continue the voy- age, and the master determined, very properly, as the parties agree, to make for the Bay of San Antonio, on the south- east coast of Patagonia, as the nearest anchorage, and at the end of four days the ship arrived off that bay and set the usual signal for a pilot. Throughout that period the signs of fire continued to in- crease ; and in getting up the chains, so as to be ready to cast anchor without delay, they were found to be quite hot, and there were other indications of fire, which greatly heightened the general alarm. Unwilling to run into a bay unknown to him, without a pilot, the master set his signal as aforesaid and waited three hours for one ; but no one came, and it became evident that none could be expected, as the coast was wild and desolate. Something must be done, as the alarm increased as the impending peril became more imminent. Haul off the master could not, as the wind and waves were against any such move- ment. He could not resume the voyage for the same reason, and also because the crew utterly refused their co-operation ; nor could he with safety any longer attempt to "lie to," as the ship was gradually approaching the shore, and because she was exposed both to the impending peril of fire on board, and to the danger, scarcely less imminent, of shipwreck from the wind and waves. Nothing, therefore, remained for the master to do, which it was within his power to accomplish, but to run the vessel ashore — which it is agreed by the parties would have re- sulted in the " certain, and almost instant loss of vessel, cargo, and all on board " — or to make the attempt to run into the bay without the assistance of a pilot. Evidently he would have been faithless to every interest committed to his charge if he had attempted to beach the vessel at that time and place, as the agreed statement shows that the weather was rough, that the wind was high and blowing toward the land with a heavy sea, and that the shore was rocky and precipitous. 430 Insurance : Fike, Life, Marine. c. x. What the master did on the occasion is well described by the parties in the agreed statement, in which they say he at length determined, as the best thing to be done for the general safety, and especially for the preservation of the cargo and the lives of those on board, to make the attempt to run in without a pilot, preferring all risks to be thereby incurred rather than to remain outside in the momentary apprehension of destruction to all ; and the parties agree that he was fully justified in his decision as tested by all the circumstances, although the ship in attempting to enter the bay grounded on a reef, and before she could be got to sea again sprung a leak and sustained very serious injuries in her bottom. Great success, however, attended the movement, notwith- standing those injuries, as the water taken in by the ship ex- tinguished the fire, and the ship remained fast and secure from shipwreck until the winds subsided and the sea became calm. Repairs could not be made at that place, and the parties agree that the injuries to the ship were such as fully justified the master in returning to Montevideo for that purpose, as that was the nearest port where the repairs conld be made. ' He arrived there on the twenty-seventh of the same month, and it appears by the agreed statement that tho just and necessary expenses incurred by the ship at that port to enable her to re- sume the voyage were one hundred thousand dollars, including repairs, unloading, warehousing, and reloading of the cargo, and that the master, being without funds or credit, was obliged to sell a considerable portion of the cargo to defray those expenses. Repaired and rendered seaworthy by those means, the ship on the 11th of September in the same year resumed her voyage, and arrived at her port of destination on the 7th of December following ; and the master, without unnecessary delay, delivered the residue of the shipments in good order to the respective consignees, as required by the contract of affreightment. General average contribution is defined to be a contribu- tion by all the parties in a sea adventure, to make good the loss sustained by one of their number on account of sacrifices vol- untarily made of part of the ship or cargo to save the residue and the lives of those on board from an impending peril, or for extraordinary expenses necessarily incurred by one or more of o. x. Star of Hope. 431 the parties for the general benefit of all the interests embarked in the enterprise. Losses which give a claim to general aver- age are usually divided into two great classes: (1) Those which arise from sacrifices of part of the ship or part of the cargo, purposely made in order to save the whole adventure from perishing; (2) those which arise out of extraordinary expenses incurred for the joint benefit of ship and cargo. Common justice dictates that where two or more parties are engaged in the same sea risk, and one of them, in a moment of imminent peril, makes a sacrifice to avoid the impending danger, or incurs extraordinary expenses to promote the general safety, the loss or expenses so incurred shall be assessed upon all in proportion to the share of each in the adventure. Where expenses are incurred or sacrifices made on account of the ship, freight, and cargo, by the owner of either, the owners of the other interests are bound to make contribution in the proportion of the value of their several interests ; but in order to constitute a basis for such a claim it must appear that the expenses or sacrifices were occasioned by an apparently imminent peril, that they were of an extraordinary char- acter, that they were voluntarily made with a view to the general safety, and that they accomplished or aided at least in the accomplishment of that purpose. Authorities may be found which attempt to qualify this rule, and assert, that, where the situation of the ship was such that the whole adventure would certainly and unavoidably have been lost if the sacrifice in question had not been made, the party making it cannot claim to be compensated by the other interests, because it is said that a thing cannot be regarded as having been sacrificed which had already ceased to have any value ; but the correctness of the position cannot be admitted unless it appears that the thing itself for which contribution is claimed was so situated that it could not possibly have been saved, and that its sacrifice did not contribute to the safety of the crew, ship, or cargo. Sacrifices where there is no peril present no claim for contribution ; but the greater and more imminent the peril, the more meritorious the claim for such con- tribution, if the sacrifice was voluntary and contributed to save the associated interests from the impending danger to which the same were exposed. 432 Insttrance : Fire, Life, Marine. o. x. Such claims have their foundation in equity, and rest upon the doctrine that whatever is sacrificed for the common benefit of the associated interests shall be made good by all the inter- ests which were exposed to the common peril, and which were saved from the common danger by the sacrifice. Much is deferred in such an emergency to the judgment and decision of the master ; but the authorities everywhere agree that three things must concur in order to constitute a valid claim for general average contribution : First, there must be a common danger to which the ship, cargo, and crew were all exposed ; and that danger must be imminent and apparently inevitable, except by incurring a loss of a portion of the associated inter- ests to save the remainder. Secondly, there must be the vol- untary sacrifice of a part for the benefit of the whole ; as, for example, a voluntary jettison or casting away of some portion of the associated interests for the purpose of avoiding the com- mon peril, or a voluntary transfer of the common peril from the whole to a particular portion of those interests. Thirdly, the attempt so made to avoid the common peril to which all those interests were exposed must be to some practical extent successful ; for, if nothing is saved, there cannot be any such contribution in any case. 1 Equity requires, says Emerigon, that in these cases those whose effects have been preserved by the loss of the merchan- dise of others shall contribute to this damage, and commercial policy as well as equity favors the principle of contribution, as it encourages the owner, if present, to consent that his property, or some portion of it, may be cast away or exposed to peculiar and special danger to save the associated interests and the lives of those on board from impending destruction ; and, if not pres- ent, the moral tendency of the well-known commercial usage is to induce the master to exercise an independent judgment in the emergency, for the benefit of all concerned. Masters are often compelled, in the performance of their duties, to choose between the probable consequences of immi- 1 While this is true, some authorities maintain that the success need not be shown to have been caused by the sacrifice in order to establish a right to gen- eral average contribution, but that it is enough if the circumstances existing at the time of such sacrifice justified a general average act. Amould, Mar. Ins., p. 854 (6th ed., 1887). See § 119, supra. c x. Star of Hope. 433 nent perils threatening the loss of the ship, cargo, and all on board, and a sacrifice of some portion of the associated inter- ests in their custody and under their control, as the only means of averting the dangers of the impending peril in their power to employ. They must elect in such an emergency, and if they, in the exercise of their best skill and judgment, decide that it is their duty to lighten the ship, cut away the masts, or to strand the vessel, courts of justice are not inclined to over- rule their determinations. Owners of vessels are under obligation to employ masters of reasonable skill and judgment in the performance of their duties ; but they do not contract that they shall possess such qualities in an extraordinary degree, nor that they shall do in any given emergency what, after the event, others may think would have been best. From the necessity of the case, the law imposes upon the master the duty, and clothes him with the power, to judge and determine, at the time, whether the cir- cumstances of danger in such a case are or are not so great and pressing as to render a sacrifice of a portion of the associated interests indispensable for the common safety of the remainder. Standing upon the deck of the vessel, with a full knowledge of t her strength and condition, and of the state of the elements which threaten a common destruction, he can best decide in the emergency what the necessities of the moment require to save the lives of those on board and the property intrusted to his care ; and if he is a competent master, if an emergency actually existed calling for a decision whether such sacrifice was required, and if he appears to have arrived at his conclu- sion with due deliberation, by a fair exercise of his own skill and judgment, with no unreasonable timidity, and with an honest intent to do his duty, it must be presumed, in the ab- sence of proof to the contrary, that his decision was wisely and properly made. Controversies respecting the allowance or adjustment of general average more frequently arise in cases where the sacri- fice made consisted of a jettison of a portion of the cargo than in respect to any other disaster in navigation. Explanations and illustrations upon the subject, therefore, whether found in treatises or in judicial decisions, are usually more particularly applicable to cases of that description than 28 434 Insurance : Fire, Life, Marine. c. x. to a case where the vessel was stranded ; but the leading princi- ples of law by which the rights of parties are to be ascertained and determined in such cases are the same whether the sacri- fice made consisted of a part of the cargo or of a part or the whole of the ship, as the controlling rule is, that what is given for the general benefit of all shall be made good by the contri- bution of all, which is the germ and substance of all the law upon the subject. Doubts at one time were entertained whether a loss occasioned by a voluntary stranding of the vessel, even though it was made for the general safety, and to avoid the probable consequences of an imminent peril to the whole adven- ture, was the proper subject of general average contribution ; but those doubts have long since been dissipated in most juris- dictions, and they have no place whatever in the jurisprudence of the United States. Where the ship is voluntarily run ashore to avoid capture, foundering, or shipwreck, and she is afterwards recovered so as to be able to perform her voyage, the loss resulting from the stranding, says Mr. Arnould, is to be made good by general average contribution ; and the writer adds that there is no rule more clearly established than this by the uniform course of maritime law and usage. f Sustained as that proposition is at the present day by uni- versal consent, 1 it does not seem to be necessary to refer to other authorities in its support, nor is it necessary to enlarge that rule in order to dispose of the present controversy ; but to prevent any misconception as to the views of the court it is deemed proper to add that it is settled law in this court that the case is one for general average, although the ship was totally lost, if the stranding was voluntary and was designed for the common safety, and it appears that the act of stranding resulted in saving the cargo. Undoubtedly the sacrifice must be voluntary and must have been intended as a means of saving the remaining property of the adventure, and the lives of those on board, and unless such 1 This statement of the learned court is not quite accurate. See the able defense of a contrary view in the Bnc. Brit., subject General Average ; and also York Antwerp Eules. § 125, supra; Maclachan on Shipping, p. 623 ; Gourlie, Gen. Av., pp. 188, 135. The custom of Lloyd's excludes damage from voluntary stranding. Owen, Mar. Ins., p. 271 (1890). c - x - Star of Hope. 435 was the purpose of the act it gives no claim for contribution ; but it is not necessary that there should have been any inten- tion to destroy the thing or things cast away, as no such in- tention is ever supposed to exist. On the contrary, it is suffi- cient that the property was selected to suffer the common peril in the place of the whole of the associated interests, that the remainder might be saved. Suggestion is made that the act of stranding of the ves- sel in this case was not a voluntary act, as the reef where she grounded was not visible at the time and was unknown to the master ; but the agreed statement shows that in undertaking to run into- the bay the master,knew that the chief risk he had to encounter was the stranding of the ship, and the precautions which he took to guard against that danger show to the entire satisfaction of the court that the disaster was not altogether unexpected. As the ship advanced, the lead was constantly employed, showing eight fathoms at first, then seven, then six only, and so on ; the depth continuing to diminish at each throw of the lead, until the ship grounded and remained fast. Grant that the master did not intend that the ship should ground on that reef, still it is clear that he was aware that such a danger was the chief one he had to encounter in entering the bay, and the case shows that he deliberately elected and de- cided to take that hazard rather than to remain outside, where, in his judgment, the whole interests under his control, and the lives of all on board, were exposed to imminent, peril if not to certain destruction. Under these circumstances it is not possi- ble to decide that the will of man did not in some degree con- tribute to the stranding of the ship, which is all that is required to constitute the stranding a voluntary act within the meaning of the commercial law. Suppose the storm outside the bay was irresistible and over- powering, still it does not follow that there was no exercise of judgment, for there may be a choice of perils when there is no possibility of perfect safety. -Destruction of all the interests was apparently certain if the ship remained outside, but the master under" the circum- stances elected to enter the bay without the assistance of a pilot, knowing that there was great danger that the ship might ground in the attempt ; but his decision was, that it was better 436 Insurance : Fibe, Life, Makiite. c. x. for all concerned to make the attempt than to remain where he was, even if she did ground : and the result shows that he decided wisely for all interests, as damage resulted to none except to the ship, and she would doubtless have been de- stroyed if she had continued to remain outside of the bay. Guided by these considerations, our conclusion is, that the loss and damage sustained by the ship at the place of the dis- aster, and the costs and expenses of the repairs — and all the other costs and expenses as charged in the adjustment — are the proper subject of general average contribution, as alleged by the claimants in their answer. Details will be avoided, as the decree must be reversed, and the cause remanded for further proceedings. • Brief consideration must also be given to the exceptions, taken by the claimants, to the report of the commissioner, which were overruled by the court. 1. That the commissioner erred in assuming that the valu- ation of the ship, as given in the policy of insurance, is the proper basis of her contributory value in the statement of the amount for general average. As a general rule, the value of the ship for contribution, where she has received no extraordinary injuries during the voyage, and has not been repaired on that account, is her value at the time of her arrival at the termination of her voy- age ; but if she met with damage before she arrived, by perils of the sea, and had been repaired, then the value to be assumed in the adjustment is her worth before such repairs were made. Neither party gave any evidence as to the value of the ship prior to the disaster, except what appears in the policy of in- surance, and, under the circumstances, it is difficult to see what better rule can be prescribed than that adopted by the com- missioner. Strictly speaking, the rule is the value of the ship ante- cedent to the injuries received ; but, as that requirement can seldom be met, the usual resort is her value at the port of departure, making such deduction for deterioration as appears to be just and reasonable. No proof on that subject, except the policy of insurance, was offered by either party, and, inasmuch as ships are seldom insured beyond their actual value, the exception is overruled. c x. Star of Hope. 437 2. That the commissioner erred in carrying into particular average certain expenses incurred by the master at the port where the repairs were made, which should have been re- garded as the proper subject of general average. We think it plain that the exception must be sustained, as some of the matters charged as particular average, in whole or in part, ought clearly to have been included at their full value among the incidental expenses necessarily incurred in making the repairs. "Whatever the nature of the injury to the ship may be, and whether it arose from the act of the master in voluntarily sacrificing a part of it or in voluntarily stranding the vessel, the wages and provisions of the master, officers, and crew from the time of putting away for the port of succor, and every ex- pense necessarily incurred during the detention for the benefit of all concerned, are general average. Kepairs necessary to remove the inability of the ship to proceed on her voyage are now regarded everywhere as the proper subject of general average. Expenses for repairs, be- yond what is reasonably necessary for that purpose, are not so regarded. The wages and provisions of the master, officers, and crew are general average from the time the disaster occurs until the ship resumes her voyage, if proper diligence is employed in making the repairs. Towing the ship into port, and extra expenses necessarily incurred in pumping to keep her afloat until the leaks can be stopped, are to be included in the adjustment. Surveys, port charges, the hire of anchors, cables, boats, and other necessary apparatus, for temporary purposes in making the repairs, are all to be taken into the account, as well as the expenses of unloading, warehousing, and reloading the cargo after the repairs are completed. Repairs in such a case cannot be made by the master unless he has means or credit; and if he has neither, and his situation is such that he cannot communicate with the owners, he may sell a part of the cargo for that purpose, if it is necessary for him to do so in order to raise the means to make the repairs. Sacrifices made to raise such means are the subject of general average, and the rule is the same whether the sacrifice was 438 Insubance : Fire, Life, Marine. c. x. made by a sale of a part of the cargo, or by the payment of marine interest. Governed by these rules, it is believed the rights of the parties may be adjusted without serious difficulty or danger of mistake. Decree reversed. CHAPTEE XI. new york standard fire policy. Supreme Judicial Court of Massachusetts, 1852. SCKIPTUKE v. LOWELL MUTUAL FIEE INS. CO. (10 Cush. 356.) What i* loss by fire. Action on a policy of insurance on a dwelling-house owned by plaintiff, but occupied by one Elbridge Smith, whose minor son, without plaintiff's knowledge, brought a cask of gun- powder into the attic and fired it with a match, doing con- siderable damage. Perkins, J., in the Court of Common Pleas, gave plaintiff judgment for the total damage done, on an agreed statement of facts, and defendants appealed to this court. Cushing, J. — The case finds that a burning match being applied, without fault of the plaintiff, to a cask of gunpowder in the attic of his house, the gunpowder took fire, exploded, set fire to a bed and clothing, charred and stained some of the woodwork, and blew off the roof of the house ; and the only question in the case is, whether the loss thus occasioned to the building is covered by the conditions of an ordinary policy against fire. The question may be generalized thus : By the ignitior* of gunpowder within a dwelling-house, damage is done to the house, that damage consisting in part of combustion and in part of explosion. Is the whole damage covered by a policy insuring "against loss or damage by fire?" The very anomalous case of Austin v. Drew, 6 Taunt. 436, has been adduced in argument and greatly relied upon, as hav- ing apparent analogy to this ; but when that case is examined, 440 Insurance : Fiee, Life, Marine. c. xi. the analogy disappears. The evidence there was, of a building of several stories, in each of which sugar, in a certain state of preparation, was deposited for the purpose of being refined; and a chimney, running up through the building, formed almost one whole side of each of the stories ; and by means of this chimney, heat was communicated to the several rooms con- taining the sugar, and thus acted on it chemically. At the top of the chimney was a register used to shut in the.heat dur- ing the night. The servant of the assured, in lighting the fires in the morning, neglected to open the register, in consequence of which, undue heat came out into the heating-room, and the sugars were thereby injured. And the action pending, was to recover damage for this under a policy of insurance agaiust loss by fire. The decision in Austin, v. Drew has been assumed to estab- lish that, " to bring a loss within the risk insured against, it must appear to have been occasioned by actual ignition, and no damage occasioned by mere heat, however intense, will be within the policy." 2 Marsh, on Ins. (3d ed.) 790. This propo- sition is not the point of the case ; and it cannot be sound law ; for it may well happen that serious damage, within the scope of a fire policy, shall be done to a building, or to its contents, by the action of fire in scorching paint, cracking pictures, glass, furniture, mantelpieces, and other objects, or heating and thus actually destroying many objects of commerce, and yet all this without actual ignition — that is, visible inflammation. All these manifest errors, and the do.ubts they throw over the case of Austin v. Drew, are dispelled at once by the report of it in Holt and in Campbell, as it was tried at Nisi Prius. There it appears that the claim was for damage to the sugars by overheating only. And Chief Justice Gribbs said : "lam of opinion that this action is not maintainable. There was no more fire than always exists when the manufacture was going on. Nothing was consumed by fire. The plaintiffs' loss arose from the negligent management of their machinery. The sugars were chiefly damaged by the heat. And what produced the heat ? Not any fire against which the company insured, but the fire for heating the pans, which continued all the time to burn without any excess. The servant forgets to open the register by which the smoke ought to have escaped and the c. xi. Scripture v. Lowell Mutual Fire Ins. Co. 441 heat to have been tempered." And when one of the jurymen suggested that fires arising from negligence of servants were covered by fire policies, Chief Justice Gibbs assented, and said it was not the case of a fire arising from negligence, for there was no fire except where it ought to have been ; but it was tha case of the damage of an article in the process of manufacture by the unskillful management of the fire used as an agent of the manufacture. Austin v. Drew, 4 Campb. 360 ; Holt N". P. 126. If, in Austin v. Drew, the fire had been where it ought not to be, if, even with careless management, it had burned the build- ing, and notwithstanding it was fire maintained only for the purpose of manufacture, then all the observations of the court go to show that, in this instance, as in that of the whaleship mentioned in Emerigon (1 Tr. de Ass. 436), the insurers would have been held to be liable for the loss. This, therefore, and this only, as correctly stated by Beaumont (Ins. 37), is decided by the case of Austin v. Drew ; namely, that where a chemist, artisan, or manufacturer, employs fire as a chemical agent, or as an instrument of art or fabrication, and the article, which is thus purposely subjected to the action of fire, is damaged in the process by the unskill fulness of the operator, and his mis- management of heat as an agent or instrument of manufacture, that is not a loss within a fire policy. This, Ave apprehend, is good policy and sound law. But it does not touch at all the present case. It has been thought proper thus to analyze the case of Austin v. Drew, because, having been variously reported by four different reporters, and presenting itself prominently in several of the text-books, but in nearly all of them with more or less of misconception, it has become the starting point, in legal construction, of conflicting lines of argument leading to sundry false conclusions, and, among others, that of a sup- posed application to the present question. Some adjudications have also been cited of questions arising in the contingency of damage done by lightning. Thus, in Kenniston'v. Merrimack Insurance Company, the Supreme Court of New Hampshire decided that damage done by light- ning, without any combustion to indicate the presence of fire, is not within the terms of a policy against " fire by accident, lightning, or by any other means " ; the court, in a brief opin- 442 Insurance : Fire, Lite, Marine. c. xi. ion, deducing the conclusion from the assumed premises that lightning ^e^se is not fire. 14 N. H. 341. The same conclu- sion, upon similar facts and upon the same "words of insurance, " fire by lightning," is elaborately reasoned out in a recent case in New York, Bdbcock v. Montgomery County Insurance Com- pany, 6 Barb. 637 ; where it is held, that, to constitute a loss within the policy, there must be fire, or burning, and that damage by lightning in other forms is not the risk intended by the contract ; because, though caloric may generate electricity, or electricity caloric, yet caloric and electricity are distinct things in nature. The principle adjudged in the cases of this class will be readily seen by reversing the question. Suppose, not as fact but as mere supposition, a policy insuring against damage done through electricity generated by caloric. Obviously, this would not cover damage done by fire only, electricity not being evolved. So, in the actual case reported, of insurance against fire produced by lightning, if the effects be of lightning only, without exhibition of fire, it would not, according to the above decision, be within the policy. Or suppose insurance on cattle against the risk of death by fire alone. In that assump- tion, if the cattle die, as they may, by a stroke of lightning, without a burn or any other action of fire on their bodies, it would not be the risk contemplated by the contract. Beau- mont on Ins. 37. The question of loss by lightning is very summarily dis- posed of in the older authorities by treating electricity as fire from heaven. See 1 Emerigon, c. 12, § 17, No. 1, and the authors there cited. But the progress of knowledge has led to juster notions of the nature of lightning, and, of course, to dif- ferent conclusions touching its legal relations, which are cor- rectly summed up by a late writer as follows : namely, that fire includes lightning if there be any mark of fire, but not otherwise. Beaumont on Ins. 37. These cases of damage by lightning bear on the present question, therefore, if at all, only by very distant analogy. Neither of them covers it or has any direct relation to it. To the contrary of this, in New York, at least, the same courts which decide that loss by lightning merely is not covered by a fire policy, decide that loss by the explosion of gunpowder' is. o. xi. Scripture v. Lowell Mutual Fire Ins. Cck 443 There is a series of cases precisely in point which expressly decide, or by implication assume, that damage done by the explosion of gunpowder ignited within a building, as well as that done by its combustion, is within the risk of a fire policy. The case of Grim v. Phoenix Insurance Company was this : A vessel, insured against fire, was partly laden with gun- ' powder, which, being ignited by carelessness, the vessel was blown up and totally lost. It was argued by eminent counsel, and the opinion was given by Thompson, C. J., and throughout the case it seems to be assumed that the loss was, in respect to its cause, within the policy, and the decision was made to depend on other considerations, 13 Johns. 451. The same con- clusion is also assumed in the case of Duncan v. Sun Fire In- surance Company, 6 Wend. 488. In the case of City Fire Insurance Company v. Corlies, the claim was on a fire policy for merchandise destroyed not in burning, but through the blowing up of the building wherein it was stored, by means of gunpowder ; and the court expressly adjudged this to be " a loss by the peril insured against, within the meaning of the policy." 21 "Wend. 367. The question, we admit, is a nice one. Upon careful reflec- tion, however, we have come to the conclusion that the re- ceived opinions on the subject and the adjudications referred to are in accordance with reason and principle. It seems not to be denied that actual combustion, produced by the ignition of gunpowder, is within the present policy. If, then, a com- bustible substance in the process of combustion produces, ex- plosion also, it is not easy to perceive why, of the two diverse but concurrent results of the combustion, the one should be .ascribed to fire any less than the other. The plain fact here is the application of fire to a substance susceptible of ignition, the consequent ignition of that substance, and immediate damage to the premises thereby. It is no sufficient answer to say that some of the phenomena produced are in the form of explosion. All the effects, whatever they may be in form, are the natural results of the combustion of a combustible substance ; and, as the combustion is the action of fire, this must be held to be the proximate and legal cause of all the damage done to the prem- ises of the plaintiff. Our opinion excludes, of course, all damage by mere explo- 444 Insurance : Fire, Life, Marine. c. xi. sion, not involving ignition and combustion of the agent of explosion, such as the case of steam, or any other substance acting by expansion without combustion. See Perrin's Admin- istrator v. Protection Insurance Co., 11 Ohio, 146. It likewise excludes all damage occasioned but remotely or consequentially through the agency of gunpowder, such as injury done to a house by falling fragments in the blasting of rocks, or the shattering of a house by the stroke of a cannon-iball, in which examples the shock of a projectile, and not ignition or combus- tion, is the proximate cause of the damage done. We recognize and accept, in the full force of its application, the maxim : In jure non remota causa seal proximo spectatur. Bacon's Max. 1. The legal relations of marine insurance have been copiously discussed in many express treaties of elaborate erudition, and are considered in a great number of judicial decisions, in which the whole subject has been explored with wonderful acuteness and comprehension of logic and of learning; while fire insur- ance, as a branch of legal knowledge, is, comparatively speak- ing, in its rudiments. The cases on marine insurance throw little if any light on the present question, except in so far as they attempt to prescribe a rule for distinguishing between what is remote and what is proximate cause. The conclusion reached in this discussion, as may be seen by the latest investi- gation of the point in Great Britain, Montoya v. London Assurance Co., 6 Exch. 451, is that, while for most cases it is practicable to draw the line, and to formalize a rule between the two classes of causes, yet, in other cases, according to the general law of nature, the two classes approach and run into one another until the distinction vanishes ; and within the limits of this debatable land of differences, it is necessary to apply judicial discretion to the particular questions as they arise, just as it is in the not infrequent inquiry whether a thing, or the use or measure of it, be reasonable or not. In Montoya v. London Assurance Co., it was determined that, where the lower part of a cargo is damaged by sea water and, by the evolution of gases from the part thus damaged or the propagation of heat arising from fermentation, the superior part of the cargo be damaged also, the loss on the latter is by the perils of the sea, the involvement of the secondary effect in the primary one being an example of causa proscima. c. xi. Sckipttjre v. Lowell Mutual Fike Ins. Co. 445 In the present case there is no room for question concerning a series of causes, as whether primary or secondary, proximate or remote ; for the agent is one and the same throughout, namely, fire. The causa was burning powder ; the causa cau- sans was a burning match ; at each stage of causation it was the action of fire. Nay, to be exact, the burning of the gun- powder, like the burning of the match, was a succession of several complex acts of burning, yet fire is the agent at each of these distinct stages of causation. Suppose there was a barrel of sulphur in the plaintiff's attic instead of gunpowder, and this being ignited with a match, afterwards the fire had passed from the burning sulphur to the substance of the house. This would be recognized at once as a case of fire. It does not change the legal relation of causes to substitute a barrel of burning gunpowder for a barrel of burning sulphur. The only difference in the elements of the question is, that the gun- powder, when ignited, consumes with more of rapidity than sulphur, and the combustion is accompanied or followed by explosion. Still, the agent is fire, though it acts in different ways upon the different successive subjects of its action, begin- ning with the match and terminating with the plaintiff's house. On the other hand, cases are conceivable, other than by the use of gunpowder, of explosion without any combustion, which, nevertheless, being the result of the action of fire, are still, it would seem, within the range of the general principle. Various mineral substances exist, of value in commerce and the arts, which explode by the action of fire, without either ignition or combustion. In general, any close vessel of whatever material composed, when filled with an expansive fluid, is liable to explode by the action of heat, though it may be that the vessel and its contents are alike incombustible. The same thing happens, under certain conditions, to some forms of wood ; which, although combustible, may by the action of fire explode, without ignition ; or which, as in the present case, of a house, by having compressed within it some burning substance, which is explosive as well as combustible, like gunpowder, may suffer the double injury of combustion in part and in part of explosion. If, however, the question of consequential damage needed to be explored for the determination of the present case, it 446 • Insurance : Fire, Life, Martne. c. xi. would serve to confirm the conclusion at which we have on other premises arrived. Thus, in Great Britain, damage which occurs consequentially in the case of a fire, by reason of confu- sion of mind, as in throwing fragile objects out of the window, or by sudden terror from alarm, as in leaving open the top of a barrel, and thus wasting the contents, is held to be loss by fire, according to the usages of insurance offices or established legal principle. Beaumont on Ins. 41. So it is in the case of a beam, cornice, or coving, removed to prevent the spread of conflagration. Ibid. We understand the same to be the rule, in the case, for instance, of a fire in the upper story of a build- ing, and the destruction or damage of goods in a lower story, not by fire, but by the water thrown into or upon the building for the purpose of extinguishing the fire. All these are fit illustrations of the question of merely consequential damage. In the hypothesis that fire is to be regarded as causa proximo, in the present case we can see but one supposable defect ; namely, the suggestion that, though it be conceded that the explosion of burning gunpowder, and its effects, are the action of fire, yet this particular effect on the building is not exhibited in the form of igneous action. The cases above supposed, of the shrivelling of some masterpiece of pictorial art, the cracking or discoloration of a rich vase or gem, the bursting of a cask of wine through the expansion of its contents, these, it may be said, are distinctly cases of damage, without ignition it is true, but by the direct and specific action of heat as such ; while it is denied that such is the fact in the present case of the blow- ing up of a dwelling-house by the ignition of gunpowder. "We do not think the premises of this argument are sustained by the physical facts which occurred. If they were so, then the near- est analogy would be of damage by smoke ; that is, the moisture thrown off by burning wood, and carrying with it ashes, empy- reumatic oil, and other constituent parts of the wood, either in their natural condition, or transformed by the process of combustion. Now it is obvious that mere smoke, Avithout any direct action of heat, may do great damage to many kinds of merchandise, such as delicate textile fabrics, esculent vegetables, articles of taste, and other numerous objects ; and if a dwelling or a magazine take fire, and some parts of it only be consumed, but the contents of apartments, to which the actual fire does c. xi. Lyons v. Providence Washington Ins. Co. 447 not extend, are nevertheless damaged by the smoke penetrating into and filling them, can it be doubted that the damage thus done is a loss within the ordinary conditions of a fire policy ? Semble, per Gibbs, Chief Justice, arguendo, in Austin v. Drew, Holt N. P. 127. Yet, incontestable, damage by smoke is an effect, which is not in itself igneous action, though it be the result thereof ; while, as we conceive, the explosion of gun- powder is igneous action. In conclusion, we think the rule, which we propose for the present case, reconciles all the conditions involved in the ques- tion ; is conformable to the nature of things ; and constitutes a coherent and consistent doctrine, namely, that where the effects produced are the immediate results of the action of a burning substance in contact with a building, it is immaterial whether these results manifest themselves in the form of com- bustion, or of explosion, or of both combined. In either case, the damage occurring is by the action of fire, and covered by the ordinary terms of a policy against loss by fire. Judgment for the plaintiff. Supreme Court of Rhode Island, 1883. LYONS v. PROVIDENCE WASHINGTON INS. CO. (14 R. I. 110.) Location, when material. Carpenter, J. — The plaintiff proved in the trial of this case in the Court of Common Pleas that she procured from the de- fendant a policy of insurance against fire, on certain articles of furniture and wearing apparel, described in the policy as " All contained in house No. — , McMillen Street, Providence, R. I. ; " that at the time of the fire the articles had been removed and were in a house on Power Street, where the fire occurred ; that the defendants had never been informed of the removal; that she never told them of the removal, and did not think it was necessary to tell them, and that at the time she procured the policy of insurance she owned the house on McMillen Street, in which the articles insured then were. In this state of the proof the defendant requested the presiding justice to instruct 44:8 Insurance : Fire, Life, Marine. c. xi. the jury that the permanent removal of the goods insured from the house on McMillen Street to the house on Power Street, without the knowledge and assent of the defendant corporation, terminated the contract of insurance, and that the plaintiff could not recover. The presiding justice refused such instruc- tion, whereupon a verdict was returned for the plaintiff, and the defendant brings this bill of exceptions. There seems to be no doubt that if this question were to be decided on authority, it must be taken as the general rule 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. Eddy Street Iron Foundry v. Hampden Stock and Mutual Ins. Co., 1 Cliff. 300 ; Shertzer v. Mutual Fire Ins. Co. of Hartford County, 46 Md. 506 ; Wall v. Fast Rimer Mutual Ins. Co., 3 Seld. 370 ; Hart- ford Fire Ins. Co. v. Farrish, 73 111. 166. The plaintiff, however, contends that this case comes within an exception to the general rule. The argument is, that inas- much as the insured property is household and personal effects, and inasmuch as it is matter of common knowledge that cer- tain 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 plain- tiff might make such removal during the term of the insur- ance, 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 exception to the general rule as above stated ; but we do not think that, either in reason or on authority, it goes to the extent claimed by the plaintiff. Briefly stated, the rule seems to be that the temporary re- moval of property, whether occasional or habitual, in pur- suance of a use which is a " certain necessary consequence " arising from the character of the property, without any change in the ordinary place of keeping, will be no defense to an ac- tion on the policy. The reasoning of Lord Mansfield, although in case of marine insurance, applies exactly to this question. Felly v. Governor & Company of the Royal Exchange Assur- c. xi. Lyons v. Providence Washington Ins. Co. 449 ance, 1 Burr. 341 ; ffolbrook v. St. Paul Fire & Marine Ins. Co., 25 Minn. 229. The plaintiff further contends that the general rule above laid down is not founded in justice and sound reason, and ought not to be adopted in this case. The argument is, that no person not learned in the purport of judicial decisions could know or infer that the words of the policy above quoted, which are in appearance merely descriptive, imported a warranty ; and that, therefore, they should not now be so construed. We can- not agree with this argument. We must assume that the words of a written instrument conveyed to the minds of the parties to that instrument the meaning and effect Avhich have been imputed to those words by well-established judicial deter- minations. Undoubtedly such determinations, if they are to remain as authority, must appear to be based on the words themselves, or on something in the nature, circumstances, or "relations of the parties or of the contract. We think the in- terpretation of the words of this policy as a warranty is well drawn from the nature of the contract of insurance. It must be evident to any person who at all considers the nature of that contract, that the amount to be charged for premium must vary on consideration of the location of the property to be insured ; and but small reflection would be necessary to per- ceive that the removal of the property to another place might be greatly to the disadvantage of the insurer, although such new place of deposit might not be in itself more exposed to damage from fire, since the result of such removals, if per- mitted to a considerable extent, might be to expose an undue proportion of his capital to the risks of a single conflagration. Exceptions sustained. CHAPTEE XII. clauses of the new york standard fire policy continued. New York Court of Appeals, 1881. LANDERS v. WATEETOWN FIRE INS. CO. (86 N. Y. 414.) Other insurance, valid or invalid. Andrews, J. — The policy on which this action is bronght, was issued o"n or about August 1, 1873, and contains a condi- tion that, " if the assured shall have, or shall hereafter make, any other insurance on the property hereby insured, not in- dorsed hereon, or consented to by this company or its author- ized agent, in writing, this policy shall be void." The answer avers a breach of this condition, and alleges that, at the time the policy was issued, the house insured was covered by a prior policy, issued to the plaintiff in the Glens Falls Insur- ance Company, for $800, terminating May 1, 1874, the exist- ence of which was not communicated to, or known by the defendant. It was proved that the plaintiff, in May, 1871, pro- cured an insurance on the house, in the Glens Falls Insurance Company, for $800, for the term of three years from May 1, 1871, not indorsed on -the policy in suit, or consented to by the defendant, or its authorized agent, in writing. The policy in the Glens Falls Company contained a condition, that, if the insured premises should become vacant, and unoccupied, or the risk should be increased, by the erection or occupation of neighboring buildings, or by any means whatever, without the consent of the insurer, indorsed on the policy, it should be void. The answer made on the trial to the defense of prior insur- ance was, that, after the policy in the Glens Falls Company was issued, the house remained vacant for several months o. xii. Landers v. Watertown Fire Ins. Co. 451 without the consent of the insurer, and that the risk had been increased by the plaintiff's having put into a mill, near the insured premises, an engine and boiler. The vacancy, and the increase of risk by the putting in of the engine and boiler, were proved. The policy in the Glens Falls Company had not, however, been canceled by the company, nor did it appear that the company knew of the vacancy, or increase of risk. The plaintiff did not discover the provision in the policy of the Glens Falls Company, avoiding it for these causes, until after the fire. He procured the policy in the defendant's com- pany, for the reason that he supposed, although erroneously, that the term for which tfce policy in the Glens Falls Com- pany was issued had expired, or was about expiring. The court, on the trial, overruled the defense based on the prior insurance, on the ground that^the policy in the Glens Falls Company had become .void, in consequence of the vacancy and increase of risk, and, consequently, that there was no prior insurance when the defendant's policy was issued. In this ruling, the court, we think, erred. The prior policy was valid when issued, but was avoidable by the company issuing it, for breach of condition subsequent. But the company had not elected to avoid it for that reason. It was not certain that it would have so elected, if the facts had been known to it. In some cases, it might be very inequi- table for a company to take advantage of the breach of a condition as to vacancy, or increase of risk, to avoid a policy originally valid, although the legal right so to do might be unquestionable. It certainly would be competent for a com- pany to waive such an objection. The first policy was void- able only at the election of the company. The condition was inserted for its benefit, but its violation did not, ipso facto, extinguish the policy. The condition in the defendant's policy was inserted to protect it from the hazard of over-insurance, and the existence of the policy in the Glens Falls Company was a breach of the condition. No question arises in this case as to the rule in case the prior policy had been void in its inception, by non-performance, by the insured, of a condition precedent. It is claimed that the defendant's agent, when the applica- tion for the policy in suit was made, knew of the existence of 452 Insurance : Fire, Life, Marine. c. xii. the policy in the Glens Falls Company. The defense of prior insurance was not disposed of on this point. That question may be passed upon on a new trial. The judgment should be reversed and a new trial granted, costs to abide event. All concur. Judgment reversed. New Yoek Court of Appeals, 1874. WILLIAMS v. PEOPLE'S FIRE INS. CO. (57 N. T. 274.) Increase of risk. Dwight, C. — The only point which it will be necessary to consider, in the present case, is, whether the judge at the trial erred in refusing to submit to the jury the question, whether there had been a violation of the conditions of the insurance policy, insuring the plaintiff's goods, by reason of an increase of the risk, owing to the plaintiff's own act. The condition in the policy, which is claimed by the defendant to have been violated by the plaintiff, is as follows : " If, after insurance has been effected, either by the original policy or the renewal thereof, the -risk shall be increased by any means whatever within the control of the assured, or if such building or premises shall be occupied a in any way, so as to render the risk more hazardous than at the time of insuring, such insurance shall be void and of no effect." The facts of the case, so far as it is necessary to detail them, as bearing on an alleged increase of risk, show that the prop- erty insured was merchandise, contained in a brick building, known as 307 Broadway, in the city of New York. The goods were in a room in the third story. The plaintiff used the room for the purposes of his business, and also as a sleeping-room. Its dimensions were thirteen feet by six feet eight inches. There was a stove in the room, in which fires were kindled from time to time. The plaintiff kept in this room a jug of crude petroleum. It stood on a shelf eight or ten feet from the stove, and would hold a gallon or more. The petroleum was used for medicinal purposes, and, in particular, to cure an c. xn. Williams v. People's Fire Ins. Co. 453 eruption of the skin. "When he used the petroleum, he would stand naked before the fire in the stove, and rub himself with the oil. He had done this, from time to time, for five or six months, before the fire. The shirt and drawers which he wore, after making the application, having become saturated with the petroleum, he cast into a box in the room, having a lid upon it. He had worn articles of this kind two nights before the fire. He had made an application of the petroleum to his per- son on the afternoon of January 30, 1868, and left his place at five o'clock in the afternoon. On this occasion, he had rubbed the oil upon his person before the fire in the stove, as usual. The merchandise was found to be on fire on the mornin°- of January 31, at two and a half o'clock. The petroleum jug con- tained at the time about two quarts of the oil, and was stand- ing on the shelf, without a cork. The flames did not set the oil on fire. The saturated clothing was not burned or injured. The unburned goods were thrown together in a pile after the fire. There was found in the mass, besides the clothing referred to, some balls saturated with turpentine or kerosene, and there was a strong smell of those substances in the room. There was evidence given by a refiner and dealer in petroleum oils, and who gave testimony as an expert, that crude oil was highly dangerous, and apt to give off, by evaporation, volatile gases which would readily take fire. He stated that there was no comparison, as to danger, between the crude and the volatile oil. He declared that it was dangerous to strike a match in a close room, owing to the presence of the gases and their liabil- ity to take fire. He added that the danger would be much increased by the presence of garments saturated with the oil, as there would be more surface exposed for evaporation, and that, in his view, there was danger from the circumstances of the present case. Other experts, called by the plaintiff, wholly contradicted this view. It appeared that the defendant did not know of the use of the petroleum, and did not take risks where petroleum was used, except at very high rates. It belonged to the class of prohibited, or, at the least, to specially hazardous articles. Under these facts, the question should have been left to the jury, whether the acts of the plaintiff had not " increased the risk " under the condition in the policy. The effect of this clause has been frequently considered by 454 Insurance : Fire, Life, Marine. c. xn. the courts. It differs from that class of conditions which refer to a state of things existing at the time of the execution of the policy. It looks wholly to the future, and solely concerns the conduct of the assured. It binds him to a rigorous course of conduct as to the observance of existing precautions and the introduction of new sources of danger. The bearing of it is well stated by Chief Justice Shaw in Houghton v. Manufac- turers' Mutual Fire Insurance Co., 8 Metcalf, 114, 122. The clause in that case was not precisely in form like the one now under discussion, but was substantially the same. The court said : " This provision binds the assured not only not to make any alteration or change in the structure or use of the property which will increase the risk, but prohibits them f:om introduc- ing any practice or custom or mode of conducting their busi- ness which would materially increase the risk, and also from the discontinuance of any precaution represented in the appli- cation to be adopted and practiced with a view to diminish the risk." P. 122 ; May on Insurance, § 218. The effect of the clause plainly is, that if there be any increase of risk, the plain- tiff cannot recover. It is in the nature of a warranty that there shall be no material increase of the risk. Allen v. Mut. .Fire Ins Co., 2 Md. Ill ; Mayor of New York v. Hamilton Fire Ins. Co., 10 Bosw. 537 ; Baxendale v. Harvey, 4 H. & N. 445. Whether there is such a material increase of the risk or not is a question for the jury. It is urged, however, that there was a special clause in the policy concerning petroleum, and that this covers the whole subject, and thus excludes the application of the " increase of risk " clause to the present case. That clause provides that the sale or storage of crude or re- fined coal-oil or petroleum, etc., is prohibited within the prem- ises covered by the policy, except by written permission in- dorsed thereon. It is argued, from this form of expression, that all other forms of use except "sale or storage" are allowed. It is not pretended that this article was kept for sale, and the decisions show that the small amount of petro- leum kept in the present case for the purpose indicated is not an instance of " storage." Hynds v. Schenectady Co. Mut. Ins. Co., 11 N. Y. 554 ; May on Insurance, § 242, and cases cited. Conceding that the true construction of this condition is to allow the act of keeping petroleum when not on sale or storage, c. xii. Williams v. People's Fire Ins. Co. 455 it must still be harmonized with the condition concerning "increase of risk." The risk must not be augmented by any means whatever within the control of the assured. Taking the clauses together, the insured could not fairly claim to use petroleum actively and as an instrument to accomplish some purpose of his own, if the risk was thereby increased. A prohi- bition of " the sale or storage of gunpowder " would not, by implication, confer the right to fire a pistol among inflammable substances. Suppose that there was a prohibition against the sale or storage of certain chemical substances, not specially dangerous in an inert state, would that cover, by implication, the act of a chemist who should, by combining them into dangerous and explosive compounds, give them a capacity to cause mischief which they did not originally possess ? This result could not be claimed, even if there was an express insur- ance upon such substances. Says a recent author : " A per- mission to keep kerosene or gunpowder for sale, it is obvious, cannot fairly be construed into a permission to manufacture or use them upon the premises, since the risks in the respective cases may widely differ." May on Insurance, § 234. The plaintiff further insists that the last-named clause is qualified by the following provision : " If the above-mentioned premises shall, during this insurance, be occupied or used so as to increase the risk, or by the occupation of neighboring prem- ises, this company, after notice given to the assured or his or her or their representative, of their intention to terminate the insurance, will refund a ratable portion of the premium." It is claimed that in construing this clause, with the general one on " increase of risk," the result is, that, on such an increase, the company may terminate the insurance by notice, and lose the unearned premium, or by withholding notice save the pre- mium ; in which case the insurance continues binding. This construction is inadmissible. It gives no force to the general clause concerning increase of risk by the act of the insured. If that were entirely omitted from the policy, and the clause concerning the right to reduce the premium were inserted, the company would have precisely the same right which the plain- tiff insists that he should derive from both the clauses. It would necessarily follow, that, if the defendant did not avail itself of the privilege to reduce the premium, the policy would 456 Insurance : Fire, Life, Marine. o. xii. stand, and that if the reduction was made, the policy would cease. On this construction, no good reason can be given for two distinct conditions. If the second covers any more acts than the first, they would, naturally, on that supposition, be embraced in a single group of conditions by using some more general form of expression. Again, the proposed construction leaves the insured at liberty to increase the risk and still collect the insurance money, unless such increase happens to come to the knowledge of the insurer; for, in that case alone could notice be given. The true construction is to hold that the two conditions are intended to meet two entirely distinct classes of cases — one, where the increase of risk is occasioned by the act of the insured ; the other, where it is caused by the acts of third persons, over whom the insured has no control. In the former case the insurance policy becomes wholly void ; in the latter, the insurer reserves to himself an election whether he will con- tinue the insurance, or terminate it ; at the same time, in the last event, refunding a proportional part of the premium. This view is taken of two clauses, nearly identical with those under consideration, by the Supreme Court of Massachusetts, in Allen v. Massasoit Insurance Company, 99 Mass. 160. Accordingly, the clause concerning the increase of risk by the act of the insured is a condition precedent, and if the risk has been increased, the plaintiff cannot recover. It is imma- terial whether the loss was occasioned by the breach of the condition. There can be no recovery if the condition has been broken, though the fire may have been occasioned by some wholly independent cause. Flanders on Fire Ins. 487, and cases cited ; Gardiner v. Piscataqxiois Mutual Fire Ins. Co., 38 Me. 439. The only question that can be litigated under the condition as, has the risk been in fact increased ? That question should have been submitted to the jury. As the judgment should be reversed for this error, it is unnecessary to consider the other points discussed upon the argument. All concur. Judgment reversed. c. xii. Kyte v. Commercial Union Assurance Co. 457 Supreme Judicial Court of Massachusetts, 1889. KYTE v. COMMEKCIAL UNION ASSURANCE CO. (149 Mass. 114.) A temporary oreach of warranty vitiates the policy, though not connected with the loss. Contract upon two policies of fire insurance in the Massar chusetts standard form, one upon a dwelling-house and the other upon a barn. The defense was, that the policy was rendered void by an increase of risk, before the fire occurred. The dwelling-house, which was in process of erection when the policy upon it was issued, contained sixteen rooms, one of which was finished and furnished by the plaintiff as a bar-room, and was occupied by him as a hotel ; and the barn was situated near it. There was evidence tending to show that from April, 1882, to July, 1883, the hotel was used by the plaintiff for the illegal sale and keeping for sale of intoxicating liquors, such liquors being seized on the premises on April 7, 1882, and duly forfeited, and the plaintiff being convicted for the illegal sale of such liquors in April, 1883, and again in June of the same year. The defendant offered evidence tending to show that there was a custom among fire insurance companies doing business in Massachusetts, for many years past, to charge a higher rate of premium for insurance on a building occupied by a per- son engaged in the business of a common victualer than on a dwelling-house ; that a building occupied for the purpose of carrying on the business of a common victualer, and one oc- cupied as an ordinary dwelling-house, belonged to different classes, it being the general custom of insurance companies doing business in this Commonwealth to charge two or three times as much premium on the former as on the latter, and that a much higher premium would be charged for insuring a building in which intoxicating liquors were illegally sold than on one of the same class in which they were not sold. The judge gave the following instructions, among others, to the jury : " If it be assumed (and it may be, for the purposes of this trial) that such illegal use would vitiate the policy and deprive 458 Insurance : Fire, Life, Marine. q. xn. the plaintiff of the right to maintain an action for a loss by fire while the building was being so used, still, if, upon all the evidence in the case, you find that that use was temporary, not contemplated at the time when the policy was taken by the plaintiff, and that such illegal use ceased from and after the time when the plaintiff had a license authorizing him to sell intoxicating liquors, the fact that he made an illegal use of the premises in 1882 will not deprive the plaintiff of the right to maintain the action. His right under the policy, if it was suspended while the illegal use of the building was being made, would revive when he ceased to use the building illegally." The defendant requested the judge to charge, among other things : " If you find that, by the illegal sale of intoxicating liquors in this building by the plaintiff Kyte, or by others with his consent and knowledge, for a certain portion of the time for which these policies were issued, the risk was for that period increased — this policy is void as to the plaintiff Kyte's interest, and he cannot recover, although this increase was not per- manent and did not cause the fire." This request was refused. The jury returned a verdict for the plaintiff, and the defendant alleged exceptions. C. Allen, J. — These policies were in the form of the Massachusetts standard policy, and each provided that, " This policy shall be void ... if, without such assent [namely, the assent in writing or in print of the company], the situation or circumstances affecting the risk shall, by or with the knowl- edge, advice, agency, or consent of the insured, be so altered as to cause an increase of such risks, ... or if gunpowder or other articles subject to legal restriction shall be kept in quantities or manner different from those allowed or prescribed by law." Various other circumstances were enumerated which would also avoid the policy. At the beginning of the trial, the defendant waived every defense except increase of risk. The defense of the illegal keeping of intoxicating liquors, as a separate and distinct defense, was therefore waived. "We have to consider, in the first place, whether the instruc- tions requested by the defendant were given in substance. The c. xii. Kyte v. Commercial Union Assurance Co. 459 plaintiff contends that they were. The learned judge before whom the case was tried adopted in substance the third and fifth instructions asked for by the defendant, and thus in- structed the jury, that if they should find, that during the time for which these policies were issued, the plaintiff Kyte, by obtaining a common victualer's license and making use of this building under said license, and legally or illegally selling intox- icating liquors therein, increased the risk, then this policy be- came void as to the plaintiff Kyte, and he could not recover for his interest therein ; and if they should find, that while these policies were in force intoxicating liquors were kept and sold in this building by the plaintiff Kyte, or with his consent or knowledge, and that thereby the risk was increased, this pol- icy became void as to his interest, and he could not recover. This was a general and broad instruction, including the increase of risk by using the premises as a common victualing place or as a place for selling intoxicating liquors, legally or "illegally, and well covered the general question of the effect of an in- crease of risk. From this instruction, taken alone, a jury might well have inferred that the policy would be void in case of any such increase of risk at any time during the time covered by the policies and before the fire. But the defendant, in the fourth request for instructions, asked for a special instruction, adapted to the case of a tempo- rary increase of risk which had ceased before the time of the fire ; that is to say, that if the jury should find that, by the illegal sale of intoxicating liquors in this building by the plain- tiff Kyte, or by others with his consent and knowledge, for a certain portion of the time for which these policies were issued, the risk was for that period increased, this policy would be void as to Kyte's interest, and he could not recover, although this increase was not permanent. The judge declined to give this ruling, and instructed the jury, in substance, that, if that illegal use was temporary, not contemplated at the time when the pol- icy was taken by the plaintiff, and ceased before the fire, then the fact that he had made an illegal use of the premises in 1882, which was during the time covered by the policy, would not deprive the plaintiff of the right to maintain the action ; and that his right under the policy, if suspended while the ille- gal use of the building continued, would revive when he ceased 460 Insurance : Fiee, Life, Marine. c. xii. to use it illegally. This instruction did not in express terms mention the subject of an increase of risk by the illegal use of the premises for selling liquor ; but the instruction was given in place of the fourth request for instructions, and that request was refused, the judge saying that he had given what would be entirely inconsistent with it. The question is thus presented, whether the provision of the policy that it shall be void in case of an increase of risk means that it shall be void only during the time while the increase of risk may last, and may revive again upon the termination of the increase of risk. The provision is, that the policy shall be void if any one of several circumstances successively enumer- ated shall be found to exist. Some of these circumstances relate to the time of issuing the policy, and others could not arise till afterwards. They are of different degrees of impor- tance, some of them going to the essential matters of the contract, and others being comparatively trivial in character. The language of the policy is the same in respect to them all. that the policy shall be void. In Hinckley v. Oermania Ins. Co., 140 Mass. 38, the policy was in the same form as those in the present cases, and for a short time during the term of the policy the plaintiff kept a bowling alley and billiard table without having any license therefor. There was no question of increase of risk, or other actual prejudice to the insurer ; and under these circumstances two questions arose : First, whether the plaintiff's act fell within the provision that the policy should be void if gun- powder or other articles subject to legal restriction should be kept in a manner different from that allowed by law; and, secondly, whether, assuming that the policy would be void during the time of the illegal keeping of the bowling alley and billiard table, it would revive after such temporary use had ceased. In deciding the case, the court intimated that the plaintiff's act was not within the meaning of the provision in the policy, unless the risk was thereby increased, but placed the decision upon the second ground, that the policy would revive. The court now thinks it would have been better to place the decision of this part of the case solely upon the first ground, leaving it an open question whether a departure from the terms of the provision of the policy, without an increase of c. xii. Ktte v. Commercial Union Assurance Co. 461 risk, may be deemed merely to suspend, and not absolutely to avoid the policy. However that may be, we think an increase of risk entitles the insurer to avoid the policy absolutely. The contract of insurance depends essentially upon an adjustment of the premium to the risk assumed. If the assured, by his voluntary act, increases the risk, and the fact is not known, the result is that he gets an insurance for which he has not paid. In its effect upon the company, it is not much different from a misrepresentation of the condition of the property. If the provision stood alone, that in case of any material misrepresentation as to the risk or any voluntary increase of risk afterwards the policy "should be void, it could hardly be doubted that the words should be taken in their natural, obvious meaning. The fact that with this are coupled the other provisions above referred to does not change its meaning with reference to the effect and consequence of an increase of risk. An increase of risk which is substantial, and which is continued for a considerable period of time, is a direct and cer- tain injury to the insurer, and changes the basis upon which the contract of insurance rests ; and since there is a provision that, in case of an increase of risk which is consented to or known by the assured, and not disclosed and the assent of the insurer obtained, the policy shall be void, we do not feel at liberty to qualify the meaning of these words by holding that the policy is only suspended during the continuance of such increase of risk. Lyman v. State Ins. Co., 14 Allen, 329. Mead v. Northwestern Ins. Co., 7 IS. Y. 530. It follows, therefore, that the fourth instruction which was requested, or something in substance like it, should have been given. Upon the facts stated and assumed, the increase of risk, if there was one, continued for fifteen months, and could not be treated as a casual, inadvertent, or inevitable thing. Exceptions sustained. UJlAJb'TEK XilL clauses of the new york standard fire policy — continued. New York Court of Appeals, 1889. WALTON AND WIFE v. AGRICULTURAL INS. CO. (116 N. Y. 326.) Alienation clause. Change of interest. Shifting of interest among the insured. This action was brought upon a policy of insurance issued by the defendant, to recover the sum of $500 for loss sustained 'by the burning of a barn, a quantity of hay and grain, and two horses, covered by the policy. Said policy contained the following condition : " If the said property be sold or conveyed, or if the interest of the parties therein be changed in any manner, whether by the act of the parties or by operation of law, . . . then, and in every such case and in either of said events, this policy shall be null and void, until the written consent of the company at the home office is obtained." At the time of the application for, and issuance of the policy, William T. Walton was the owner of the premises insured. About five months thereafter he conveyed said property to a third person, who, on the same day, duly conveyed the same to Eliza D. Walton, the wife of William. Notice of these trans- fers was never given to the defendant, neither was the written consent of the company at the home office obtained. William T. Walton, against the objection of the defendant, testified that he told the agent, at the time the application for insurance was made, that as soon as he had finished repairing the buildings he should convey the property to his wife, and that he wanted a policy so made out as to cover his interest now and the interest of his wife after conveyance made. The agent replied that he c. xiii. Walton and Wife v. Agricultural Ins. Co. 463 could accomplish that result by making the policy out to William T. Walton and wife. It was thereupon arranged that such a policy should be applied for, and he signed an application to the company. The agent or solicitor who made out the application" was not a general agent, and did not have authority to issue policies. His duty was to make out applications for insurance and for- ward them to the home office of the company, where they were passed upon. If rejected, the matter was at an end ; if ac- cepted, a policy of insurance was made out and forwarded to the agent for delivery on receipt of premium. Respecting the extent and limitation of the authority of the agent to represent the defendant, the policy in question provided as follows : " Agents of the company are permitted to give the consent of the company to assignment of policies. But no agent of the company, is permitted to give consent of the company in any other cases required by the provisions of this policy, or to waive any stipulation or condition contained herein ; but in all cases where the consent of the company is required by this polioy, other than consent to the assignment of the policy, such con- sent must be obtained at the home office of the company." The trial court charged the jur}', as a matter of law, that the conveyance from husband to wife through a third person did not vitiate the policy, and that the plaintiffs were entitled to. recover. Defendant excepted. Yerdict for plaintiffs. Parker, J. — The contract of insurance upon which the plain- tiffs base their right to recover in this action, provided that if the property insured be sold or conveyed, or if the interest of the parties be changed in any manner, the policy shall be null and void, until the written consent of the company at the home office shall be obtained. Subsequent to the issuance of the policy the property was conveyed by Walton, through a third person, to his wife with- out the written consent of the company. Thus, by the terms of the contract, the policy of insurance became of no effect. Upon the trial the plaintiffs sought to relieve themselves from the effect of the violated condition by the introduction of oral evidence tending to show that Walton informed the defendant's solicitor of his intention to convey to his wife after a few 464 Insurance : Fibe, Life, Marine. c. xhi: months, and requested that the policy be so drawn as to cover his interest before conveyance and that of his wife afterwards, and that the solicitor informed him that he could accomplish that result by issuing the policy to William T. "Walton and wife. The evidence upon that subject was seasonably objected to by the defendant, but was received by the court ; and the jury, in a special finding, found the fact to be as contended for by the plaintiffs. The question presented, therefore, is, can the plaintiffs be permitted to show, in contradiction of the express terms of the contract, that it was orally agreed before its making and delivery that they should be permitted thereafter to do an act which the contract forbids ? This is not an action brought to so reform a contract as that it shall be made to voice the agreement which the parties intended to make. On the contrary, it is based on the policy as it was written, and cannot be maintained by evidence that the contract was intended to be a different one. For a policy of insurance is presumed to embrace the entire agreement of the parties. The precedent oral agreement cannot be regarded as a part of the policy or in any wise effective as a contract. Like other written contracts, the oral agreement, preceding its execution and delivery, is presumed to have become merged in it, and its terms cannot be controlled or varied by parol evidence. Pindar v. Resolute Fire Ins. Co., 47 N. Y. 114 ; Ripley v. JEtna Ins. Co., 30 id. 136 ; Alston v. Mechanics' Mutual Ins. Co., 4 Hill, 329. The cases of Van Schoich v. Niagara Insurance Com- pany, 68 N. Y. 434 ; Woodruff v. Imperial Insurance Company, 83 id. 135, and Short v. Home Insurance Company, 90 id. 16, are not in conflict with this rule. True, oral evidence was received in each of those cases. It was not received, however, for the purpose of contradicting the written agreement, or to show that the parties made a different contract than the one expressed, but to demonstrate that the insurer, at the time of the issuance of the policy, had knowledge of the facts, the existence of which were asserted upon the trial, to constitute a breach of warranty. Upon such proof was predicated an estoppel against the insurer. It was held, in effect, that if the insurer receive pay for a policy of insurance, knowing it to be c. xra. "Walton and Wife v. Agricultural Ins. Co. 465 invalid when issued, he shall be deemed to be estopped from insisting upon its invalidity. The object of this rule is to pre- vent fraud and to render it impracticable for insurers to attempt the acquisition of premiums upon policies known to be invalid when issued. The principle of those cases cannot be applied here. The act which the contract declares shall vitiate the policy had not been performed when the policy was issued. It was not an existing fact. The policy was, therefore, valid at the time of its issuance, and so remained until the property was conveyed without the consent of the defendant. Certainly, the facts here disclosed fail to suggest a fraud which will estop the defendant from interposing as a defense the warranty against a conveyance of the property. As the defendant is not estopped and the action is brought upon the contract as it was written, it follows that the admission of parol testimony to vary or contradict one of its provisions was error. The judgment should be reversed and a new trial granted, costs to abide the event. Bradley, J. (dissenting). — The main question is whether there was a breach of the provision of the policy that " if the said property shall be sold or conveyed, or if the interest of the parties therein be changed in any manner, whether by act of the parties or by operation of law . . . this policy shall be null and void until the written consent of the company, at the home office, is obtained," and, if so, whether such breach is available to the defendant as a defense. When the policy was made and the property by it insured, the title to the property was in the plaintiff, William T. Walton, and after- wards, before the loss, it was conveyed by him, through a third party, to his wife the plaintiff, Eliza D. Walton, who had the title at the time of such loss. The" policy was made to both of the plaintiffs, and by it the defendant undertook to make good to the insured, their heirs, executors, and administrators, such loss or damage, not exceeding in amount the sum insured, as should happen by fire to the property during the term of the insurance. This contract was made by the defendant to plaintiffs jointly, apparently for the purpose of indemnifying both of them against loss or damage as to all the property, as 30 466 Insurance : Fiee, Life, Marine. c. xm. if they had a united interest in it. The inquiry arises, Why was this done so by the defendant? If the company were not advised that the title was wholly in the husband at the time the contract was made, it might be said that the policy was made in that form because it was called for by the appli- cation of the plaintiffs. But that question is answered by evidence, on the part of the plaintiffs, to the effect that when the defendant's agent called upon the husband to obtain the insurance, he was advised by him that he then had the title and intended to convey the property to his wife, and wanted the policy so that it would insure the property while he held it and have the like effect after the conveyance to her, and was informed by the agent that it could be done by a policy to both of them. It was then understood that it should be so made for that purpose, and an application was prepared by the agent accordingly. And when the agent delivered the policy, he assured the husband that such was its effect. Upon that subject the jury specially found that there was an understand- ing between the agent and Mr. "Walton, at the time the appli- cation was made, that the premises would be transferred by the latter to his wife thereafter, and that the policy was issued to Walton and his wife, on that account, by the defendant. The powers of the agent were somewhat defined by his certificate of appointment,which was that he was constituted agent, " with full power to receive proposals of insurance, ... to consent to assignments of policies and to attend to the business of said agency, in accordance with the rules and regulations of said com- pany, and to such instructions as may be given by its officers." He was not, therefore, a general agent of the defendant, and had not the power to waive the condition of the policy first above mentioned. Wilson v. Genesee Mut. Ins. Co., li N. Y. 418. But the defendant was responsible for the acts of the agent within the scope of his authority, and chargeable with the knowledge he acquired in the exercise of his power, having relation to it, and upon which he acted, and the parties insured relied in their dealing with him. The matter of title to the property, at the time the application and policy were made, was a legitimate fact of inquiry and representation. The policy provides that applications for insurance must be made in wrifing and signed by the applicant, or by his authority, c. xiii. Walton and Wife v. Agricultural Ins. Co. 467 and that all its statements will be deemed warranties ; and if the interests of the insured be any other than the entire, un- conditional, and sole ownership of the property for the use and benefit of the insured, it must be so represented to the com- pany in the application, otherwise the policy will be void. And any misrepresentation or concealment will have the like effect. It may be assumed, so far as it is essential to do so, that the defendant was charged with knowledge of any in- formation received by the agent on the occasion of taking the application, in respect to the title to the property insured. McEwen v. Montgomery, etc., Ins. Co., 5 Hill, 101 ; Van Schoick v. Niagara F. Ins.' Co., 68 K Y. 434. The company then, with knowledge that the wife had no title to the prop- erty, united her with her husband as a party, insured by the policy, for the purpose of indemnifying her against such loss as she might suffer at the time and in the event it should occur. That interest was dependent upon transfer of the* property or some interest in it to her by her husband. There- was no apparent reason for making the wife a party to the policy, other than that she might subsequently acquire some interest in the property. It would, therefore, seem that the taking by the wife of the title or some interest in it, from her husband, may be deemed to have been in contemplation between the parties to the contract of insurance when the policy was issued, and that the defendant may be estopped from asserting to the contrary. It cannot well be claimed that the wife was joined with a view to her inchoate right of dower in the real property covered by the policy. It is only the entire, uncon- ditional, and sole ownership that is insured, unless otherwise represented in the application. The title of the property or interest in it, of any party insured, is in no manner qualified in the application ©r policy. In view of the situation, as above represented, there arises the further question, Was the property sold or conveyed, or the interest therein of the parties insured in any manner changed within the meaning of the provisions of the policy ? The title had not passed from those parties at the time of the loss. The conveyance through a third party to the wife had the effect only to take the title beyond them on its way to her, and in practical effect is no different than if it could have and had been made directly from the hus- 468 Insurance : Fieb, Life, Marine. o. xiii. band to the wife. Wolfe v. Security Fire Ins. Co., 39 N. Y. 49. If they had held the title jointly when the policy was made, transfers thereafter made between them would seem not to come within the condition of the policy relat- ing to the sale or conveyance of the property insured or to the change of the interest of the parties in it. Such is the weight of authority upon that subject. Hoffm,cm v. jEtoa Fire Ins. Co., 32 1ST. Y. 405 ; Keeney v. Home Ins. Co., 71 id, 402; Dresser v. U. F. Ins. Co., 45 Hun, 29S; Burnett Eufala Home Ins. Co., 46 Ala. 11 ; 7 Am. E. 581 ; Pierce v. Nashua Ins. Co., 50 E", H. 297 ; 9 Am. E. 235 ; Dermani v. Home Mut. Ins. Co., 26 La. Ann. 69 ; 21 Am. E. 544 West v. Citizen's Ins. Co., 27 Ohio St. 1 ; 22 Am. E. 294 Texas Banking and Ins. Co. v. Cohen, 47 Tex. 406 ; 26 Am. E 298 ; Powers v. Guardian Fire Ins. Co., 136 Mass. 108 ; 49 Am, E. 20 ; Peck v. New london Mut. Ins. Co., 22 Conn. 575 ; lock- wood v. Middlesex Mut. As. Co., 47 id. 553. And a reason for such construction, as given by Judge Porter in the Hoffman case, and adopted in some of the other cases cited, was that the sales and conveyances which the parties had in view when the condition was made part of the contract, were " evidently such, and such only, as would transfer the proprietary interest of those with whom the insurers contracted to others with whom they had not consented to contract. They testified their confi- dence in each of the assured by issuing to them the policy, but they did not choose to repose blind confidence in others who might succeed to the ownership. . . . The design of the pro- vision was to interdict all sales of proprietary interests by parties insured to parties not insured." In the present case both plain- tiffs were parties to the contract, and both were insured by it. The wife, no less than the husband, was by the terms of the policy insured. The title and entire interest in the property remained in the parties whom the defendant undertook by the contract to indemnify. The reason of the rule of construction applied in the Hoffman case is applicable to this case. The confidence reposed in the plaintiffs must be deemed to have been equal as to each, because the contract was made alike with both of them. Such contracts are of a personal nature, and in making them are involved considerations having relation to the character of the persons insured, as upon their care and c. xiii. Walton and Wife v. Agricultural Ins. Co. 469 vigilance the reasonable protection of the property against the hazard assumed by the insurer is dependent. Hence it is that such conditions are inserted in policies, so that the insurers may not be subjected to consequences of the habits or motives of interest of those with whom no contract of insurance has been made. The purpose of a provision in a contract may be entitled to some considerations in its construction and applica- tion, with a view to the intention of the parties, and that such intention may be carried into effect. Kelley v. Upton, 5 Duer, 336 ; Parshall v. Eggert, 54 N. T. 18 ; Colt v. Phamix Ins. Co., id. 595. And as was said in Hoffman v. jEtna Insurance Company, 32 N". Y. 413 : " 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." In such case the language employed will be construed conbra proferentem, and will be given such import as the promisor had reason to suppose the other party understood it. McMaster v. Insurance Co., 55 1ST. Y. 222 ; White v. Hoyt, 73 id. 505. It is only when no other construction is permitted that such one as produces a forfeiture or renders a contract void will be adopted. Hitch- cock v. N. W. Ins. Co., 26 N. Y. 68 ; Dilleber v. Insurance Co., 69 id. 256 ; Coyne v. Weaver, 84 id. 386. The promise of the defendant was to make good the loss or damage to the prop- erty which the plaintiffs should sustain. This was subject to the condition that the property should not be sold or conveyed, or the interest therein of the plaintiffs changed. The title did not, nor did any interest in it, pass from the parties insured. It was wholly in those parties when the policy was made, and was still there at the time of the loss. In that sense there was no sale or change of interest, and in that sense the language of the condition may be interpreted, and thus the supposed inten- tion of the parties to the contract effectuated. They are, by the terms of the policy, treated as one party to it without any distinction as to interest or as to the beneficial results which might come from the promised indemnity. This leads to a further proposition, that the defendant, chargeable with knowl- edge of the situation of the title to the property at the time the policy was made, treated the plaintiffs as interested jointly in it ; and, if that relation were essential to the right of transfer between themselves without breach of the condition before 470 Insurance : Fiee, Life, Marine. o. xiii. mentioned, the defendant is disabled, for the purpose of defense, ' from denying to them the benefit which such relation would afford. Otherwise, it may be said that the defendant had fur- nished an opportunity to itself to practice a fraud upon them, which could not have existed if the policy had been made to the husband alone ; for in that case, on the sale and conveyance to the wife, she could have taken the consent of the company to the transfer and continued the policy for her benefit, or have obtained insurance elsewhere. Short v. Home Ins. Co., 90 ~JS. Y. 16. The fact that she was made a party to it, under the circumstances which placed her in that relation, rendered the consent, which the agent was authorized to give, of transfer of the policy unnecessary, and she was at liberty to assume that it was effectual for her indemnity. Follett, Ch. J., Potter and Yann, JJ., concur with Parker, J. ; Haight and Brown, J J., concur with Bradley, J., dissenting. Judgment reversed. CHAPTER XIY. clauses of the new yoke standard ftre policy continued. New York Court of Appeals, 1890. SMITH v. AGRICULTURAL INS. CO. (118 K Y. 522.) Warranty against incumbrances. Follett, Ch. J. — This action was defended on the ground, among others, that the following conditions in the policy were violated by the insured : (1) " If the property, either real or personal, or any part thereof, shall be encumbered by mortgage, judgment or other- wise, it must be so represented to the company in the applica- tion, otherwise this entire policy and every part thereof shall be void." (2) " This policy of insurance is based upon a written appli- cation on file in the company's office, purporting to be signed by the applicant, or by his authority, and all statements con- tained therein are warranties on the part of the assured." The application on which the policy was issued was signed by the duly authorized agent of the insured, and contains this question and answer : " Q. How much is the real estate encumbered ? A. $1,000." When the policy was issued, and when the loss occurred, there were five mortgages on the fifty acres, the principal sums of which aggregated $4,411.14, with arrears of interest amounting to more than $600, so that the premises were encumbered for upward of $5,000 ; and, in addition, there was mortgage upon six acres, adjoining the fifty acres, of $500, with interest from July 1, 1887. Since 1880, Elton M. Smith, the insured, has not resided in 4Y2 Insurance : Fiee, Life, Maeine. o. xiv. this State, and Elijah Smith, his father, has occupied the prop- erty, and acted as the agent of his son in respect to this insur- ance. Since some time before the date of the policy, Abram "Weed has been an agent of the defendant, with powers defined by the following clause in the application : " The powers of the agents of this company are limited to receiving proposals for insurance and collecting premiums, and giving the assent of the company to assignments of policies." The oral negotiations, which resulted in the execution and deliv- ery of the application on which the policy was issued, were conducted by Elijah Smith in behalf of the insured, and Abram Weed in behalf of the defendant. Elijah Smith testi- fied : " Q. "What was said (between you and Weed) on the subject of incumbrances ? A. He asked if there was a $1,000 incumbrance, and I told him there was over $2,000 incum- brance on it. Q. Did you tell him there was $1,000 incum- brance on it? A. No, sir ; the application was not read tome, and I did not read it ; that representation that there was only $1,000 incumbrance was not true ; I signed it not knowing that that was there." Abram Weed testified that Elijah Smith stated that the place was encumbered for $1,000, and that he did not say it was encumbered for over $2,000. The court instructed the jury, that, if Elijah Smith stated to Abram "Weed that the place was encumbered for $1,000, the plaintiff could not recover. But if Smith told "Weed the place was encumbered for over $2,000, that the discrepancy between such statement and the amount of the incumbrances was not a defense to the action. To this instruction the defendant ex- cepted, and asked the court to instruct the jury, that, if they found that Smith stated to Weed that the property was encum- bered for over $2,000, the plaintiff could not recover, which was refused, and an exception taken. This question was also raised by a motion to non-suit. The most favorable view which can be taken by the court for the plaintiff is to consider the case as though the question and answer testified to by Smith had been inserted in the application instead of in the question and answer appearing therein. Assuming, then, that the conversation between the agents o. xiv. Smith v. Agricultural Ins. Co. 473 of the contracting parties about incumbrances was precisely as testified to by the insured's agent, there was a material mis- representation in respect to the amount of the liens. The answer that the place was incumbranced " for over $2,000," to the question, " Is there a $1,000 incumbrance on it ? " did not actually or proximately disclose the fact inquired about. The answer, "over $2,000," cannot by any fair construction bl held to be notice to the defendant, or its agent, that the place was then encumbered for over $5,000. It is urged by the respondent that this contract of insur- ance is severable; that the insurance on the barn should be deemed one conttoct, the insurance on its contents another contract ; and that a misstatement in respect to the amount for which the realty was encumbered does not invalidate the insurance .on the personalty; and that defendant, having asked the court to rule that no part of the loss could be re- covered, asked for too much in the instruction prayed for and in its motion for a non-suit, and that the exceptions to these rulings are unavailable. Under forms of policies quite different from the one in the case at bar, insuring specific amounts on separate items of property, contracts have been held severable. The following cases illustrate the rule: Merrill v. Agricul- iural Ins. Co., 73 N. Y. 452 ; Herrman v. Adriatic Fire Ins. Co., 85 id. 162 ; Schuster v. Dutchess Co. Ins. Co., 102 id. 260 ; Holmes v. Drew, 16 Hun, 491 ; Sunderlin v. JEtna Ins. Co., 18 id. 522 ; Dacey v. Agricultural Ins. Co., 21 id. 83 ; Woodward v. Republic Fire Ins. Co., 32 id. 365 ; Baldwin v. Hartford Fire Ins. Co., 60 K H. 422. It is expressly stipulated in this policy, that if either the real or personal property, or any part of it, be encumbered, it must be so represented to the company in the application; otherwise the entire policy and every part of it shall be void. This policy is quite different in its legal effect from those considered in the cases cited ; it not being expressly provided in those policies, as in this, that a misrepresentation of the situation of one of the subjects insured should invalidate the insurance on all other property covered by the policy. Eeo-arding the application amended so as to conform to the testimony produced by the plaintiff, and then construing the application and policy together as the parties have stipulated 474 Insurance : Fibe, Life, Marine. c. xiv. that we must, there was a breach by the insured of the terms of the contract of insurance, which defeats the plaintiff's claim to recover. The judgment should be reversed, and a new trial granted, with costs to abide the event. All concur, except Brown, J., dissenting; and Bradley and HAittHT, JJ., not sitting. Judgment reversed. CHAPTEE XY. CLAUSES OF THE NEW YORK STANDARD FIRE POLICY CONTINUED. Kingston Surrey Spring Assizes, 1870. CHAPMAN" v. POLE. (22 L. T. N. S. 306.) Fraud and overvaluation. Action against the Sun Insurance Company, on a fire policy. Plea, " that there appeared to be, and was, fraud in the claim made by the plaintiff upon the company, for and in respect of the said alleged loss and damage, etc., on account of the said loss or damage delivered to the company's office." The policy was effected in February, 1866. The fire oc- curred in the following September, and the claim was made forthwith for £418 as for a total loss, but no particulars were delivered until required under the conditions. The particulars of the claim when delivered appearing — on comparison with the salvage and debris — grossly exaggerated, payment was refused. In November this action was brought, and in Feb- ruary, 1867, interrogatories were delivered to the plaintiff, which, not being answered, the action was stayed until, in January, 1870, they were answered, and the action proceeded. After the plaintiff made a claim of damage to the amount of £418, further particulars being required, in October particu- lars of claim were delivered, claiming large sums for specific articles to each room. The plaintiff also made a statutory declaration in the usual form, " that the said estimate or account contains, to the best of my knowledge and belief, a true and faithful account of the loss and damage sustained by me in my said goods and chattels, all of which were my own property, and were in and upon the said house when the fire happened, i76 Insubance : Fibe, Life, Marine. c. xv. and were burned, lost, or damaged by the fire ; and that my real and just loss on the said goods and chattels occasioned by the fire amounts to £418 ; and I make this solemn declaration conscientiously believing the same to be true." It had ap- peared, however, on the report of the inspector as to salvage and debris, that it was impossible there could have been the quantity and value of the goods represented ; and in one of the rooms remaining unconsumed, the contents, valued at £30, were not worth £3 ; and in the bed-rooms the remains of cheap iron bedsteads, worth a few shillings, were found in the place of mahogany stated as worth £15 ; while the debris of crock- ery, etc., found would only represent a few shillings' worth, instead of £33, the value stated ; and other heads of claim were found in the same proportion to exceed the real value. The company, however, having disputed the claim, and having in this action interrogated the plaintiff as to the mode in which he had acquired the goods insured, he stated in his answer that he had purchased the greater part of them at sales, and had them many years before the policy, though some of them were given to him, and some by one Bennett, an attor- ney, now dead. Being cross-examined as a witness, he stated that he had purchased them nearly all from Bennett, and had given him between £300 and £400 for them. He also stated that in July he had assigned the goods to one "Walker for advances to the amount of £400. The plaintiff w T as called, with Walker, in support of his claim, but could give no partic- ulars or vouchers. Strong evidence, however, was given on the part of the company to show that the furniture was of the poorest description — not worth above £50 ; that a great part had been removed in June, so that at the time of the fire the things in the house were not worth more than £30. Cockbukn, C. J., to the jury.-^In consequence of the obser- vations which have been made upon the conduct of the Insur- rance Company, I feel it to be my duty to say that I consider, that, in insisting on a full and searching examination into the case in a court of justice, the defendants, the Sun Fire Insur- ance Society, have only discharged their duty to their share- holders and the public. Beyond all doubt, this is a case deserving of such an examination and inquiry ; for, whatever c. xv. Chapman v. Pole. 477 may be its result, from beginning to end the case presents itself under circumstances of grave suspicion, and calling for searehing inquiry. The issue for you to determine in substance upon this case is whether the plaintiff has made an honest or dishonest claim : the issue is fraud or no fraud. If the defend- ants have failed to satisfy you that the claim* was fraudulent, the plaintiff is entitled to recover ; and, in that case, the only question will be, what was the real value of the goods de- stroyed ? for that is all he is entitled, in any event, to recover. But if you think the defense is made out, and that, in point of fact, with reference either to the quantity or value of the goods, the plaintiff knowingly preferred a claim he knew to be false and unjust, then he is entitled to recover nothing. That is one of the conditions in the policy, and the company are entitled to stand upon the defense. And considering how exposed they are to deception, and how rarely they are able to establish it by proof, in my opinion when they have a case in which they are honestly convinced that fraud has been perpe- trated, and that they have sufficient evidence of it to submit to a jury to establish it, then they are not only fairly entitled, but they are bound to do so. For you will do well to bear in mind that the rate of insurance is calculated upon the average of losses as compared with profits, and the more the company is subjected to deception and fraud, the higher the rate of pre- mium which they are obliged to charge. Therefore, the public have an interest in such cases, and the company is bound to defend them, when they have fair ground for so doing, as they certainly have in this instance. "We must start in such a case with certain principles. It is not, certainly, a question of mere accuracy or inaccuracy. A man may make a mistake in his claim, and it may be quite honestly. If, for instance, a man either fails to recollect the precise quantity of goods he has on his premises at the time of the fire, or mistakes the value of those of which he was in possession, and thus he presses a claim according to what he believes honestly to be true, but which may in the end turn out to be mistaken, the only con- sequence which ensues is, that, inasmuch as the contract of in- surance is simply a contract of indemnity, he can only recover to the extent of the real value of the goods he has actually lost. You must not run away with the notion that a policy 478 Insurance : Fire, Life, Marine. c. xv. of insurance entitles a man to recover according to the amount represented as insured by the premiums paid. It is essentially a contract of indemnity. If a man chooses to insure goods worth £100 at a rate of premium which represents a value of £500, he can only recover the real and actual value of the goods. The law" will not allow of gambling in the form of insurance. Insurance companies are subject to fraud enough as it is, and, if persons Avere allowed to insure goods to a greater amount than the real value, it is obvious that a door would be open to fraud and wickedness of the most abomin- able description. Therefore, in all the cases the only question — supposing the claim to be honest — is, what was the real and actual value of the goods destroyed. But beyond that, although the insured has not caused the fire, yet if he has made a fraudulent claim, then, on such a condition as is con- tained in this policy, he must fall by the fraud he has thus attempted to perpetrate, and is not entitled to recover at all. Such being the legal principles on which the question to be determined arises, it is for you to determine upon the evidence. If you believe the evidence for the defense, it is clearly estab- lished, and it is a gross and scandalous case of fraud. Accord- ing to that evidence the claim was grossly excessive not only in point of value, but as to the quantity and character of the furniture insured ; and it is not easy to conceive of such gross exaggeration being honest. A man may be somewhat mis- taken as to the exact value or the precise number of the articles of furniture he possesses, but he can scarcely be so grossly ignorant of the furniture of the rooms in which he lives and sleeps as honestly to represent articles worth a few shillings or pounds as worth large sums of money. If, then, you believe the evidence for the defense, it is your duty to find for the defendant, as in that view a more scandalous fraud never was attempted. Verdict for the defendant. o. xv. Behrens v. Germania Fire Ins. Co. 479 Supreme Court of Iowa, 1884. BEHRENS v. GERMANIA FIRE INS. CO. (64 Iowa, 19.) Overvaluation to avoid the policy must be intentional. Action on a policy of insurance in the usual form, to re- cover damages sustained by the destruction by fire of the prop- erty insured. The defendant pleaded that the plaintiff falsely and fraudulently overvalued the property insured. There was a trial by jury, verdict, and judgment for plaintiff, and defend- ant appealed. » Seevers, J. — I. The court instructed the jury as follows : " As to the defense stated in the third instruction, you are informed, that, if you find that the preponderance of credible evidence establishes that plaintiff, in getting the policy in suit, made a false statement as to stock purchased and added to that already possessed, or intentionally deceived the agent Deggin. dorf as to the value of his property, and thereby obtained the policy in suit, the defendant is entitled to a verdict. But a mere honest mistake as to value is not sufficient to invalidate the policy, and thereby defeat plaintiff's action." No excep-. tion is taken to this instruction, and it therefore must be re- garded as the law of the case. The jury found specially that the plaintiff represented the value of the property at the time he obtained the insurance to be two thousand dollars, and that its actual cash value at that time was only twelve hundred and forty dollars, and that the plaintiff at the time of procuring the policy " did not knowingly, and with intent to deceive, misrep- resent the value of the property " insured. It is insisted that this finding is contrary to the evidence. We do not think this is so. We have read the evidence care- fully, and are unable to reach the conclusion that the plaintiff purposely and with intent to deceive made a false statement of the value of the property. The policy contains this provis- ion : The " amount of such loss or damage is to be estimated according to the actual cash value at the time of the loss." Under the terms of the policy, the plaintiff could not possibly gain anything by the overvaluation. The evidence, therefore, 480 Insurance : Fire, Life, Marine. c. xv. of a fraudulent intent should at least be of a satisfying charac- ter to warrant us in disturbing the verdict. "We cannot say that the evidence fails to sustain the special finding. II. Substantially, it is insisted that the overvaluation is so great, that, conceding that there was no fraudulent intent, there cannot be a recovery. But, as we have seen, the defendant's liability is not to be measured by the valuation at the time the insurance was effected, but by the actual cash value of the prop- *erty at the time it was destroyed. Overvaluation by owners of property is a usual occurrence, and made honestly ; that is, the owner will place a higher value on his property than his neighbor, and we doubt not this is well understood by insur- ance companies, and we doubt whether anything short of a fraudulent intent should avoid a policy of the character in question. But, be this as it may, the overvaluation in this case is not so great as to justify us in holding, as a matter of law, that there cannot be a recovery on the policy in question. The decided weight of authority, we think, is in accord with this view. Bonham v. Iowa Central Ins. Co., 25 Iowa, 328 ; Franklin Ins. Co. v. Vaughan^ 92 U. S. 516 ; Williams v. Phoenix Fire Ins. Co., 61 Me. 67 ; Wood on Insurance, § 426 ; Dogge v. JVortA-weslern Ins. Co., 49 Wis. 501. Affirmed. New York Court of Appeals, 1878. WALSH v. HABTFOED FIBE INS. CO. (73 N. ¥. 5.) A stipulation or notice in the policy limiting the agent's authority to waive except in a designated manner is, if truthful, binding upon fhcinsured. Andrews, J. — The policy contains the following conditions and provisions : " If the premises hereby insured shall become vacant by the removal of the owner or occupant, and so remain for more than fifteen days without notice to the com- pany and consent indorsed hereon, then the policy shall be void. And it is further expressly covenanted by the parties hereto, that no officer, agent, or representative of this company shall be held to have waived any of the terms and conditions of the policy, unless such waiver shall be indorsed hereon in c. xv. "Walsh v. Haetfoed Fiee Ins. Co. 481 writing. This policy is made and accepted upon the above express conditions." The dwelling insured when the policy was issued was occupied by a tenant who left the premises June 3, 1875, and the house remained vacant from that time until the time of the fire, July 23, 1875. There was no consent to the vacancy indorsed on the policy, and prima facie the plaintiff was not entitled to recover. The vacancy for more than fifteen days before the fire having been shown, it was incumbent upon the plaintiff, in order to maintain his action, to establish that the company had waived or dispensed with the condition, or in some way precluded itself from taking advantage of it. It appeared upon the trial that one Carpenter was the agent of the defendant at Carthage, and was authorized to solicit risks, receive applications for insurance, fix rates of premium, and issue and renew policies on behalf of the defendant. The policy in question was issued by Carpenter. The plaintiff's son, who acted for him, met Carpenter on the day the dwelling was vacated, and informed him that the tenant was moving out, and asked him to consent that the dwelling should remain vacant, and Carpenter replied that he would give his consent. The next morning, as the son testified, he went to Carpenter's office to see if he had given consent, and asked him if it was necessary to get the policy and have the consent indorsed, and Carpenter replied, " It was not necessary ; it was indorsed on the books, and it was all right." Carpenter was called as a witness for the plaintiff, and testified: "I think Mr. "Walsh, either in the office or on the steps, spoke to me and asked me if it was not necessary to indorse that (consent) on the policy. I told him I did not think it was, but I couldn't do it." Car- penter kept a register in which he entered a memorandum of the policies issued at his agency, and in the margin of the reg- ister, opposite the memorandum of the policy in question, was entered, in his handwriting, the words, "Permission to be vacated between time of tenant moving out and another com- ing in." When this entry was made is left uncertain. Car- penter, when pressed to state the time, said, "I guess it was before the fire," and he was unable to fix the time more definitely. The plaintiff on the trial insisted that the evidence and 31 482 Insurance : Fiee, Life, Maeine. c. xv. facts above recited established a waiver by the defendant of the condition requiripg that consent to a vacancy should be indorsed on the policy. In determining this question it is important to bear in mind that there is no proof tending to show a waiver by the company of the condition, independently of the acts of the agent Carpenter. The transaction between the agent and the insured was not known to the company until after the fire. The agent made no report of the fact that the consent had been applied for or had been given. In short, there was no recognition, affirmance, or ratification by the company of what was said or done by the agent upon the application of the plaintiff for consent that the premises might remain vacant. The question, therefore, whether there was a valid consent that the dwelling might remain unoccupied, depends upon the authority of the agent to give such consent in any other mode than by indorsement upon the policy ; or, in other words, whether having power to consent by indorsement on the policy, he could nevertheless bind the company by an oral consent, or by such consent accompanied with a memo- randum thereof made in his register. That the agent was authorized to consent to the vacancy by a written indorsement on the policy is clearly implied from the language of the con- dition ; and if the mode in which his consent should be mani- fested had not been specified, or if no provision upon the subject had been contained in the policy, we do not doubt that Carpenter could have consented either orally or in writing, and that his consent in either mode would have bound the com- pany. He was the general agent of the company in the locality where he resided to make contracts of insurance in its behalf, and was vested with large discretionary powers. The power of such an agent must, in the absence of special restric- tions, be deemed to include the power to modify contracts made by him, dispense with conditions, and do such acts from time to time as are necessary to prevent a forfeiture of policies as a consequence of changes in the ownership, situation, or occupa- tion of the insured property. Insurance corporations organized under the laws of one State may, and often do, carry on their business in other States. They cannot conduct their business except through agents, and it is a reasonable and just inference that agents c. xv. "Walsh v. Hertford Fike Ins. Co. 483 intrusted with the power to make original contracts of insur- ance have also the power to modify them as occasions and cir- cumstances require. Nor would a restriction upon the power of an agent, not known to persons dealing with him, limiting the usual powers possessed by agents of the same character, exempt the principal from responsibility for his acts and con- tracts, which were within the ordinary scope of the business intrusted to him, although he acted in violation of special instructions. The company could itself dispense with this condition by oral consent, as well as by writing, Trustees, etc. v. Brooklyn Fvre Ins. Co., 19 N. T. 305 ; and Carpenter, unless specially restricted, would have possessed, in this respect, the power of the principal. But the policy contains the provision that no agent of the company shall be deemed to have waived any of the terms and conditions of the policy, unless such waiver is indorsed on the policy in writing. This is a plain limitation upon the power of agents, and can mean nothing less than that agents shall not have the power to waive conditions, except in one mode, viz., by an indorsement on the policy. The plaintiff is presumed to have known what the contract contained, and the proof tends to the conclusion that this provision was brought to his notice. He saw fit, however, to accept the assurance of the agent that an entry in the register was sufficient. It is difficult to see how, upon the law of contracts and agency, the plaintiff can recover. The entry in the register was not an indorsement on the policy. The oral consent was an act in excess of the known authority of the agent. The provision was designed to protect the company against collusion and fraud, and the dangers and uncertainty of oral testimony. The case seems to be a hard one for the plaintiff ; but courts can- not make contracts for parties, nor can they dispense with their provisions. The authority of an agent is not only that conferred upon him by his commission, but also as to third persons that which he is held out as possessing. The principal is often bound by the act of his agent in excess or abuse of his actual authority, but this is only true between the principal and third persons, who, believing and having a right to believe that the agent was acting within and not exceeding his authority, would sustain 484 Insurance : Fire, Life, Marine. c. xv. loss if the act was not considered that of the principal. Clark v. Metropolitan Bank, 3 Duer, 248 ; Story on Agency, § 127 ; Howard v. Braithwalte, 1 Ves. & B. 209 ; Stainer v. Tysen, 3 Hill, 2T9 ; Barnard v. Wheeler, 24 Me. 279. The doctrine is established to prevent fraud, and proceeds also upon the ground that when one of two innocent persons must suffer from the act of a third person, he shall sustain the loss who has enabled the third person to do the injury. If, however, a person dealing with an agent knows that he is acting under a circumscribed and limited authority, and that his act is in excess of or an abuse of the authority actually conferred, then manifestly the principal is not bound, and it is immaterial whether the agent is a general or special one. The principal has the unqualified right, as between himself and the agent, to define and limit the agent's authority ; to invest him with large or with restricted powers only. The agent, as we have seen, may sometimes bind the principal, although he transgresses his instructions, provided his apparent authority extends to the act done, but this is a rule of protection only. Applying to this case these familiar principles, there can be little doubt how the question presented in this case should be decided. There was a breach of condition which, by the express terms of the contract, rendered the policy void. The condition was a lawful one, and one which the company had the right to insert in the contract. The judge at the trial held the proof to be insufficient to establish a waiver of the condi- tion, and non-suited the plaintiff. The General Term reversed the judgment on the non-suit, and ordered a new trial. "We think this action cannot be sustained. This conclusion does not interfere with that class of cases which have estab- lished that conditions for the prepayment of premium and the like, which enter into the validity of a contract of insurance at its inception, may be waived by agents, and are waived if so intended, although they remain in the policy when delivered, and that a contract for renewal is for this purpose to be treated as an original contract. Trustees, etc. v. Brooklyn Fire Ins. Co., 19 N". Y. 305 ; Sheldon v. Atlantic Fire and Marine Ins. Co., 26 id. 460; Boehen v. Williamsburg h Ins. Co., 35 id. 131 ; Bodine v. The Exchange Ins. Co., 51 id. 117 ; Bowman v. Agricultural Ins. Co., 59 id. 526 ; Carroll v. Charter Oak c. xv. Walsh v. Hartford Fire Ins. Co. 485 Ins. Co., 1 Abb. Ct. App., Dec. 316 ; Van Schoick v. Niagara Ins. Co., 68 N. Y. 434. We think a recovery cannot be per- mitted in this case without changing the law of contracts. The order granting a new trial should be reversed, and judgment entered upon the non-suit affirmed. Allen, Kapallo, and Earl, JJ., concur ; Church, Ch. J., Folger and Miller, JJ., dissent. Order reversed and judgment affirmed. CHAPTEE XVI. clauses of the life policy. New Yoke Court of Appeals, 1877. CUSHMAN v. UNITED STATES LIFE INS. CO. (70 N. Y. 72.) Warranty : Meaning of terms " disease " and " usual medical attendant." Action upon a policy of life insurance issued by defendant upon the life of Birt Cushman, plaintiff's intestate. The defense was a breach of warranty. The case upon a former appeal is reported in 63 N. Y. 404. At the close of the evidence defendant's counsel moved fdr a non-suit, on the ground that the evidence showed a breach of warranty in answers by the insured to the following questions in the application : " Has the party had . . . disease of the liver ? " Answer, " No." " Or any serious disease ? " Answer, " No." " Give name and residence of party's usual medical attendant." Answer, " Charles Purdy, M.D., Norwich." The motion was denied, and said counsel duly excepted. Earl, J. — It is claimed that there was a breach of warranty in answering "No" to the question in the application whether the applicant "had ever had disease of the liver." Dr. Ormsby, a young physician, who was admitted to practice in 1868, attended the insured in July, 1870, for four, five, or six days, and he testified that he, in his judgment, had congestion of the liver. It does not appear that his symptoms were very marked. He was not much sick, was dressed every day, and up and around more or less, and soon recovered. He again attended him in July, 1871, for a similar sickness, still less serious, visited him two or three times, and treated him for congestion of the liver. In 1872, after the policy was issued, c. xvi. Cushman v. United States Ltfe Ins. Co. 487 he treated him again, for five days, for the same complaint ; and in 1873 he again attended him for a few days in his last illness, and testified that he then had, and died of, acute con- gestion of the liver. The evidence tended to show that the assured was not much sick at any of the times when Dr. Ormsby visited him prior to his last sickness ; that he was not confined to his bed ; that he was up and around ; that he speedily recovered ; and that, during all the years prior to his last sickness, he was capable of vigorous labor and great endur- ance, and was apparently a sound, healthy man. In Novem- ber, 1871, Dr. Purdy, defendant's examining physician, who had known the assured for many years, examined him upon his application for insurance, and found his liver sound and free from disease. He was called to attend him in consultation with Dr. Ormsby, in his last sickness, shortly before his death, and testified that, from the symptoms detailed to him by Dr. Ormsby, he did not die of congestion of the liver, but of inflam- mation of the bowels, thus contradicting Dr. Ormsby as to the cause of death. Taking into consideration all the evidence, it cannot be said that it was so conclusively shown that the assured had had congestion of the liver prior to the date of the policy as to leave nothing for the determination of the jury. Taking into consideration the symptoms of the sickness, the degree of skill and the extent of the examination of the doctor, the very slight nature of the sickness and the speedy and com- plete reeovery, and all the other circumstances, it was for the jury to determine whether, prior to the insurance, the assured had had congestion of the liver. But, even if he had had such congestion, it does not follow that, within the meaning of the policy, he had had a disease of the liver. In construing con- tracts words must have the sense in which the parties used them ; and, to understand them as the parties understood them, the nature of the contract, the objects to be attained, and all the circumstances must be considered. By the questions inserted in the application the defendant was seeking for infor- mation bearing upon the risk which it was to take, the probable duration of the life to be insured. It was not seeking for information as to merely temporary disorders or functional dis- turbances having no bearing upon general health or continuance of life. Colds are generally accompanied with more or less 488 Insurance : Fiek, Life, Marine. c. xvi. congestion, of the lungs, and yet in such a case there is no dis- ease of the lungs which an applicant for insurance would be bound to state. So most, if not all, persons will have at times congestion of the liver, causing slight functional derangement and temporary illness ; and yet, in the contemplation of parties entering into contracts of life insurance, and having regard to general health and the continuance of life, it may safely be &aid that in such cases there is no disease of the liver. In con- struing a policy of life insurance it must be generally true that, before any temporary ailment can be called a disease, it must ,be such as to indicate a vice in the constitution, or be so serious as to have some bearing upon general health and the continu- ance of life, or such as, according to common understanding, would be called a disease; and such has been the opinion of text writers and judges. 2 Park, on Ins. 933, 935 ; Chattoch v. Shawe, 1 Moody & E. 498 ; Fowkes v. The M. & L. Life Ins. Co., 3 Foster and Fin. 440 ; Barteau v. The Phoenix Mut. Life Ins. Co., 3 T. & C. (1ST. Y. Sup. Ct. R.) 578 ; Peacock v. New Fork Life Ins. Co., 20 F. Y. 293 ; Higbie v. Guardian Miit. Life Ins. Co., 53 K Y. 603 ; Fitch v. Am. Pop. Life Ins. Co., 59 1ST. Y. 557, 571. Hence, whether the assured had had con- gestion of the liver, and whether such congestion was of such a character as to constitute a disease of the liver within the meaning of the policy, were both questions properly submitted to the jury, and their determination thereon is conclusive. The assured also answered "No" to the question in the application whether he " had had any serious disease." It can hardly be claimed that there was any evidence showing this answer to have been untrue. But whether it was true or not, for reasons above stated, it was at least a question of fact upon all the evidence for the jury. To the question as to the "name and residence of the party's usual medical attendant," the assured answered, " Dr. Charles Purdy," and it is claimed that his answer was untrue. In 1867 Dr. G-reenleaf attended the assured when he was sick with some trouble of the bowels, from the 14th to the 30th day of August, and he never attended him before or after that time. Dr. Ormsby attended him prior to the date of the policy .only in July, 1870, and July, 1871, as above stated. The assured was a single man, who had always prior to his insurance c. xvi. Cushman v. United States Life Ins. Co. 489 ' lived in his father's family, and Dr. Purdy had for many years been the family physician. He had frequently attended different members of the family, but had never been called to the house to attend the assured except in his last sickness ; but during many years the assured had called upon him every year, and some- times several times a year, and consulted him as physician. It is quite evident that he knew more about the health and con- stitution of the assured than any other doctor. To constitute a medical attendance, it is not requisite that a physician should attend the patient at his home; an attendance at his own office is sufficient. Of these three physicians, then, who was the "usual medical attendant"? It certainly was not Dr. Greenleaf, who had attended him during but one brief illness, and never before or after. Was it Dr. Ormsby, who had attended him on two occasions, visiting him in all probably not over half a dozen times ? Or was it Dr. Purdy, the family physician in his father's family, upon whom he called yearly for many years for medical advice or treatment ? I think Dr. Purdy could more properly be called the usual medical attend- ant ; but, whether this be so or not, it was at least a question for the jury, and there was no error in submitting it to them. But the policy contained a clause in which the defendant promised to pay the amount insured " in three months after due notice and satisfactory proof of the death during the continuance of this policy of the . . . assured . . . and proof of the just claim of the assured." After the death of the assured, the plaintiff delivered to the defendant claim and proof of loss, signed and verified by himself. Annexed thereto was the statement of Dr. Ormsby, as physician in attendance upon the assured in his last illness, as to the cause of his death ; and in that statement, in answer to the question, " How long have you been the attendant or family physician ? " he answered, " Five years." It is contended that this answer shows that Dr. Purdy was not " the usual medical attendant " of the assured prior to the date of the policy, and hence that there was a breach of warranty rendering the policy void, and that therefore there was no " proof of just claim " as required by the policy. To this contention there are several satisfactory answers. The answer made in August, 1873, that Dr. Ormsby had been the " attending physician " of the assured for five years, does not 490 Insurance : Fire, Life, Marine. o. xvi. necessarily show that the answer made at the time of the insurance in November, 1871, that Dr. Purdy had, prior to that time, been the " usual medical attendant," was absolutely untrue. A party may have several " attending physicians" and one " usual medical attendant." But a still better answer is, that the plaintiff was not wholly responsible for the state- ments made by Dr. Ormsby. He had made his statement, showing a "just claim" against the defendant for the amount insured, and in that statement there was nothing in conflict with any warranty contained in the policy. This statement, we may infer from the form of blank furnished by the com- pany, the plaintiff was required to procure from the physician who attended the assured in his last illness. The main object of this statement was to furnish the company evidence of the death, and the cause and circumstances thereof. There can be no reason for holding the plaintiff responsible for any misstate- ment contained therein not caused by him. He was responsible for the statement made by himself, but not for the statements which he was required to procure from the attending physician, the officiating clergyman, and the undertaker. Such state- ments were procured at the request of the defendant for its information, and it must take them for what they may be worth. The plaintiff had no means of compelling answers in such statements to suit himself. If the answers were not satis- factory, or were in conflict with any answers contained in the application for the insurance, the defendant could have in- stituted further inquiries, or asked for" further explanations from the plaintiff. This it did not do. So far as it appears, it made no objection to the proof of loss, and did not in answer, or at any prior time, allege the discrepancy now noticed as a reason for refusing to pay the amount insured. It cannot claim to have been misled by the statement of Dr. Ormsby into a defense of the action, even if that were material, as this defense was not alluded to in the answer, and other special defenses were, and were also litigated upon the trial, and there was no evidence that it was so misled. There was, therefore, nothing to prevent the plaintiff from proving upon the trial the truth as to who was the usual medical attendant of the assured Life Ins. Co. v. Francisco, 17 Wall. 672. Judgment affirmed. o. xvi. Cobb v. Covenant Mut. Ben. Asso. 491 Supreme Judicial Coukt of Massachusetts, 1891. COBB v. COVENANT MUT. BEN. ASSO. (153 Mass. 176.) Warranty as to medical treatment and consulting a physician. Devens, J. — By the terms of his application, which is referred to and made a part of the benefit certificate issued to the insured, he warranted the answers to the questions pro- pounded " to be full, complete, and true," and agreed that the answers and application should form the exclusive and only basis of the contract between himself and the defendant, and further agreed that, if " any misrepresentations or fraudulent or untrue answers " had been made, the contract should be null and void. The case at bar differs obviously from those in which an applicant has averred that the answers made by him are true according to his best knowledge and belief, or has limited his statement by other similar words. Such answers, if accepted by the insurer, would render it necessary for them to prove that, as thus limited, they were untrue. Clapp v. Association, 146 Mass. 529. The sixth question in Form A of the application was : "Have you personally consulted a physician, been prescribed for, or professionally treated within the past ten years ? " To this question the insured answered, " No ; " and it has been found by the jury, upon an issue submitted to them, that this answer was false. The plaintiff contended that such an issue should only be found against him in case the answer was inten- tionally false. In our view, the insured having made the* truth of his statements the basis of his contract, it was sufficient for the defendant to show that this statement was actually untrue. The plaintiff further claimed that the question referred to in the application should be construed as referring to a specific disease, and that, if the insured had consulted or been pre- scribed for by a physician for a pain that did not amount to a disease, his answer to this question would not prevent the plaintiff from recovering. The presiding judge declined to instruct in accordance with this contention, and instructed the jury that if Cobb, the insured, being, as he supposed, in need of a physician, went to one for the purpose of consulting him 492 Insurance: Fire, Life, Marine. o. xvi. as to what the matter was with him, had an interview, answer- ing such inquiries as the physician deemed pertinent, receiving aid, advice, or assistance from him, Cobb " consulted " a phy- sician within the meaning of the interrogatory ; and, further, that if they found that he went to a physician for the purpose of procuring aid and assistance from the physician as such, and the physician prescribed a remedy, or treated him profession- ' ally either by giving him a prescription or by administering hypodermic injections of morphine, of which there was some evidence, then he was professionally " treated " within the meaning of the interrogatory, or professionally " prescribed for." This ruling appears to us correct. While the question whether Cobb had a fixed disease, and what the disease was, might be an inquiry involved in considerable embarrassment, the question whether he had consulted a physician, or had been professionally treated by one, was simple, and one about which there could be no misunderstanding. Had it been replied to in the affirmative, the answer would have led to other inquiries. Indeed, the question which follows is, " If so, give dates, and for what disease." It is upon the existence of this latter ques- tion that the plaintiff founds an argument that it was neces- sary to show that Cobb had some distinct disease permanently affecting his general health before it could be said that he answered this question untruthfully. Eut the scope of the question cannot be thus narrowed. Even if Cobb had only visited a physician from time to time for temporary disturb- ances proceeding from accidental causes, the defendant had a right to know this, in order that it might make such further investigation as it deemed necessary. By answering the ques- tion in the negative, the applicant induced the defendant to refrain from doing this. In Insurance Co. v. MoTague (49 K J. Law, 587), it was held that where the applicant stated that he had not consulted a physician, or been prescribed for by one, and such statement was shown to have been false by proof of a prescription received, there could be no recovery, although it appeared to have been given for a cold. The court says: " The representation did not aver a condition of health, or that it was requisite or proper to consult a physician. It averred that he had not consulted a physician, or been prescribed for by a physician. The fact found contradicted this averment, whether c. xvi. Cobb v. Covenant Mut. Ben. Asso. 493 the consultation and prescription related to a real disease or an apprehended disease." After retiring, the jury returned into court with a request that the court would define the word "pre- scription." There was evidence in the case from three physi- cians tending to show that, on more than one occasion, they had consulted with him, administered hypodermic injections for the pain which he was suffering, and also given him medicine. The presiding judge instructed the jury fully as to the meaning of a " prescription," and added that, if the insured went to one of those physicians and received from him a medicine as a physi- cian, for the purpose of assistance and relief in a difficulty under which he was then suffering, then it is a " prescription " within the meaning of the law. The judge added : " And it is your duty as jurors so to find, whether the consequences may be as you would wish them, or otherwise." The plaintiff ex- cepting to the last paragraph as a charge upon the facts, the presiding judge modified this, and said : " I will endeavor in this way to define a ' prescription,' and let this definition stand for the definition objected to : If the insured went to a physi- cian for the purpose of getting his aid, advice, or assistance as a physician in a difficulty under which he was then suffering, or supposed himself to be suffering, and the physician, hearing what the insured had to say, as a physician, and, for the pur- pose of relief, or cure, or aid, or assistance, gave to the insured medicine, then it may be said that such a physician prescribed for him." To this the plaintiff also objected as a charge upon the facts, and claimed that the jury should have been instructed that the word "prescription" was a word in common use, which they could clearly define as well as the court. This latter instruction leaves clearly to the jury the inquiry whether the insured had gone to the physician and received from him aid, assistance, medicine, etc., in answer to his application. We cannot see that it has any element of a charge upon the facts. The definition of a " prescription " was entirely correct, nor, even if a word in common use was explained, was there reason why the judge should not define it in answer to the request, if he gave them an accurate definition. The plaintiff also insists that the last clause of the definition as first given was a charge upon the facts. It is perhaps suf- ficient to say that it was clearly withdrawn, and the later defi- 494 Insurance : Fire, Life, Marine. c. xvi. nition given in the place of it. "We do not, however, consider the last clause of the first definition as a "charge" upon the facts within the meaning of Pub. Stat., c. 153, § 5. The judge had defined the word as to the meaning of which they had inquired, and submitted to them in a condensed way the evi- dence bearing upon the issue which they were to determine. Certain facts, if they find them to exist, he informs the jury, will make a " prescription " by a physician, within the mean- ing of the law. He then adds : " And it will be your duty as jurors so to find, and it is your duty so to find, whether the consequences may be as you would wish them to be, or other- wise." Although the last clause is a caution to the jury to dis- regard the consequences which may follow their decision, there is no reason why a judge, when he deems it proper to do so in the trial, may not caution the jury not to be swayed by sympa- thy, prejudice, or passion, and direct them to be governed in their finding by the facts as they exist, without regard to the results that may follow therefrom. Bill dismissed. CHAPTEE XVII. clauses of the life policy concluded. Iowa Supreme Coukt, 1880. CKITCHETT v. THE AMERICAN INS. CO. (53 Iowa, 404.) The ordinary canvassing agent has no authority to extend the time for •payment of premiums contrary to the terms of the policy, but if employed to deliver the policy he has thereby an implied authority to determine how the premium due at the time of such delivery shall be paid. Action upon a policy of insurance. The defendant alleges that the plaintiff was in default at the time of the loss by reason of the non-payment of an installment of the premium. Eor a portion of the premium the company had taken the plaintiff's note, whereby he had obligated himself to pay the company three dollars upon the first day of November, 1876, and the same amount upon the first day of November in each of the three succeeding years. The policy contained a provision in these words : " If default shall be made by the assured in the payment of any installment of premium upon the install- ment note given for this policy for the space of thirty days after such installment shall become due, by the terms of such note, then this policy shall be null and void, and this company shall not be liable to pay any loss happening during the con- tinuance of such default in payment of such installment ; but on payment by the assured or his assigns of all installments of premium due under this policy, or upon the installment note given therefor, the liability of the company under the policy shall attach, and this policy be in force as to all the losses hap- pening after such payment, unless it shall be inoperative from some other cause." The installment falling due Nov. 1, 1876, was not paid. 496 Insurance : Fire, Life, Marine. c. xvii. The loss occurred March 9, 1877. There was a trial by jury, and verdict and judgment were rendered for the plaintiff. The defendant appeals. Adams, Ch. J. — The plaintiff claims that he was not in de- fault at the time the loss occurred, notwithstanding the non- payment of the installment, which, by the terms of his note, fell due on the first day of November, 1876. He claims that the company had extended the time of payment. As evidence of such extension, he testified that one Kennedy, the agent of the company at Oskaloosa, near where he resided, agreed with him after the installment became due to extend the time of payment until he (plaintiff) should receive a certain pension ; that he received his pension March 8, 1877, and on the same day went to Kennedy's office to pay the installment due upon his insur- ance note, but did not find him, and on the next day, about four o'clock in the afternoon, the property insured was destroyed by fire. The defendant denies that any agreement for extension was made between the plaintiff and Kennedy, and introduced Kennedy as a witness, who testified that none was made. Upon this point the jury found against the defendant, and, the evidence being conflicting, their finding must be taken as con- clusive. But the defendant insists that, conceding that Kennedy agreed to an extension, the defendant would not be bound by it, because Kennedy had no authority to bind the company in that respect ; and further, if he had, that the plaintiff cannot recover, because the loss occurred after the time as extended, and the plaintiff had not paid even then. Kennedy's authority was shown by the certificate of his appointment introduced in evidence. From it, it appears that he was authorized to receive applications for insurance, and collect and transmit premiums. Kennedy testified that he was not authorized to issue policies, and it is not pretended that he was. The court instructed the jury, in substance, that the plain- tiff would be entitled to recover if they found that Kennedy, agreed to extend the time of payment, and that the loss oc- curred within such time. The giving of this instruction is assigned as error. c. xvn. Critchett v. The American Ins. Co. 497 According to the terms of the policy, the company ceased to carry the risk at the end of thirty days from the time the installment became due. If the company continued to carry it, it was by reason of a contract not contained in the policy, and that contract must have been the alleged contract with Kennedy. Now, what precisely was that contract, taking the plaintiff's statement as to what it was ? He says : " He (Ken- nedy) agreed he would give me time to get my pension." From this it will be seen that Kennedy did not undertake to contract that the company would, without payment, continue to carry the risk after it had ceased by the terms of the policy. It is doubtful, indeed, whether he even meant to bind the com- pany not to enforce payment of the installment before plaintiff could get his pension. The words do not necessarily mean more than that he would not himself enforce it. But we are of the opinion, that, if Kennedy had expressly contracted that the company should carry the risk without payment after it had ceased by the terms of the policy, such contract would not have bound the company. There is no pretense that Kennedy had any express authority to bind the company by any contract whatever. He belonged to an ex- tensive and well-recognized class of insurance agents, from whom the power to make contrapts is withheld. If he had the power to contract in the name of the company to carry the risk without payment after it had ceased by the terms of the policy, it is because the law would imply such power from the fact that he was authorized to collect and transmit pre- miums. But an agent employed to collect a claim does not thereby have authority to bind his principal even to grant an extension of time. Hutchings v. Munger, 41 1ST. Y. 155 ; Kirk v. Jliatt, 2 Carter (Ind.), 323; Corning v. Strong, 1 Carter (Ind.), 329. Still less would such agent have authority to bind his principal by a contract of insurance. We have seen no case where the doctrine contended for by plaintiff has been held. We do not say that where a policy is delivered by an agent without the prepayment of the premium it will not take effect, even though the agent have no authority to pass upon and accept the risk, and even though the policy provides that it shall not take effect unless the premium is prepaid. Where an agent is intrusted with a policy for the purpose of deliver- 33 498 Insurance: Fiee, Life, Marine. c. xvii. ing it, and does deliver it, though in violation of a provision of the policy as to prepayment, it has been held that the as- sured has a right to assume that prepayment has been waived. Young v. Hartford Fire Ins. Co , 45 Iowa, 377 ; Bowman v. Agricultural Ins. Co., 59 N. T. 521 ; Mississippi Valley Ins. Co. v. Neyland, 9 Bush. 430 ; Sheldon v. Conn. Mut. Ins. Co., 25 Conn. 9. But the waiver rests not simply upon something said by the agent which could be construed into an agreement of waiver, but upon something done by the agent which he"was employed to do. The authorities all agree that a mere agree- ment to waive prepayment will not put a policy in force where it is not delivered. It is, therefore, the delivery of the policy which constitutes the ground of waiver. It is true that in Hallock y. Commercial Insurance Co., 2 Dutcher, 268, a recovery was allowed although the premium had not been paid nor the policy delivered. But the agree- ment for the insurance had been made and the premium ten- dered, which the agent declined to receive because the policy was not made out. In 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 renewal premium. It was held that the plaintiff was entitled to recover. That case was substantially like the case at bar, except that the contract was made by the officers of the company and not by an agent. The principle decided, therefore, was materially different. Nor does the case at bar come within the rule held in Viele v. Germania Ins. Co., 26 Iowa, 9. That was a case where the risk was increased by the act of the assured contrary to the provisions of the 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. The doctrine of that case is unquestionably correct, but it rests upon the fact that the agent is made the judge as to whether a given use is an increase of risk or not. Mr. Jus- tice Beck, who wrote the opinion, said : " The agent is charged, by the terms of the policy on which this suit is based, with the power to determine whether the risk is increased. If he so determines, he may cancel the policy and put an end to the c. xvn. Cbitchett v. The American Ins. Co. 499 contract. This involves the necessity of examination of the condition of the insured property during the life of the policy, and constant watchfulness to protect the interest of the under- writers. If he determines that the risk is increased, such deter- mination is final. Such being the great and extraordinary powers of the agent, it follows that he is clothed with the power to dispense with conditions and waive the effect of breaches thereof in contracts of insurance made by him. If he can determine that the conditions of the contract have been broken, surely he can also determine that they have not been broken." In our opinion there is tiothing in this doctrine that affords support to the proposition that an agent who has not the power to make the contract of insurance can bind the company by his contract to an indefinite postponement of the payment of a renewal premium, and keep the policy in force in contraven- tion of its provisions. In Bouton v. The American Mutual Life Insurance Company, 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 con- tract 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 Insurance Com- pany v. Norton, 96 U. S. 234. In that case a recovery was allowed where the agent had extended 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 prac- tice of the company an express authorization of the agent to extend the time of payment. There was no pretense that the acent bv virtue of his power to make the contract of insurance and collect premiums could extend the time of payment. It is not uncommon, we think, for agents to keep a policy in force after a renewal premium becomes due, without actual payment by the assured. The agent sometimes credits the assured or issues a receipt to him without payment by him, the under- standing being that the agent becomes personally liable to the company, and the assured to the agent. In such case as between the assured and the company, the premium is regarded as paid. See Flanders on Insurance, page 164, and cases cited. 500 Insurance : Fire, Life, Makine. o. xvii. 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 forfeit- ure incurred by a violation of a condition of the policy. See Walsh v. jEtna Life Insurance Company, 30 Iowa, 133, and cases cited. But where an agent who is authorized to receive 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 holding that an agent can bind the company by his consent to a postponement of a payment of a renewal premium, and keep a policy in force contrary to its provisions, unless he is expressly author- ized to do so. It has been suggested that Kennedy's authority to receive payment of premiums should be deemed to include the au- thority to bind the company to carry the risk without payment; because it might be for the interest of the company to do so. But authority to an agent to do one thing does not include, by implication, an authority to do another thing, merely because it might be for the interest of the principal to do the other thing. An agent has implied authority to employ the usual and necessary means to accomplish what he is expressly author- ized to do. In the case at bar the carrying of the risk without payment of the premium was not necessary to enable the com- pany to collect the premium ; that was collectible without any new contract or consideration. In no view, then, did Kennedy have the implied power to make the contract relied upon. In our opinion the rule contended for by plaintiff would have a tendency to impair the value of all insurance, both fire and life. If insurance agents can grant a valid extension of the payment of renewal premiums for a few months, as in this case, while the risk continues, they can grant such an exten- sion for a few years, or such length of time as the policy can be renewed. No company under such rule would be safe. Liabilities would constantly tend to become disproportionate to available resources. The interests bound up in insurance are too important to be thus jeopardized. c. xvii. Ceitchett v. The American Ins. Co. 501 The foregoing considerations dispose of the case without regard to the fact that the loss occurred one day after the alleged extension had expired. The evidence was not such as to justify the instruction given, nor the verdict rendered. Reversed: Beck, J. {dissenting). — The policy in the case insured the property for five years, the term to end November 12, 1880. The premiums were payable annually, the first being paid when the policy was issued, and the others secured by a promissory note payable in installments of equal sums on the twelfth day of November of each subsequent year. The whole of the condi- tion of the policy touching the effect of non-payment of these installments is not set out in the opinion of the majority of the court. The part omitted follows what is quoted in that opin- ion. I here present it : " When a promissory note is given by the assured for the cash premium it shall be considered a payment of such pre- mium, provided such note is paid at or before maturity, but if such note, or any part thereof, shall remain unpaid and past due more than thirty days at the time of any loss or damage, then this company shall not be liable to pay such loss or damages happening during such default, and no attempt to collect such note or any installment of premium upon the installment note aforesaid, whether by legal process or otherwise, shall be deemed a waiver of any of the conditions of this policy, or have the effect to renew the policy ; but upon payment by the assured of the full amount of such note or installment, as the case may be, and all cost that may have accrued, then this policy shall be in force as to losses happening thereafter, un- less inoperative or void from some other cause." The agent who, as plaintiff claims, extended the time of payment, was expressly empowered by the defendant to collect, and remit the premium due upon notes of the kind given by plaintiff. The case presents this state of facts : The policy was an ex- isting contract at the time of the destruction of plaintiff's prop- erty. But on account of the failure of plaintiff to pay an in- stallment of the note which had fallen due, the contract could not be enforced against defendant if the breach of the condi- 502 Insurance : Fiee, Life, Maeine. c. xvii. tion were interposed as a defense. The contract had not ceased to exist ; it was binding upon the parties, and defendant would become again liable thereon upon payment of the pre- miums. The case does not, therefore, require us to determine whether the agent was authorized to enter into a contract of insurance. It is not claimed that his acts had that effect ; nor, indeed, did the agent, in the act of giving plaintiff time upon his note, make any contract for the company. The whole con- tract between the parties is embodied in the policy. But by extending the time of payment, the agent dispensed with the strict performance of the contract of the plaintiff to pay the premium on the day stipulated. The opinion of the majority of the court, I understand, concedes that if the agent did ex- tend the time of payment, and had authority to do so, his act would operate as a dispensation of the condition of the policy and operate as a waiver of the forfeiture resulting from the non-payment. The only question, then, to be determined in- volves the power of the agent to make an arrangement with plaintiff that he should have further time for the payment of the installment then due or about to fall due. The agent was authorized to collect the premiums. It can- not be doubted that if the plaintiff had paid to the agent the premium after default, the policy would have again attached. The agent could have enforced the payment under the terms of the policy. Thus far he was clothed with authority, upon the exercise of which, at his discretion, depended the binding force of the policy. His authority to collect the premium could be exercised in such a manner and at such times as the interest of the defend- ant determined by the agent required. Surely, the authority to collect the premium was not so limited that it could not have been exercised after default by plaintiff. It follows that) the agent, before default, could arrange with the plaintiff tol extend the time in the exercise of his authority to collect, or in other words, could extend the time for payment. It is not necessary to hold that the agent had authority to enter into a contract for the extension of the time upon the note. This would require authority to make a new contract under which the' old contract would be modified. But the extension of indulgence to the plaintiff under an agreement c. xvii. Critchett v. The American Ins. Co. 503 that the insured shall not be prejudiced by delay is quite a different thing. I will illustrate this point by a supposed case. A enters into a contract for the sale of lands to B, payment to be made upon a specified day, the time of payment being of the es'sence of the contract. The note given by B to secure the purchase money is placed in the hands of C for collection, who agrees with B that indulgence shall be extended for a time agreed upon. In such a case the condition as to time is waived. The agent's power to collect the money was exercised in grant- ing indulgence. I know of no reason why the same doctrine should not apply to policies of insurance. It is based upon the plainest reasons. Parties to a contract should not be en- abled to lay ambuscades and pitfalls for one another; they should not, by professions of kindness and indulgence, induce the violation of the contract, and then take advantage of the default. The agent of defendant in this case was authorized to col- lect the premium ; there was no limitation upon this authority. He, therefore, could, in the exercise of his authority, do all acts that could have been done by his principal in collecting the premium. He could grant indulgence and delay in the exer- cise of his authority. As I have said, the agent made no new contract ; his act in granting indulgence does not demand the exercise of authority to make a new contract. My brothers in the foregoing opinion express the thought that the agent could not grant indulgence, unless he had the authority to enter into a contract of insurance. They think that the time for the payment of premiums can only be ex- tended by insurance agents when they deliver the policy, or do some other act required in the execution of the contract. That agents possessing such authority, and under such circum- stances may waive conditions as to the time of payment, does not support the conclusion that indulgence, or, if you please, extension of time, may not be granted by an agent employed to collect premiums after the policy has attached. In my opinion the time at which an agent may perform acts under his authority, if not prescribed by the principal, rests in his discretion, to be exercised for the interest of the principal. The 504 Insurance : Fibe, Life, Marine. c. xvii. agent of defendant was authorized to collect the premium ; he determined that he would not collect it, or demand its pay- ment, until plaintiff received his pension, and so informed plain- tiff, who, relying upon the arrangement, did not pay the pre- mium before his house was burned. As the act of the agent !in extending the time of payment was done in the exercise of authority to collect the premium, the defendant is estopped to enforce the forfeiture for the non-payment of the installment. The conclusion I reach, that the payment of the installment on the day it fell due was dispensed with, and the forfeiture waived by the act of the agent in extending the time of pay- ment, is supported by the following authorities: Viele v. Ger- mania Insurance Company, 26 Iowa, 9 ; Walsh v. The jEtna Life Insurance Company, 30 id. 133 ; Young da Co. v. Hart- ford Fire Insurance Company, 45 id. 377 ; Insura?iee Com- pany v. Norton, 96 U. S. 234 ; Mississippi Valley Life Insurance Gompany v. Neyland, 9 Bush. 430 ; Sheldon v. Connecticut Mutual Life Insurance Company, 25 Conn. 207 ; Bouton v. American Mutual Life Insurance Company, 25 Conn. 542; Trustees of Baptist Church v. Brooklyn Insurance Company, 19 N. Y. 305 ; Bowman v. Agricultural Insurance Company 59 N. Y. 521 ; HaUoch v. Commercial Insurance Company-, 2 Dutcher, 268. In my opinion the judgment of the District Court ought to be affirmed. New York Court of Appeals, 1871. MALLORY v. TRAVELERS INS. CO. (47 N. Y. 52.) PreswnpUon that death by drowning is by accident rather than by suicide. Appeal from judgment of the General Term of the second judicial district, affirming a judgment entered upon verdict in favor of plaintiff. This action is brought upon an accident policy of insurance issued upon the life of W. S. Mallory for the sum of $2,000, for the benefit of and made payable to plaintiff. By the policy the defendant agreed to pay the sum insured, and " within ninety days after sufficient proof that the insured, at any time c. xvn. Mallory v. Travelers Ins. Co. 505 within the term of this policy, shall have sustained personal injury caused by any accident within the meaning of this policy and the conditions hereunto annexed, and such injuries shall occasion death within three months after the happening there- of." "And if the insured shall sustain any personal injury which shall not be fatal, but which shall absolutely and totally disable him from the prosecution of business, then on satisfac- tory proof of such injury, compensation shall |be paid to him," etc. " Provided always that no claim shall be made under this policy by the said insured in respect of any injury, unless the same shall be caused by some outward and visible means, of which proof satisfactory to the company shall be furnished," etc. Geovee, J. — The question whether the plaintiff had an in- surable interest in the life of the deceased does not arise in this case. The insurance was upon the life of W. S. Mallory. The policy was procured by him, and he paid the premium therefor, and made the loss payable to the plaintiff (his daughter) or legal representatives. This, in effect, was a policy procured by him upon his own life, and an assignment thereof to the plaintiff. Grosvenor v. The Atlantic Fire Ins. Co., 17 N. Y. 391 ; Bawls v. American Mutual Ins. Co., 27 ]ST. Y. 282. There was no error in denying the defendant's motion for a nonsuit. No ground for such motion was stated, and in such a case the well-settled rule is, that there is no error committed by denying it, although there may be a defect in the plaintiff's proof, if the defect was such that it might have been supplied if pointed out upon the motion. But there was no such defect. The proof showed that the deceased had been staying at his brother's at Bridgeport, Conn., for about a week ; that he left the house on Sunday, and was last seen alive on that day, walking toward a railroad bridge over a culvert, across a stream emptying into the sound, where the waters of the sound set, to some extent, into the land and up the stream at high tide ; that this bridge was used by pedestrians to cross the stream to a considerable extent; that the body of the deceased was found in the pond not far from the bridge, in a few days thereafter. The policy was one embracing cases only where the death was caused by an injury received from an accident. 506 Insurance : Fiee, Life, Maeine. o. xvn. From the facts above it appeared either that the death was caused by such an injury or the suicidal act of the deceased ; but the presumption is against the latter. It is contrary to the general conduct of mankind ; it shows gross moral turpi- tude in a sane person. That it resulted from the former cause was to some extent rendered more probable by the wound upon the head of the deceased, and the break in the corresponding part of his hat. Although this wound might have been made after the deceased was in the water, or while falling in, yet it was for the jury to say how it was caused, and to determine its effect upon the question whether the death was the result of an accidental injury, or whether the deceased had destroyed his own life. The court did not err, in charging the jury, that the conversation between the president of the company and the deceased had no bearing upon this particular application. It was proved that the deceased at the time of death was, and for some time previous to procuring the policy had been, a can- vasser for applications for insurance with the defendant ; that in an interview with the president, the deceased remarked that he could procure a great number of applications in Newark : to which the president in substance replied, that he must be cautious, as the company did not wish to insure insane per- sons, or persons of habits of intoxication. This evidence was relied upon by the defendant to avoid the policy, in connection with the facts proved, that the deceased, twenty years before making the application, had a severe fever, during which he was more or less insane, but that after recovering therefrom he was sane until three or four years before that time, when he was insane, from what cause did not appear, and was placed for about three months in a retreat for such persons, when he was discharged cured therefrom, from which time to his death he more or less attended to business, was sane, or at most the evi- dence of a want of sanity was so slight during any portion of this period as hardly warranted the submission of any question thereon to the jury ; that the deceased did not state to the company, upon making application for the policy, that he ever had been insane, but did state there were no 'circumstances which rendered him peculiarly liable to accident. This gen- eral conversation with the president some time before the application had no tendency to show a fraudulent concealment c. xvii. Malloey v. Travelers Ins. Co. 507 of material facts upon making the application. There was no evidence tending to show that he was then insane, or that he had been for some time before, and this conversation did not convey to his mind the idea that the company regarded those that a long time before had been insane, as peculiarly liable to ac- cidents. The construction put upon the contract in the charge was correct. That construction was, that the terms outward and visible means applied only to injuries not causing death in three months, but to such only as entitled the deceased to cer- tain sums from the company during their continuance, as pro- vided by the policy. The part of the charge to the effect that if the wound led to the cause of his death, then it would be an accidental death, could have been understood only in the sense of the wound being produced by an accident, but that this, not* causing death, did cause him to fall into the water, where he died from drowning, then the death was accidental ; so under- stood, it was entirely correct. The judge was right in charg- ing that, if the deceased did not conceal any fact which, in his own mind, was material in making the application, the policy was not void. Iiawls v. The American Mutual Life Ins. Co., 27 N". T. 282; Van Lindenau v. Desborough, 15 Eng. C. L. 290 ; and Valton v. National Fund Life Ins. Co., 20 K Y. 32. Cases cited by counsel were cases where false answers were given to inquiries made, and have no application to this case. The counsel was mistaken in his exception to the charge, that if the deceased was insane so that he could not know right from wrong, that his death in such a condition was an accident, which would entitle him to recover. The judge did not so charge. The judge did charge that if his con- dition at the time was such that he could not distinguish right from wrong, if it was such that he could not be held in his own mind to know that he was doing an act which would produce death, then he was an involuntary agent, and the result of that involuntary act producing death was an accident. This part of the charge was not excepted to. Hence no question arises thereon for review by this court. The defendant can sustain no injury from the want of a proper ex- ception, even if right in its law, for the reason that there was no evidence tending to show that the deceased did not know that keeping his head under water for a sufficient time would 508 Insurance : Fike, Life, Mabine. c. ivii. cause his death. It was wholly immaterial whether Lawton ever told Johnson that the deceased was insane, or when he told him so. The defendant could not have sustained any injury from this testimony. The judgment appealed must be affirmed, with costs. All concur. Judgment affirmed. New York Court of Appeals, 1884. MUKKAY v. NEW" YOEK LIFE INS. Co'. (96 N. Y. 614.) Exemption from liability if death in consequence of molation of law. Andrews, J. — The policies upon the life of Wisner Murray each contain a condition that, if the insured " shall die in, or in consequence of, a duel, or of the violation of the laws of any nation, State, or province," the policy shall be void. The assured died from a pistol shot from a pistol in the hands of one Berdell, upon whom the deceased and his brother had committed a violent assault, and the defense is based upon this condition in the policy. It is an undisputed fact that the brothers, 'acting in concert, planned the assault upon Berdell. They stationed themselves in the waiting-room of the station, awaiting his arrival, and, when he entered the room, Spencer Murray seized him by the arm's from behind and held him, while his brother, Wisner Murray, standing in front, beat him over the head and face with a raw-hide, striking from ten to .twenty blows, inflicting severe and painful wounds from which the blood flowed profusety, covering his face and clothing. The assault was a brutal one, and, so far as appears, without provocation. Berdell testified that in the struggle to escape from Spencer Murray his hand was involuntarily brought into contact with his hip-pocket, containing a pistol. He drew it from his pocket, and it appears that Wisner Murray, seeing the pistol, started toward the lunch-counter, keeping-his face toward Berdell and calling on his brother to " hold him and not to let him shoot." Wisner Murray jumped over the lunch-counter, and, as he was passing through a door into another room, the pistol in the hands of Berdell was discharged, the ball hitting the assured in the forehead, causing his death. c. xvii. Mueeay v. New York Life Ins. Co. 509 Berdell, who was called as a witness by the defendant, tes- tified, in substance, that the firing of the pistol was accidental, and was caused by the sudden jerking of his arm by Spencer Murray, who was still holding him, and that he had no inten- tion of firing at the deceased. It is established by the great preponderance of testimony that, until after the pistol was fired, Berdell was in the grasp of Spencer Murray, and was struggling to release himself. Berdell also testified that the deceased, during the time he was retreating, had a pistol which he pointed at the witness as if aiming at him. He is confirmed as to the deceased having a pistol by another witness, and a pistol was found, after the affray, on the floor near where the deceased fell, a distance of about thirty feet from the place where Berdell was when the shot was fired. The witnesses differ as to the time which elapsed between the commencement of the affray and the firing of the pistol, the highest estimate given by any witness being thirty seconds. It is not disputed that the assault made upon Berdell was a violation of law. But it is contended that as, according to the evidence of Berdell, the firing was accidental and not inten- tional, and as it also appears that it happened- after the assured had abandoned the combat, his death was " not in, or in con- sequence of, a violation of law," and was not, therefore, a death excepted from the operation of the policy. The argu- ment is that death under such circumstances, from an accidental shooting, cannot, in a legal sense, be attributed to the violation of law which preceded it, so as to bring it within the condition of the policy. There must, no doubt, be a relation between the act causing the death and the violation of law to avoid the policy. In the case of Brailey v. Mutual Benefit Life Insur- ance Company, 45 IS". Y. 422, involving the construction of a similar clause in a life policy, the court said : " It seems to be clear that a relation must exist between the violation of law and the death to make good the defense ; that the death must have been caused b\' the violation of law." It may be that the proviso in the policy was primarily intended to exempt the company from the hazard of a death from violence to which persons engaged in the execution of criminal acts a"re exposed, and especially where the unlawful or criminal act is such as is likely to be met by forcible resist- 510 Insurance : Fire, Life, Marine. c. xvii. ance. It is plain that a homicide committed in self-defense would be a death within the condition ; so, also, a death at the hands of justice in punishment for crime. The death in these cases would be the direct and legitimate result of the criminal act. Another case, a little further removed from the violation of law as its cause, would be one where a party assailed, in the heat of passion engendered by the act of the assured, on the moment takes the life of the aggressor, although the provoca- tion might not be a legal justification of the homicide. Such a death, we conceive, might be within the condition, depending upon circumstances. If the violation of law in which the deceased was engaged was trivial, although calculated to some extent to excite opposition or resistance, but the taking of life was a result which no reasonable man could have contemplated as likely to follow from the unlawful act, there would be no such relation between the act and the death that the former could be said to be the cause of the latter. But if, on the other hand, the party killed was engaged in committing a violent assault, the natural result of which would be to arouse the pas- sions and excite the anger of the party assailed, and in the heat of passion he killed his assailant, the death would, we think, be the result of the unlawful act within the meaning of the policy, although the party causing it exceeded the bounds of lawful resistance. As between the. company and the assured, his vio- lation of law ought justly to be treated as the cause of the death, because the deceased must be assumed to have known the danger he incurred, and that a party resisting an assault under such circumstances, and whose anger is naturally excited, does not mark with exactness the line which separates lawful defense from excessive and unjustifiable force. We have so far had in view cases where the death of a person insured was the result of the intentional act of another, or of the law. But while it is probable, as we have said, that cases of this kind were primarily in the contemplation of the parties to the contract, the words of the condition are too broad to permit them to be confined to this narrow and rigid limitation. The proviso clearly exempts the company from all risks of life which attend the violation of law, which are the natural and reasonable concomitants of the transaction, Prize-fignting is prohibited by law, and is attended with some c. xvn. Murray v. New York Life Ins. Co. 511 danger. Suppose in such a friendly contest, by mishap one of the combatants strikes a blow which causes the death of the other. "Would a death under such circumstances be a death in the violation of law within the policy, although there was no intention to kill ? However this might be answered, we think t it is clear that there may be a death in violation of law within the meaning of the policy, although not intentionally inflicted, and although it was not occasioned by the act of another. A burglar who, in consequence of a misstep, or to escape detec- tion, falls or jumps from the roof of a house which he is attempting to enter, and is killed, dies in violation of law as plainly as if he had been shot by the owner in defense of his dwelling. In the former as in the latter case, the death results from the criminal act, within • the policy, as a natural and rea- sonable consequence, because, although the immediate cause of the death was the fall, yet the exposure to the danger was encountered in the prosecution of the criminal purpose. An- other case may be stated, of which there may perhaps be more doubt. Suppose the assured in this case, instead of hav- ing been killed by the pistol, had, in the struggle with Berdell, ruptured a blood-vessel, or, being predisposed to heart disease, it had been brought on by the excitement of the affray, and he had died from either of these causes in the midst of the Strug- gle. Death from a rupture of a blood-vessel, or from disease of the heart, occurring independently of any violation of law, would be covered by the policy. The company assume the risk of death from these causes under ordinary circumstances. But do they assume such risk when the immediate, exciting cause of the ' death is a struggle originating in a criminal assault in which the deceased was engaged at the time ? To exempt the company, must the death result from some peculiar and special risk connected with the commission of crime ? It seems to us not, and that it is sufficient to bring a case within the condition, if there is such a relation between the act and the death that the latter would not have occurred at the time if the deceased had not been engaged in the violation of law. In the case before us it is said that the shooting was acci- dental and not voluntary or intentional, and consequently was not a death,- in or in consequence of a violation of law. "What incidents would attend the assault by the Murrays could not 512 Insurance : Fiee, Life, Mabine. c. xvn. be foreseen. They probably did not know that Berdell had a pistol, and if they had known it, they could not have antici- pated that it would be discharged in the manner stated by him. But they took the risk of his resistance to any extremity. They took the risk of an injury which might happen to them in consequence of his handling a deadly weapon, whether such injury was intentional or accidental. The case is to be consid- ered under the actually existing circumstances of the assailants and assailed, and if the killing under these circumstances was not an unnatural result of the attack, the case is within the condition. Assuming that Berdell's statement that the shoot- ing was unintentional was binding on the jury, and that the killing was accidental, 3 r et the accident was the result of the struggle of Berdell to free himself from the grasp of Spencer Murray, and the jerking of his arm by the latter. The acci- dent, so called, was caused by the assault, and the risk of injury from the discharge of the pistol was occasioned by the criminal act of the Murrays. The claim that "Wisner Murray had abandoned the combat before the firing of the pistol, if true, does not meet the difficulty. He was a party to the original encounter. The struggle with Spencer Murray was continuing when the pistol was fired. If the shot had killed Spencer Murray, and he had been the person insured, there could, we think, be no doubt. It killed his brother, who was unfortunately within its range, but at a time when it is said he was attempting to escape from the scene. But he was not relieved from responsibility for the act of his confederate in a crime jointly planned, who was continuing the assault, and the act of Spencer Murray in jerking the arm. of Berdell, causing the explosion, is as to the company the act of both. We are of opinion, assuming as true to its full extent the statement made by Berdell, that the defease was established. If, as there is some slight evidence to show, Berdell fired the pistol after he had escaped from Spencer Murray, the case is not changed. At all events the jury upon that theory of the case might well have found, and could not justly have found otherwise, that it was fired by Berdell in the heat of passion, and under circumstances which, if they did not fully justify him, made the firing and the consequent death a natural and reasonable consequence of the assault. "Whether, therefore, c. xvii. Murray v. New York Life Ins. Co. 513 the firing of the pistol was intentional or not, or whether Wis- ner Murray had or had not abandoned the combat, the jury upon the evidence were justified in finding as they did by the general verdict, that the assured died in, or in consequence of, a violation of law. This conclusion answers the points made upon the exceptions to the charge. Judgment affirmed. CHAPTER XVIII. clatj8e8 of the accident policy. New Yoke Couet of Appeals, 1890. BACON v. U. S. MUT. ACC. ASSO. (123 N. T. 304.) Whether a loss by accident or by disease. The policy, or certificate, was in general similar to the form of accident policy given in the appendix, but one of the stipulations was worded as follows : " Benefits under this cer- tificate shall not extend to any death or disability which may be caused, wholly or in part, by bodily infirmities or disease existing prior or subsequent to the date of this certificate, or by poison in any manner or form." Verdict for plaintiff, affirmed by General Term Supreme Court. Peckham, J. — I think the deceased died from disease within the meaning of the language used in the policy sued upon in this action, and not from an accident causing the disease. The disease itself was not caused by an accident within the mean- ing of the policy. The case of Paul v. Travelers Ins. Co., 112 N. Y. 472, has been cited by counsel for the respondent as decisive of his case. Upon the question decided the case is conclusive, and we have no disposition to alter our views as expressed therein. But upon the question of whether the deceased in this case died from disease, as above stated, the case of Paul is without the slightest analogy. In that case the deceased came to his death by accidentally inhaling illuminating gas. This gas is a manu- factured article, gathered into large reservoirs, and thence dis- tributed through pipes into almost every house in a city or c. xvm. Bacon v. U. S. Mux. Acc. Asso. 515 village. The deceased accidentally, while asleep, inhaled this gas and was suffocated. This would seem to be a plain case of death from accident, and it was found that the gas was not purposely inhaled. The death being the result of accident, it was then held that such death was caused by external and vio- lent means, within the meaning of the policy. This also seems plain enough. The gas was external, and it was not inhaled voluntarily— «.«., intentionally and for the purpose of being killed thereby. It might naturally be said— as in effect it was— that death, as the result of accident, imports an external and violent agency as the cause. There was no question in the Paul case that the deceased'came to his death through disease ; no pretense could properly be made as to death from disease in such a case. If the deceased had been asleep in a room into which a large quantity of water was poured through the acci- dental breaking of a water-main, and in consequence thereof he had been drowned, no one would deny that the death was caused by accident, and was not the result of disease, as that word is generally used among men. There is no difference in the case in principle if the death, instead of being caused by water which was visible, was caused. by gas which is invisible. In neither case could the idea even suggest itself that death was caused by disease. But in the case before us the facts are entirely different. The deceased died, as is said and as will be here conceded, from malignant pustule. It is caused, as the plaintiff's witness testified, by the infliction upon the body of a certain kind of animal substance, contact with diseased or putrid animal mat- ter; this acts by producing, at the point of contact with this matter, a papula, something like a flea bite, which rapidly be- comes a vesicle, a blister-like affair, and then a pustule ; this is accompanied by a great deal of swelling in the parts immedi- ately around it, and a great deal of pain in the individual ; the glands in the vicinity become infiltrated with blood and pus, and become dark red or even black in color ; the neighboring glands become involved ; then comes, almost immediately after or together with these signs, a great prostration, and the patient dies in a short time, five to eight days generally, the extreme limits being from twenty-four hours to sixteen days ; he dies of exhaustion. 516 Ixsueance: Fibe, Life, Marine. c. xviii. As to the cause of the pustule, the witness stated that the virus comes from the hide, or hair, or wool of animals suffering from this disease ; from their flesh sometimes, or it may come from the feathers of birds that have been feeding upon this peculiar kind of carrion ; it may be communicated directly, that is, by the immediate contact of the individual with it, by his touching it or handling it and then bringing the matter in contact with the skin or thin mucous membrane ; or it may be transported, as there are very many cases known, by insects, flies, mosquitoes, that have been feeding upon this, carrying it away and depositing it upon individuals. It is commonly known as malignant pustule, or charbon, or anthrax ; they are all synonymous terms. It has been called wool-sorter's disease, because it happens among people that handle wools and hides, such as tanners, butchers, and herdsmen, and those people that are engaged in business where they are brought in contact with that sort of thing. In answer to the question, " How rare is malignant pustule ? " this same witness for the plaintiff answered : " In the eastern parts of this country it is pretty rare ; there have been some epidemics reported in America ; in the eastern part of Massa- chusetts, I think about twenty years ago, there were quite a number of cases among the hairworkers, people that take the hair that comes from abroad and make mattresses of it." The witness thus designates the difficulty as an epidemic, which word is so frequently used in connection with disease as almost to be synonymous therewith. It was undoubtedly so used in this instance by the witness, who thus described malig- nant pustule as a disease, when referring to its frequency in Massachusetts some years ago. The word epidemic would scarcely be used to express a frequent occurrence of accidents. The witness also said that he has seen it termed in one standard authority as an acute infectious disease. He said that the special poison of the disease has been found to be a particular kind of bacteria, " bacillus-anthrax." The following question was put to the witness : " Is it not so that anthrax is an acute, infectious malady, which breaks out commonly in an epizootic or enzootic manner, and is not infrequently sporadic in herbivor- ous animals and swine, and is transmissible to a great number of other animals, as well as to mankind?" The answer of c. xviii. Bacon v. IT. S. Mut. Aco. Asso. 517 the witness, after some fencing, was, " Yes, I think that is correct." Malignant pustule differs, according to this same witness, from diphtheria, small-pox, or scarlet fever, in the single fact that this is a particularly poisonous animal matter, and it has one particular germ from which it originates, as small-pox has another, and hydrophobia another, and the cause of the diffi- culty in each case is some form of bacteria, transmissible to mankind. It can be contracted through eating the flesh of animals subject to the disease. The bacillus is very small, so small that it may enter in the pores of the skin, and an abra- sion of the skin is not necessary, but might quicken the result. The forming of the pustule upon the skin is the product of the poison. Another witness for the plaintiff, who was a physician, said that he understood malignant pustule to be a development of the particular bacilli in the system radiating from the point of contact. He added that the contagion might be internal as well as external, taken through the mouth or through the nose, and it is generally considered an acute infectious disease. Both these learned gentlemen, however, refused, themselves, to designate malignant pustule as a disease. Dr. Harris defined it as " a pathological condition and succumbing of the body to the infliction of this particular poison." Dr. Bailey says he considers it as a " pathological condition following this particular inroad of this particular kind of bacilli." We all know that " pathology," as used generally, means that part of medicine which explains the nature of diseases, their causes and symptoms. A '• pathological condition " means neither more nor less than a diseased condition of the body. The insurance in this case was against bodily injuries effected through external, violent, and accidental means. It was not to extend " to any death or disability which may have been caused wholly or in part by bodily infirmities, or disease existing prior or subsequent to the date " of the policy, " nor to any case except where the injury is the proximate or sole cause of the disability or death." There cannot be the slightest doubt that malignant pustule is regarded generally, by those who have but the usual acquaintance with such matters, as a 518 Insurance: Fiee, Life, Maeine. c. xvtii. disease. Every particle of testimony given by the doctors called by the plaintiff, shows clearly, to my mind, that it is so regarded generally in the medical world, and that it is only when these doctors are asked to define the case in a manner to suit their refined notions of scientific and artistic accuracy that they define the trouble as a " pathological condition of the body ; " in the one case, " succumbing to infliction of this particular poison," and in the other, " following this particular inroad of this particular kind of bacilli." The difference between the cause of this condition and the causes of typhoid fever, tuberculosis, small-pox, scarlet fever, and such like diseases, is that this particular condition is caused by different bacilli from the others, and they come in contact with the skin or enter into its pores, while in the other cases they are generally breathed in. But no abrasion of the skin is needed to produce the con- tact of the bacilli, and what follows from such contact seems to be as plainly a disease as in the case of small-pox or typhoid fever. The question then is, even assuming that some particu- lar physicians refuse to call this a disease and describe it as a pathological condition, whether it is not a disease within the meaning of that term as used in this policy ? Taking all the facts testified to by these physicians of the plaintiff, including their own special description of this condition of the body, and it seems to me there can be no intelligent, rational doubt that the insured died from a disease attacking him subsequent to the' issuing of the policy. He did not die from any accident, within the provision contained in the policy defining an acci- dent. The definition given by the physicians for the plaintiff, as to the difficulty being a pathological condition of the body and not a disease, is upon these facts entirely too fragile to base a recovery upon, and the distinction between a disease and a pathological condition of the body is, with reference to this case, much too refined for common acceptance. It seems to rae clear that the meaning of the words used in the policy cover just such a case, and that the parties never intended that a cause of death winch to all outward appearances, and to the world in general, was a disease, should be converted into a "pathological condition" of the body caused by an accident. o. xvni. Bacon v. U. S. Mut. Acc. Asso. 519 The judgment should be reversed and a new trial ordered ; costs to abide the event. O'Brien, J. (dissenting).— The principal, if not the only, question in this case is whether the death of the insured was the result of accident, within the meaning of the words used in the contract, or of disease or other cause not covered by the stipulations of the parties. There is no dispute as to the fact that death resulted from the effects of a malignant sore upon the lip of the insured, which, soon after its appearance, involved the neighboring parts, producing septicemia and utter exhaustion. There were two theories as to what this local sore was. On the part of the plaintiff, it was claimed that it was what was known as malignant pustule, while the defendant sought to es- tablish the fact that it was a facial carbuncle and, therefore, a disease, or the result of disease, within the terms or meaning of the contract. The court instructed the jury that if the sore was, in fact, a carbuncle, that the plaintiff could not recover, but that if it was a malignant pustule produced upon the per- son of the deceased in the manner claimed by the plaintiff, that then the plaintiff was entitled to a verdict. The testimony of the medical experts produced by the plain- tiff was to the effect that this pustule is not a disease in the strict sense of that term, but a pathological condition of the sys- tem caused by the accidental infliction of diseased or putrid ani- mal matter, infested with bacteria or bacilli anthrax, upon the thin skin of the lip, whence the bacilli multiply and are diffused through the system. The animal virus that produces the sore comes from the hides, hair, wool, or flesh of animals suffering from the disease known as anthrax, and may be transmitted to human beings directly by the immediate contact of the individ- ual with it, by his touching or handling it, and then bringing the matter in contact with the skin or thin mucous membrane, or it may be carried by carrion birds, or by insects, and in vari- ous other ways communicated to man and inflicted or im- planted upon some exposed portion of the body. People whose business requires them to handle hides, hair, or wool, and who live in cattle-grazing regions, or localities such as the southern or western portions of the United States, are, according to the proofs in this case, more exposed to malignant pustule than per- 520 Insurance : Fire, Life, Marine. c. xviii. sons in other vocations, or who live in localities where cattle do not abound. The insured went to Council Bluffs on the 1st of February, 1884, and, as has been stated, died there in less than two months after. He was first employed as a bookkeeper in u meat market, and later as a check clerk in the transfer de- partment of the Union Pacific Railroad. It was shown that carloads of hides frequently pass that station, and that a large number of cattle are brought there and slaughtered in the vicinity, but there was no direct or positive proof that the deceased ever came in immediate contact with the hides, or even the flesh, of these animals. We must accept the verdict of the jury that the deceased died from the effects of malignant pustule. "Whatever an appellate court may think of the weight and force of the evidence submitted at the trial, it cannot, when there is some evidence, ignore or disregard the deliberate judgment of the body which, under our system of administering justice, is em- powered and required to determine disputed questions of fact. There was evidence to warrant the finding, and in such a case, after review by the General Term, this court must deal with the case upon the principle that death was caused as claimed by the plaintiff. Whether the malignant pustule of which the insured died was the result of animal virus coming in contact with the lip, or whether the sore was produced in some other way, was, perhaps, a more difficult question ; but in view of the testimon}' of the plaintiff tending to show that the infliction of this virus upon the person is the only cause of pustule, and that the in- sured was in some degree exposed to it, and that death gener- ally follows contact with it in a few days, we think it cannot be said that this finding is based wholly on speculation and conjecture. It was the province of the jury to draw all proper inferences from the testimony, and while there was no direct or positive proof as to when or how the animal virus came in contact with the person of the deceased, yet the jury was war- ranted in finding from the other testimony in the case that in some way the bacilli anthrax were implanted upon the lip where the sore appeared, and at some time within ninety days prior to the death of the insured. Assuming that death was c. xm Bacon v. U. S. Mut. Acc. Asso. 521 the result of malignant pustule, caused in the manner claimed by the medical experts who testified in behalf of the plaintiff, the question remains whether this was " external, violent and accidental means," within the intent and meaning of the con- tract. This court has held that where death results from breathing an atmosphere impregnated with illuminating gas which in some way escaped from pipes while the insured was asleep, the beneficiary was entitled to recover under a policy containing those words. Paul v. T. Ins. Co., 112 K Y. 472. Death by drowning is included in such a contract. Trew v. E. P. Ass'n, 6 H. & K 839 ; Mallory v. T. Ins. Co., 47 K Y. 53. So is death which may have been produced by fright. Mc- Glinchey v. F. & C. Co., 80 Me. 251. Without attempting to collate all the cases on this point, it is sufficient to observe that the courts, both in this country and in England, have given to these words a broad and liberal interpretation in favor of the insured or the beneficiary desig- nated in the policy. TJ. 8. M. A. Asm. v. Barry, 131 U. S. 100, 121 ; N. A. L. & A. Ins. Co. v. Burroughs, 69 Penn. St. 43 ; A. Ins. Co. v. Crandal, 120 TJ. S. 527 ; Winspear v. A. Ins. Co., L. R, 6 Q. B. Div. 42 ; Paul v. T. Ins. Co., supra. Guided by the principles laid down in these and other cases, and by what seems to have been the intention of the parties, I am of the opinion that we should hold in this case that the infliction of animal virus by some exterior force or power upon the person of the deceased, as found by the jury, was a bodily injury, "effected through external, violent, and acci- dental means," producing death, within the intent and mean- ing of the policy, and that the defendant is liable. When death results from the accidental infliction of the animal virus upon the person, whether by handling the same, or deposited upon his person by insects or otherwise, as shown by the wit- nesses for the plaintiff, it cannot, I think, be said that the jury was bound to find that the malignant pustule was a disease within the conditions of the policy exempting the defendant from liability. The jury could have found, in view of the evidence, that the deceased lived in a locality, and was engaged in employments in which he was exposed to contact with this peculiar form of poison, and it seems to me that a malignant pustule produced by the deposit upon the lip of the deceased 522 Insurance : Fire, Life, Marine. o. xvni. of a particle of this animal virus, resulting in death, is as much an accident as in the case of death from breathing illuminating gas while asleep. There was evidence upon w hich the jury could have found that the deceased contracted the pustule in this way. For these reasons I am constrained to dissent from the pre- vailing opinion in this case, and am in favor of affirming the judgment. All concur with Peckham, J., except Ruger, C. J., and O'Brien, J., dissenting. Judgment reversed. Supreme Court of Judicature, 1881. LA WHENCE v. ACCIDENTAL INS. CO. (L. R., 7 Q. B. D. 216.) Meaning of proviso, " direct and sole cause of death," where an excepted cause co-operates to produce the accident. Denman, J. — During the argument of this case I have had considerable doubt as to the meaning of the condition in the policy, and I am not sure that, but for Winspear v. Accident Insurance Co., 6 Q. B. D. 42, I should not have thought that the company were protected. The facts are these : The de- ceased person, while on a railway platform, was suddenly seized with a fit, which caused him to fall forward off the plat- form on to and across the railway. A locomotive engine was at that moment passing through the station ; it passed over his neck and body, and he received mortal injuries, of which he then and there died. Then it is stated in the case : " The falling forward of the insured off the platform as aforesaid was in con- sequence of his being seized with a fit or sudden illness, and but for such fit or illness he would not have suffered death or injury as before mentioned." Now, the immediate cause of death is not in the least disputable ; but there is no doubt that if he had not fallen there in consequence of the fit he would not have suffered death, and in that sense the fit led to his death. The question is whether that was merely one of several events which brought about the accident, in the sense that it caused the accident to happen by causing him to be there, or whether it was, within the meaning of this proviso, a cause of death C. XVIII. LAWRENCE V. ACCIDENTAL IbTS. Co. 523 which would prevent the policy applying to the case. In Winspear v. Accident Insurance Co., where a man, while ford- ing a river, was seized with a fit, and so fell and was drowned in the river— a fit being undoubtedly a kind of a disease which was not within the meaning of the policy, which was very like the present one, although, not exactly identical — it was held that the death did notarise from disease within the exceptions in the policy. By this present policy, if the insured shall re- ceive any personal injury caused by accidental and external violence within the meaning of this policy and the conditions thereto, and the direct effects of such injuries shall occasion his death within three calendar months from the happening thereof, then the funds of the company shall be subject to pay the sum assured. " Provided always that this policy insures payment only in case of injuries accidentally occurring from material and external cause operating upon the, person of the insured where such accidental injury is the sole and direct cause of death to the insured, or disability to follow his avoca- tions ; but it does not insure, in case of death or disability aris- ing from fits or rheumatism, gout, hernia, erysipelas, or any disease whatsoever arising before or at the time or following such accidental injury (whether consequent upon such acci- dental injury or not, and whether causing such death or dis- ability directly or jointly with such accidental injury)." !Now, the words that appeared to me during a part of the argument to "be strongly in favor of the defendants in this case are those latter words, "causing such death or disability directly or jointly with such accidental injury." If the words had simply been these, " this policy shall not attach in cases where the death is caused by an accident, jointly with a fit," I should have thought it was a case in which in all probability the defendants would be entitled to our judgment. But these three last lines of the clause are merely lines in a parenthesis, and they are put in for the purpose of showing that the excep- tion will apply, whether the disease be consequent upon the accidental injury or not, or whether the disease be one that shall have caused the death itself directly, or whether it shall have caused the death jointly with the accidental injury. But then these are words merely defining the cases in which the pre- vious words, " arising from," may be applicable. The words 524: Insurance : Fike, Life, Makine. c. xviit. " arising from " have already received judicial construction in the case of Winspear v. Accidental Insurance Co., in which it was held that the death did not arise from the disease. It appears to me that where words are merely put in as a varia- tion of those previously used, and which are exactly the same as those that have received a judicial construction, we cannot put a different construction upon them. I think we are bound to hold that the death arose from the engine destroying the insured by coming across him, and not from the previous fact of a fit having attacked him and so brought him there. It' is far better for us to decide in accordance with Winspewr v. Accidental Insurance Co., on words that are really identical, so far as they operate in this case, than to gather a distinction out of words which are, after all, merely used as illustrations of the previous descriptions. Watkin Williams, J. — I am clearly of the opinion that the plaintiff is entitled to recover, and I desire to base my decision upon reason and principle, and not; upon the decided cases. It seems to me perfectly clear, and altogether free from doubt, that upon every principle of construction and upon the true meaning of this policy, the company are liable to pay the administratrix in this case. Now, the whole case depends on the true construction of the words in the proviso, because in this case the deceased person, having fallen down accidentally in a fit from the platform of the railway on to the rails, was, while lying there, accidentally run over by a train that hap- pened at that moment unfortunately to come up, and he was undoubtedly killed by the direct external violence of the engine upon his body, which caused his death immediately. The question arises whether, according to the true construction of the proviso, it can be said that this is a case of death arising from a fit; because, if this death did not arise from the fit, according to the true construction of the policy, the remainder of the clause does not come into existence at all, and is inap- plicable. It seems to me that the well-known maxim of Lord Bacon, which is applicable to all departments of the law, is directly applicable to this case. Lord Bacon's language in his "Maxims of the Law," Eeg. 1, runs thus: "It were infinite for the law to consider the causes of causes, and their impul- c. xviii. Lawrence v. Accidental Ins. Co. 525 sions one of another; therefore it contenteth itself with the immediate cause." Therefore, I say, according to the true principle of law, we must look at only the immediate and prox- imate cause of death ; and it seems to me to be impracticable to go back to cause upon cause, which would lead us back ulti- mately to the birth of the person, for if he had never been born the accident would not have happened. The true meaning of this proviso is that, if the death arose from a fit, then the com- pany are not liable, even though the accidental injury con- tributed to the death in the sense that they were both causes, which operated jointly in causing it. That is the meaning, in my opinion, of this proviso. But it is essential to that con- struction that it should be made out that the fit was a cause in the sense of being the proximate and immediate cause of the death, before the company are exonerated, and it is not the less so because you can show that another cause intervened and assisted in the intervention. Now, if the argument of the defendants be a good one, this absurdity would follow. Sup- posing a man went out in the field following sports, and he were to be seized with a fit, either a fainting fit or an epileptic fit, or any other fit, and had retired to one side of the field, and remained there recovering from the fit ; and being there, a sportsman — not knowing he was there — accidentally shot him : it might be said, in the same manner, that the cause of death arose from a fit. It seems to me only to require to be stated, to show the entire absurdity of it. The only difference between that case and this is in the time that intervened be- tween the time of the fit and the person being placed^ within the influence of the succeeding accident, which, in this case, was very short ; but I fail to see, in point of reason, that there is any difference between one hour, or one minute, or one day. The break in the chain of causes seems to be equally complete. I, therefore, put my decision on the broad ground that, accord- ing to the true construction of this policy and this proviso, this was not an act arising from a fit ; and, therefore, whether it contributed directly or indirectly, or by any other mode to the happening of the subsequent accident, seems to me wholly immaterial, and the judgment of the court ought to be in favor of the plaintiff. Judgment for the plaintiff . 526 Insurance : Fire, Life, Marine. c. xviii. Supreme Judicial Court of Massachusetts, 1883. TUTTLE v. TRAVELLER'S INS. CO. (134 Mass. 175.) Exposure to obvious or unnecessary danger. Due diligence. When not for jury. Action of contract upon an accident policy of insurance, issued by defendant upon the life of Stephen Tuttle, and made payable to plaintiff his wife. The evidence showed that about ten o'clock in the evening of March 13, 1879, Tuttle was killed by being struck by a rail- road train, while running along the tracks in front of it, for the purpose of getting on a train approaching in an opposite direc- tion on a parallel track. The trial judge directed a verdict for the defendant, and reported the case for the consideration of the full court. C. Allen, J. — The policy provides, among other things, that no claim shall be made under it "when the death or injury may have happened in consequence of exposure to any obvious or unnecessary danger." It is also made subject to the condition that " the party insured is required to use all due diligence for personal safety and protection." Both of these provisions were violated by the act of the deceased in going upon and along the track of the railroad, under the circum- stances stated in the report. Wright v. Boston and Maine- Railroad, 129 Mass. 440, 443. No two cases are precisely alike in their facts, and what constitutes due care must depend upon the facts of each case. But the conduct of the deceased was such as, in the words of Mr. Justice Colt, is " condemned by the general knowledge and experience of all prudent men, and is conclusive on the question of due care." The danger was obvious, the exposure to it unnecessary, the want of due diligence clear, and the" death of the insured occurred in conse- quence thereof. See also Wills v. Lynn and Boston Railroad, 129 Mass. 351 ; Johnson v. Boston and Maine Railroad, 125 Mass. 75 ; Allyn v. Boston and Albany Railroad, 105 Mass. 77 ; Cor dell v. New York, Central and Hudson River Railroad, 75 N. Y. 330 ; 70 N. Y. 119 ; 64 N. Y. 535; Baxter v. Troy o. xvin. Tuttle v. Traveller's Ins. Co. 527 and Boston Railroad, 41 N. Y. 502 ; MoCarty v. Delaware and Hudson Canal, 17 Hun, 74. The plaintiff contends that it was not the exposure or neo-- gence of the assured which caused his death, but the coming _ on him of the locomotive engine, the bell or whistle of which may not have sounded ; that this was a new force or power which intervened, of itself sufficient to stand as the cause of the misfortune ; that it was for the jury to determine whether or not the railroad corporation was negligent ; and that, if so, the negligence of tiie assured, if it existed, was too remote to defeat the policy. Insurance Co. v. Tweed, 7 Wall. 44, 52; Milwaukee and St. Paid Railway v. Kellogg, 94 U. S. 469, 475 ; Schcffer v. Railroad Co., 105 U. S. 249, 252. But, without speculating as to possible cases, we do not think that the doc- trine relied on is applicable to this case. If a person voluntarily places himself in a position where he is exposed to an obvious danger, and the precise injury happens to him which there is reason to fear, it cannot fairly be held that the language of this policy was not intended and understood to be applicablo to such a case. For example, if one while walking on a rail- road track is assaulted by a robber or a dog, or is struck by lightning, his act of traveling there has no tendency to pro- duce the injury, and is not to be deemed a contributory cause thereof. But, on the other hand, if one who goes into a battle is hit by a bullet, or if one who goes up in a balloon is blown . out to sea by the currents of air, or if one who makes a railroad track his path for travel is run over by a passing locomotive engine, he must ordinarily in any legal question be held to take the risk of those results. There is in each of these cases such an association of cause and effect, that the one must be held to have contributed to the other. To hold that the death of the assured in the present case did not happen in consequence of his exposure to the risk, but from a new force or power which intervened, would be to fritter away the language of the policy by metaphysical distinctions too 'fine to enter into the understanding or contemplation of parties engaged in the prac- tical business of malting a contract of insurance. We must assume that the assured read his policy, and was acquainted with its language and attached some practical meaning to it. See White v. Lang, 128 Mass. 598 ; McOrath v. Merwin, 112 528 Insurance : Fire, Life, Marine. o. xvm. Mass. 467; Norton v. Eastern Railroad, 113 Mass. 366; McDonald v. Snelling, 14 Allen, 290 ; Oluff v. Mutual Benefit Ins. Co., 13 Allen, 308, 319 ; s. c, 99 Mass. 317, 329 ; Harper v. Phoenix Ins. Co., 19 Mo. 506. Judgment on the verdict. Pennsylvania Supreme Court, 1883. BUEKHAED v. TEAVELLEES' INS. CO. (102 Pa. St. 262.) • Accident. Voluntary exposure to unnecessary danger. Walking or being on road-bed of railway. Chief Justice Mercur delivered the opinion of the court. This case arises on a contract of insurance against injuries and death through external, violent, and accidental means. The death of the intestate was so caused. The general terms of the policy are broad enough to make the company liable. It claims exemption therefrom under certain exceptions in the policy. "What rule, then, must be applied in the interpretation of this contract and its exceptions ? The true principle of sound ethics, says Chancellor Kent, is to give the contract the sense in which the person making the promise believes the other party to have accepted it. A just sense should be exercised in so interpreting it as to give due and fair effect to its provisions. 2 Kent's Com. 557. When . a party uses an expression of his liability having two meanings, one broader and the other more narrow, and each equally prob- able, he cannot, after an acceptance by the other contracting party, set up the narrow construction. 2 Whar. on Con. § 670. Hence, when an insurance company tenders a policy to a party seeking to be insured, and uses in the policy ambiguous words, these words will be held to have the meaning most favorable to the insured, as the presumption is that on this construction he took the policy, and as the company could have avoided the difficulty by being more specific. Id.; Fowk.es v. Ins. Co., 3 B. & S. 917. The words in such case, said Mr. Justice Blackburn, ought to be construed in that sense in which, looking fairly at them, a prudent man would have understood the words to mean. Id. It is now well recognized as a general rule, that 0. XVIII. BtTRKHARD V. TRAVELLERS' Ins. Co. 529 when a stipulation or an exception to a policy of insurance,' emanating from the insurers, is capable of two meanings, the one is to be adopted which is most favorable to the insured. - May on Ins. §§ 172-179 ; Wood on Ins. §§ 141-146 ; Allen v. Ins. Co., 85 N. Y. 473 ; Western Ins. Co. v. Cropper, 8 Casey, 351; White v. Smith, 9 Id. 186. In case of doubt as to the meaning of terms emanating from an insurance company, they are to be construed most strongly against the insurer. May on Ins., supra; Fowkes v. Ins. Co., supra ; Wilson v. Ins. Co., 4 K. I. 156 ; Bartlett v. Ins. Co., 46 Maine, 500 ; Bowman v. Same, 27 Mo. 152 ; Ins. Co. v. Slaughter, 12 Wall. 404 ; JST. A. life & Ace. Ins. Co. v. Burroughs, 19 P. F. Smith, 43. The business of this company is to insure against accidents. The purpose of this policy is to pay specific damages for bodily injuries and death caused by external, violent, and accidental means. The death of the intestate was so caused. The com- pany seeks to avoid liability under two clauses in the policy. One provides, the insurance shall not extend to a case of death or injury caused by " voluntary exposure to unnecessary dan- ger ; " the other, that " walking or being on the road-bed or bridge of any railway are hazards not contemplated or covered by this contract, and no sum will be paid for disability or loss of life in consequence of such exposure, or while thus exposed." The insured was traveling by rail through Indiana on bis way to Kentucky. The train stopped on the bridge across the Ohio River by reason of the draw part of the bridge being open. He went to the front platform of the coach in which he was riding, and stepped off, and through a hole in the floor of the bridge, causing his death. This hole was about three feet wide and four feet long. It was caused by the removal of some planks during the making of repairs. 1. Was this act of the insured a voluntary exposure to unnecessary danger ? To make him guilty of a " voluntary exposure to danger," be must intentionally have done some act which reasonable and ordinary prudence would pronounce dangerous. The uncon A tradicted evidence shows that several other passengers got out of the coach, and some of them in advance of the insured. They certainly apprehended no danger. It is customary for male passengers to alight when a train stops for any length of 34 530 Insurance: Fiee, Life, Mabine. c. xviii. time. No notice was given to passengers that it was dangerous to get out of the coach where it stood. So far as appears, the bridge, with the exception of this hole, was well covered with plank and entirely safe. When the intestate alighted, other passengers were standing on the bridge near the brakeman. The latter was sitting on timber that was lying on the foot- walk of the bridge, and was to be used in the repairs being made. The passengers had no knowledge of these repairs. The brakeman held his lantern so placed on the floor that another timber cast its shadow over this hole, making it impos- sible for the insured to see it. He could see that portion of the floor lighted by the lantern, and the passengers standing there- on. He could see the brakeman near them. He stepped out of the coach in plain sight of the brakeman. He had a right to suppose he would land on a floor as firm as that on which the others stood. Neither word nor sight gave him any notice of danger. He did not approach the opening caused by the draw, and was not injured thereby. It is true he voluntarily left the car ; but a clear distinction exists between a voluntary act and a voluntary exposure to danger. Hidden danger may exist ; yet the exposure thereto without any knowledge of the danger does not constitute a volwntary exposure to it. The approach to an unknown and unexpected danger does not make the act a voluntary exposure thereto. The result of the act does not necessarily determine the motive which prompted the action. The act may be vol- untary, yet the exposure involuntary. The danger being un- known, the injury is accidental. Accident is defined by Worcester to be an event proceeding from an unknown cause or happening "without the dasign of the agent ; an unforeseen event ; incident ; casualty ; chance : and by Webster, an event that takes place without one's forethought or expectation ; an event which proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected ; chance ; casualty ; contingency. In view of the unquestioned facts, the death of the intestate was accidental. The danger was unknown. The injury was not designed. We think there was not such a voluntary expos- ure to danger as to fairly bring the act of the insured within the meaning of the exception. o. xvin. Bubkhaed v. Teavellees' Ins. Co. 531 2. "Was he walking or being on the road-bed or bridge of the railway ? He certainly was not walking on the road-bed or bridge ; and, strictly speaking, it is doubtful whether he was being on either. The evidence indicates that, without touching either, he probably passed directly from the steps of the car through the hole in the bridge. "We will not, however, put the case on the narrow ground that he did not come in contact with either road-bed or bridge. The language of the exception clearly implies two thoughts : One, that the insured must not be on the road-bed or bridge for any length of time ; the other, that the prohibition is not to guard against injury resulting from a defective road-bed or defective railway bridge, but against the danger of injury from trains passing thereon. If the design was to apply the language to bridges defectively constructed or out of repair, it would not have been restricted to railway bridges. It would have included all bridges, both foot and wagon. The purpose is not to avoid liability for injuries result- ing from being on bridges unsafe in themselves. The manifest intent is to exempt from responsibility for damages caused by collision with trains moving thereon. The present is not like a case between a passenger and a railway company, in which the company may be exempt from liability for damages arising from negligence of the passenger not voluntary. ISTor did the act of the insured prove such a reckless exposure of his person, nor obvious risk of danger, as to bring him within the applica- tion of the rule declared in Morel v. Miss. Valley Ins. Co., 4 Bush, 535 ; Lovell v. Accident Ins. Co., 3 Ins. Law Jour. 877 ; SawteUe v. Railway Pass. Ass. Co., 15 Blatchford, 216, and kindred cases. "We therefore think, under the facts found, and the rules of law which we have stated, the learned judge erred in holding that the conduct of the insured brought him within either of the exceptions, so as to relieve the company from, liability. Judgment reversed. 532 Insurance : Fiee, Life, Marine. c. xvin. New York Court of Appeals, 1871. NOETHEUP v. EAILWAY PASSEtfGEE ASSTTB- ANCE CO. (43 N. T. 516.) Accident while traveling by public or private conveyances. Grover, J. — It must be conceded that the injury received by the plaintiff's intestate does not come within the strict lit- eral words of the contract of assurance. By that contract the respondent agreed to pay the legal representatives of the intes- tate, in the event of her death from personal injury ensuing in three months from the happening thereof, when caused by any accident while traveling by public or private conveyances pro- vided for the transportation of travelers, etc. The intestate was not actually traveling upon any public or private convey- ance provided for the transportation of passengers at the time of receiving the injury which caused her death. It appears from the facts agreed upon by the parties, that the intestate, prior to such time, had undertaken to go a journey from Steu- ben to Madison County ; that the mode adopted for making the journey was by rail from Steuben to "Watkins in Schuyler County, thence by steamer to Geneva, thence by rail to Madi- son. That the intestate, in the prosecution of such journey, had arrived at Geneva on board the steamer, and, as usual, was passing on foot from the steamboat landing to the railway sta- tion to go on board of the cars for the remainder of her jour- ney ; and while so passing from the landing to the station, a distance of about seventy rods, .she slipped and fell, thereby receiving an injury which caused her death about four days thereafter. It further appears, that upon the arrival of the boat at Geneva there were usually hacks at the landing seek- ing passengers for any part of the village or the railroad sta- tion, but that a large majority going to the railroad station went there on foot. The question for determination is, whether at the time of receiving the injury the plaintiff was, within the meaning of the policy, traveling by a public or private convey- ance. The policy must be construed so as to carry into effect the intention of the parties, so far as such intention can be determined from the language used, construed in the light of c. xvm. Nokthkup v. Railway Passenger Assttb. Co. 533 well-knowii extrinsic facts, which must be presumed to have been known to the contracting parties at the time of making the contract, and in reference to which it was entered into. One fact of this character, very important in the present case, is that of the frequent change required from one train of cars to another at intermediate stations upon the same journey. Those passing from Buffalo or the Falls to New York by the New York Central, or from the former or Dunkirk to the same by the Erie, cannot be unaware of this fact. Can it be said that a passenger is not traveling, within the meaning of this contract, by public conveyance, while passing from one train to go on board another in the actual prosecution of his journey ; or, for further illustration, can this be said of a pas- senger from New York to Dunkirk by the Erie, while going from the ferry-boat at Jersey City to get on board of the train at that place ? I think that such passenger, within the mean- ing of this contract, and also within the fair construction of the language, is a traveler by public conveyance all the way from New York to Dunkirk, although he may walk a short distance from the ferry-boat to the train at Jersey City, or from one train to another when such changes are made at intermediate stations. An injury received while so necessarily walking in the actual prosecution of the journey is received while traveling by public conveyance within the meaning of the policy, as such walking is the actual and necessary accom- paniment of such travel. There is no difference in principle between a passenger so walking and the intestate in the pres- ent case. The presumption is, that the railroad trains and the steamer run in connection, the same as the ferry-boat from New York to Jersey City with the Erie trains, and that, by means of this connection, the journey of the intestate was designed to be continuously prosecuted ; and it surely can make no difference in principle that the sp.ace to be walked over in going from one conveyance to another is a few steps more or less. Nor does it affect the question, that the intes- tate might have procured a hack to carry her, had she so chosen. S^e pursued the same course that the great majority of passengers did. This she had the right to do under the con- tract. Theobald v. Railway Passenger Assurance Co. (26 Eng. Law & Equity), 432, sustains this view. In that case, the assur- 534 Insurance : Fiee, Life, Maeine. c. xvin. ance was against railway accident whilst traveling in any class carriage, on any line of railway in Great Britain, etc. This was held to include an injury received from slipping on the step of the car, while standing at the station, in getting out. Judgment reversed. CHAPTEE XIX. clauses of the marine policy. Couet of King's Bench, 1809. PARMETEE v. COUSINS. (2 Campb. S35.) The voyage : eommeneemeAt of the risk, when it attaches. This was an action on a policy of insurance on ship and freight, valued at £1,200, at and from St. Michael's, or all or any of the Western Islands, to England. The ship met with very tempestuous weather on her out- ward voyage, and when she arrived at St. Michael's she was so leaky that the crew were obliged to work at the pumps spell and spell. She was then quite in an unfit state to take in a cargo, and, there being no harbor in the island, she was in great danger from the storm, which still continued. In fact, after lying at anchor, above twenty-four hours, she was blown out to sea and was wrecked. Park for the plaintiff contended that the underwriters were clearly answerable for a loss so happening. The. policy, being at as well as from, attached the moment the ship cast an- chor at St. Michael's ; and at any rate she had lain there twen- ty-four hours, so that the outward risk had completely expired. The objection of want of seaworthiness, when properly consid- ered, was without any foundation. The ship on her arrival at St. Michael's was unfit to commence the homeward voyage ; but this was unnecessary. It was enough if she was fit for the voyage when the voyage commenced. One state of seawor- thiness was required while she remained at, and another when she sailed from, the place. This distinction had been settled by Lord KeDyon {Forbes v. Wilson, Park, 299, n.; Marsh. 155; 536 Insurance : Fere, Life, Marine. c. xix. Smith v. Surridge, & Esp. 25 S. P.), and recognized by Lord Ellenborough (Hibbert v. Martin, Sat. after M. T. 1808). If it were not allowed, the policies on the homeward voyage would in almost every instance be vitiated ; as it seldom hap- pens that a ship on her arrival at the outward port wants no repairs, but is in a condition immediately to take in the home- ward cargo. If in this case the policy on the outward voyage had expired, and the policy on the homeward voyage had not attached, how was the ship-owner to secure himself an indem- nity during the whole course of the adventure ? Lord Ellenborough. — What we have to consider here is, whether the underwriters on this ship, at and from, St. MichaeVs to England, be liable for a loss happening in the manner that has been described. And I am dearly of opinion that they are not. To be sure, while the ship remains at the place, a state of repair and equipment may be sufficient which would constitute unseaworthiness after the commencement of the voyage. But while in port she must be in such a condition as to enable her to lie in reasonable security till she is properly repaired and equipped for the voyage. She must have once been at the place in good safety. If she arrives at the out- ward port so shattered as to be a mere wreck, a policy on the homeward voyage never attaches.^ Such is the present case. I do not remember any one like it ; but the principles on which it must be decided are perfectly well established. Plaintiff nonsuited. Court of King's Bench, 1813. WILLIAMS v. SHEE. (3 Campb. 469.) The voyage : continuance of the risk, there must be no deviation. This was an action on a policy of insurance on goods by the ship Sir Sidney Smith, " at and from London to Berbice, with liberty to touch and stay at any ports and places whatso- ever and wheresoever, and for all purposes whatsoever, particu- larly to land, load, and exchange goods, without being deemed a deviation." c - XIX - Williams v. Shee. 537 The vessel sailed from Portsmouth on the 25th of Septem- ber, 1812, with a fleet for the West Indies, under convoy of his Majesty's ship Narcissus. They arrived off Madeira on Saturday the 17th of October. The Sir Sidney Smith had taken in a quantity of goods for that island, which the captain had been ordered to land there, and for which wines were to be sent on board. He began to land the goods as soon as he arrived, but, not being allowed to work on the Sunday, he had not got the wines on board till the Monday at noon. The Narcissus, with the greatest part of the fleet, had sailed away the preceding day, and was then too far off to be overtaken. Seven or eight other ships belonging to the fleet, however, were left behind at Madeira, and they all agreed to sail together for mutual protection. With this view, the Sir Sid- ney Smith remained at Madeira till the 24th of October. She finally parted company with them off Barbadoes, and on the 19th of November was captured by an American privateer on her way to Berbice. The owner of the goods insured was on bpard during the voyage. Garrow, A. G., contended that the underwriters were dis- charged, on two grounds: First, the ship, by putting into Madeira, and staying behind there when the rest of the fleet had sailed, had been guilty of a deviation ; secondly, the cap- tain had willfully deserted the convoy, and as this was done with the privity of the owner of the goods, who was on board, the policy was vacated. Park, for the plaintiff, insisted, First, that the ship had a right to put into Madeira, and to stop there in the manner she had done, under the liberty given by the policy to touch and stay at all ports and places to land, load, and exchange goods ; secondly, the captain could not be said willfully to have de- serted the convoy, for he was anxious, if possible, to enjoy its protection ; and the convoy had rather deserted him. Lord Ellenborotjgh. — I am of" opinion that the under- writers are discharged on the ground of deviation. The liberty in the policy must be construed with reference to the main scope of the voyage insured. I am inclined to think this was not a willful desertion of convoy within the meaning of the act, as the captain appears to have acted bona fide, and not to have 538 Insurance : Fire, Life, Marine. c. xix. been aware of the precise time when the convoy sailed away from Madeira. However, it is unnecessary to determine that point now ; for upon well-established principles the ship was guilty of a deviation by putting into Madeira and voluntarily staying behind there for the purposes of trade when the rest of the fleet had sailed away in the prosecution of the voyage. Plaintiff nonsuited. Court of Common Pleas, 1870. LIDGETT v. SECKETAK. (L. R., 5 C. P. 190.) The voyage : termination of the risk, until moored twenty-four hours in good The judgment of the court (Bovill, C. J., Willes, J., and Brett, J.) was delivered by Bovill, C. J. — The policy in this case, which was upon the ordinary printed form of a Lloyd's policy, was effected by the plaintiffs on their iron sailing ship Charlemagne. The risk was described in writing to be " at and from London to Cal- cutta, and for thirty days after arrival ; " and by the other terms of the policy was to continue until the said ship, etc., should be moored at Calcutta. Then followed the usual printed words, " upon the said ship, etc., until she hath moored at anchor twenty-four hours in good safety." The ship left London for Calcutta, and after sustaining damage at sea arrived in the River Hooghly in the month of October, 1866. She was then taken in tow by a steam tug, and brought to moorings at a usual place of discharge within the harbor of Calcutta, where she came to anchor and was moored on the 28th of October. The captain gave the pilot the usual certificate that she was then properly moored and left in safety. She had brought troops from England, who then disem- barked, and her cargo was unloaded and completely and safely discharged by the 8th of November, with the exception of two hundred tons of iron which were left in her for ballast. On the 12th of November she was taken from her moorings °- XLX - LlDGETT V. SBCEBTAN. 539 to a dry-dock for survey and repairs ; and, in the course of her repairs in the dock, the vessel accidentally caught fire and was wholly destroyed on the oth of December. It was found in the case that the vessel had sustained con- siderable damage from striking on a reef or bank before she reached Calcutta, whereby she became much strained and injured and leaky. Considerable repairs were necessary ; and she required extraordinary pumping, which was done at first by the troops on board and afterwards by an engine and lascars from the shore, to get her clear of the water which was in one of her compartments. She was also injured in her rudder or steering apparatus, so as materially to affect her steering ; and she was in danger of breaking from her moorings, from the currents and bore of the Eiver Hooghly ; and, if she had broken away, the defect in her steering apparatus would have further endangered her. But, notwithstanding these matters, she re- mained at her moorings for more than twenty-four hours as a ship, though damaged, and safely discharged her cargo. Under these circumstances, it was contended on behalf of the plaintiffs that they were entitled to recover as for a total loss by fire ; and on behalf of the defendant, that the plaintiffs were only entitled to claim in respect of the partial loss by sea- damage before the arrival of the ship at her moorings, and that they were not entitled to claim anj'thing in respect of the loss by fire, because such fire occurred after the termination of the risk under the policy. If the thirty days covered by the policy are to be reckoned from the time of the ship's arrival at Calcutta, either in the sense of arrival in the port, or arrival at and being finally moored at an ordinary place of mooring and discharge within the port, then, as the fire and loss of the vessel did not occur until the thirty -eighth day after she was so moored at Calcutta, viz., the 5th of December, the loss would not come within this policy ; but if the risk was extended, and continued beyond such thirty days, by reason of the printed words " until she hath moored at anchor in good safety," and of the vessel hav- ing been moored in a damaged state as described, then the ship was covered by this policy at the time of the fire on the 5th of December, and the defendant would be liable for the total loss by fire. 540 Insurance : Fire, Life, Marine. o. xix. Whether the thirty days were in this case to be reckoned from the arrival only of the vessel at Calcutta, or from her having been moored at anchor twenty-four hours in good safety, it is not necessary to determine, because we are all of opinion that, even in the latter view, the defendants are en- titled to judgment. Assuming, then, that the thirty days are to be reckoned from the time of the ship being moored for twenty-four hours in good safety, the question arises, what is the meaning of those words in such a policy. We are of opinion that the meaning is not, as has been con- tended, that the moorings are safe, but that the words refer to the ship being in safety. The words cannot mean that the vessel is to arrive without any damage or injury whatever from the effects of the voyage ; otherwise, the loss of a mast, or even a spar, a sail, or a rope, though the vessel was perfectly fit to keep not only the river, but the sea, would, contrary to all the ordinary meaning of language, prevent her from being con- sidered as in safety. So, on the other hand, the words would not, in our opinion, be satisfied by the vessel arriving and being moored in a sinking state, or as a mere wreck, or by a mere temporary mooring. We think also that the mere liability to damage, whether partial or total, during the twenty-four hours, by the occurrence of some or all of the perils insured against, cannot prevent the running of the twenty-four hours, because the extension of the period of risk for twenty-four hours after having moored in good safety clearly implies that, notwithstanding the safety intended, the ship is liable to partial or total loss by the occur- rence of a peril insured against. The American decision upon that point, of Bill v. Mason, 6 Mass. 313, proceeded on the ground that, although the ship was, during twenty-four hours after being moored, liable to damage or total loss, she was not in fact either lost or in that case even damaged. Where, on the other hand, a ship arrived in port in a sinking state, and on being moored was obliged to be lashed to a hulk in order to keep her afloat until the people on board were landed, and where she sunk on being moved toward the shore, it was held that she was not moored in safety, because the court considered that she in fact arrived as c- xi x. Lidgett v. Secbetan. 541 a wreck, and not as a ship. Shawe v. Felton, 2 East, 109. So, where a vessel arriving in a hostile port with simulated papers had her papers immediately taken and her hatches sealed down by the officers of government, although she was not formally condemned until afterwards, it was held that she had not been moored in safety for twenty-four hours, because she was in effect within the twenty-four hours taken from her owners by the foreign government. Horneyer v. Lushington, 15 East, 46. Nor was a vessel which had been for a short period moored to a wharf, but within twenty-four hours was ordered into quaran- tine, and whilst there, but more than twenty-four hours after the original temporary mooring, was lost by a peril insured against, considered to have moored in good safety, because, as it would seem, she had not, before the loss in respect of which the claim was made, been finally moored at the ordinary place of mooring. Waples v. Fames, 2 Str. 1243. Where a vessel after being moored remained in actual safety as a ship for twenty -four hours, and so that during those twenty-four hours her owners had complete and undisturbed possession of her, but afterwards she was seized in consequence of the master having smuggled before her arrival, it was held that the terms of the policy were satisfied, and that the loss by the seizure was a loss after the termination of the risk. Lockyer v. Offley, 1 T. E. 252. In that case, Willes, J., in delivering the judgment of the court, said (1 T. E. at p. 261) : " There must be some certain and reasonable limitation in point of time laid down by the court when the insurer shall be released from his engagement. If he be liable for a month, he may be for a year, and so on. And we all think that the law on insurances would be left unsettled and in much confusion if any other time were suggested than that prescribed by the policy ; viz., the continuance of the voyage and the ship's being moored twenty- four hours in safety." In the present case, the vessel, though considerably dam- aged and leaky, and with one compartment full of water, existed as a ship at the time of her arrival, and she was able to keep afloat and did keep afloat as a ship for more than twenty- four hours after being moored, by exerting the means within the power of the captain. She arrived and moored at the ordinary place for unloading, and was so moored as a ship in 542 Insurance : Fire, Life, Marine. c. xix. the possession or control of her owners for more than twenty- four hours ; and she remained as a ship and in possession of her owners for more than thirty days after the lapse of the twenty-four hours before described, and until the time of the fire by which she was totally lost. If the underwriters are liable beyond thirty days from her being so moored for twenty-four hours, it is difficult under such circumstances to see when the liability is to end. "We think the only safe rule in this case is to hold, that, after the expira- tion of thirty days from the arrival and mooring, of the vessel, and her having remained as a vessel, and in the possession or control of her owners, though not sound, for twenty-four hours, the underwriters were not responsible. "We are, therefore, of opinion that there was not a total loss within the period of risk covered by this policy, and that our judgment should be for the defendant. Judgment for the defendant. CHAPTER XX. CLAUSES OF THE MARINE POLICY— CONCLUDED. House of Loeds, 1887. THAMES & MERSEY MARINE INS. CO. v. HAMILTON. (L. R., 12 App. Cas. 484.) Perils insured against. Appeal from a decision of the Court of Appeal upon a special case stated in an action brought by the respondents against the appellants, the insurance company, to recover for a . loss under a policy. The policy sued on was a time policy on the steamship Inchmaree for twelve months, from the 20th of August, 1883, to the 20th of August, 1884 ; and the subject-matter of insur- ance, " the hull, masts, spars, sails, boats, materials, and all stores, valued at £20,000 ; and machinery, shafting, propeller, boilers, and connections, including donkey-engine and boilers, pumps, and all connections, valued at £11,000." On the 2d of March, 1884, the Inchmaree was at anchor off Diamond Island, awaiting orders, and for the purposes of the voyage it was necessary to pump up the main boilers, by means of a donkey-pump and engine, in the usual way. A pipe led from the donkey-pump to the boilers, and at its junction with one of the boilers there was a check valve, capable of being opened or closed by a screw, which ought to have been kept open and clear when the boilers were being pumped up. This valve had either been left closed or had become salted up when the donkey-pump was set to work, off Diamond Islasid, so that the water could not pass into the boiler. The consequence was, that, when the donkey-pump was set to work, the pipes and water-chamber in the donkey-pump, and the air-chamber 544 Insurance : Fire, Life, Marine. c. xx therein, became overcharged, and the water was forced up into the air-chamber, which in consequence split, and the pump was thereby damaged. It was admitted, for the purposes of the case, that the check-valve was either allowed to remain closed or become salted up by the negligence of one of the engineers, or was accidentally salted without being noticed, though reasonable care was taken by the engineers. It was also admitted that the closing or salting up, and accident, were not due to ordi- nary wear and tear. The' parties were unable to agree as to whether there was negligence in allowing the check-valve to remain closed or to become salted up ; but as the plaintiffs contended that the defendants were liable, whether there was negligence or not, it was agreed to leave that question for trial (if material) after the decision of the case. The questions stated for the opinion of the court were, whether the defendants were liable under the policy in respect of the loss, (1) if it could have been avoided by proper care, and occurred through negligence ; (2) if it occurred accidents ally, without negligence. The Queen's Bench Division gave judgment for the plain- tiffs, and this judgment was affirmed by the majority of the Court of Appeal (Lindley and Lopes, L. JJ3 Lord'Esher, M.R., dissenting. Lord Halsbury, L. C. — My Lords, in this case a policy of marine insurance for twelve months was effected upon, among other things, a pump on board the Inchmaree steamer. The adventures and perils which the capital stock and funds of the defendant company were made liable to by the policy of insurance were, of the seas, men-of-war, fire, enemies, pirates, rovers, thieves, jettisons, letters of mart and counter- mart, surprisals, takings at sea, arrests, restraints and detain- ments of all kings, princes, and people of what nation, condi- tion, or quality soever, barratry of the master and mariners, and of all other perils, losses, and misfortunes, that had or should come to the hurt, detriment, or damage of the aforesaid subject-matter of insurance, or any part thereof. It is certain that a loss or misfortune has happened to the c. xx. Thames & Meesey Mae. Ins. Co. v. Hamilton. 545 pump while the pump was being used for the purpose of filling the boilers of the Inchmaree, and the sole question is, whether the loss or misfortune which did happen was one of the losses or misfortunes against which the insuring company agreed to indemnify the owners of the Inchmaree. If understood in their widest sense, the words are wide enough to include it ; but two rules of construction now firmly established as part of our law may be considered as limiting those words. One is that words, however general, may be limited with respect to the subject- matter in relation to which they are used. The other is, that general words may be restricted to the same genus as the specific words that precede.them. There is, perhaps, a third consideration which cannot be overlooked, and that is, that where the same words have for many years received a judicial construction, it is not unreason- able to suppose that parties have contracted upon the belief that their words will be understood in what I will call the accepted sense. And it is to be remembered that what courts have to do in construing all written documents is to reach the meaning of the parties through the words they have used. Now, the facts here are very simple : a part of the pump was burst because a valve which should have let the water into the boiler was stopped up while the pump was being worked by a donkey-engine. On the one side, it is said that filling the boiler was necessary to enable the ship to prosecute her voy- age; on the other, it is said that the accident, peril, or misfor- tune had nothing to do with the sea, and was in no sense of the like kind with any of the perils or misfortunes specifically enumerated. In the long line of cases quoted at the bar, there was only one (with which I will attempt to deal presently) which enun- ciated any different principles of construction from those I have endeavored to set forth above, although I think there is some difficulty in reconciling the facts with respect to which some of them are decided with the principle upon which they profess to be decided ; conspicuously I think Devaux v. J' Anson 5 (Bing. H". 0. 519,) where Tindal, C. J., rests upon authorities which, as applicable to the particular facts of the cases to which he refers, hardly support the decision there arrived at. 35 546 Insurance : Fiee, Life, Mabine. o. xx. The great difficulty I have had in this case is the decision of Lord Selbourne, L. C, and Oockburn, C. J., in the case of West India and Panama Telegraph Company v. Some and Colonial Marine Insurance Co., 6 Q. B. D. 51. I cannot agree -with the Master of the Bolls that that case does not, as matter of reasoning, cover the present case. With the utmost respect, I can draw no real distinction between the explosion of the boiler and the bursting of the air-chamber of the pump, nor can any real distinction depend upon whether it was steam generated by fire which caused the explosion, or air and water forced into the chamber by ordinary mechanical action. But before your Lordships that case is open to review, and I cannot think that that case is reconcilable with the principles upon which policies of marine insurance have hitherto been con- strued. It introduces analogy as the guide by which you are to ascertain the genus to which the different species are to be attributed; so that, in the future, one must introduce as the true exposition of general words not the genus you find as applicable to the species enumerated, but any analogous genus. Sea perils, or the like, become enlarged into perils whose only connection with the sea is that they arise from machinery which gives motive power to ships. I cannot think that even were the analogy perfect — which. I do not think it is — this is a satisfactory mode of ascertaining what the parties meant by the words they have used ; and, as I have said, this is the real function of a court in construing an instrument. It might be reasonable for the parties to provide for such a peril, and one knows that " dangers of and incident to steam navigation " are words which have been used to pro- vide for such casualties. But I cannot think that such casual- ties were in the contemplation of the parties when using the old familiar words of this policy. I think the subject-matter, marine risks, limits the meaning of the general words. I thi nk the genus, "perils of the sea," limits the meaning. I think the meaning attributed to these words for more than half a century, by decis- ion, makes it probable that the parties used them in that ac- cepted sense. I, therefore, think the judgment of the Court of Appeal wrong, and I move your Lordships that it be reversed. Lord Beajiwell.— My Lords, I cannot agree with the c. xx. Thames & Meesey Mak. Ins. Co. v. Hamilton. 547 judgment in this case. The donkey-engine was insured. The adventures and perils which the defendants were to make good specified a great many particular perils, and "all other perils, losses, and misfortunes that have or shall come to the hurt, detriment, or damage of the aforesaid subject-matter of insur- ance, or any part thereof." "Words could hardly be more ex- tensive, and if the question — I ought to say a question on them — arose for the first time, I might, perhaps, give them their natural meaning, and say they included this case. But the question does not arise for the first time. It has arisen from time to time for centuries, and a limitation has always been put on the words in question. Definitions are most difficult, but Lord Ellenborough's seems right : "All cases of marine damage of the like kind with those specially enumerated, and occasioned by similar causes." I have had given to me the following definition or description of what would be included in the general words : " Every acci- dental circumstance not the result of ordinary wear and tear, delay, or of the act of the assured, happening in the course of the navigation of the ship, and incidental to the navigation, and causing loss to the subject-matter of insurance." Probably a severe criticism might detect some faults in this. There are few definitions in which that could not be done. I think the definition of Lopes, L. J., in Pandorf v. Hamilton, (16 Q. B. D. 629), very good : " In a seaworthy ship, damage to goods caused by the action of the sea during transit not attributable to the fault of anybody," is a damage from a peril of the sea. I have thought that the following might suffice : " All perils, losses, and misfortunes of a marine character, or of a character incident to a ship as such." I put it forward with distrust, but it would comprehend all the cases cited where the assured has recovered, save perhaps the Panama case. For example, it would include the case of the ship blown over while in dock, of the ship damaged by its moorings giving away, of the ship fired into by a ship. It would not include the cases put by Lord Esher, nor the case I put of the captain seized with giddiness dropping the chronom- eter into the hold ; nor would it include the present case. The damage to the donkey-engine was not through its being in a ship or at sea. The same thing would have happened had the 548 Insurance : Fire, Life, Marine. c. xx. boilers, and engines been on land, if the same mismanagement had taken place. The sea, waves, and winds had nothing to do with it. As a matter of principle and reasoning, I think the decision wrong. I think the judgment in the West India and Panama Telegraph Company v. Home and Colonial Marine Insurance Company wrong on the reasoning I have used. "With most sincere respect, though it is true that what the winds are to a sailing vessel, steam is to a steamer, that does not decide the question, for it is not every damage to sails that would be cov- ered by the policy. Suppose damage by rats or mildew to spare sails. As to Lord Esher's judgment in that case, I con- cur in his criticism on it in the present case. And I agree with Lopes, L. J., that the word " fire " in the policy will not sus- tain that judgment. The Lord Justice puts the case of a spar falling on the deck while getting under sail, and being broken, and says it would be within the policy. Perhaps; but if it would, it would be because it was a loss in navigation, a loss which could not have happened except on ship. But suppose the spar was being used to erect an awning on deck to give shelter to dancers or the like, and was broken, the case would not be covered by the policy. It would not be a marine loss, not a loss with which the sea, or navigation, or the ship as a ship, had anything to do. I do not like cutting down the natural meaning of words : there is always great difficulty in saying what should be sub- stituted. But it is admitted that some limit must be put on those in question here. I think a proper limit would exclude this loss. ' So that the judgment of the Master of the Rolls is, I think, right, and that of the other judges wrong, and their decision should be reversed. Order appealed from, and the judgment of the Queen's Bench Division reversed. o. xx. Bkown v. St. Nicholas Ins. Co. 549 Court of King's Bench, 1795. GREEN v. ELMSLIE. (1 Peake, N. P. Cas. 378.) Capture : proximate cause of loss. ♦ This action was on a policy of insurance on the ship Fly, from Exeter to London. The insurance was against capture only. The ship, while on her voyage, was driven by a hard gale of wind on the coast of France, and was there captured by the enemy ; she did not receive any damage from the wind. Erskine contended that this was a loss by the perils of the seas, and not by capture, and that therefore the defendant was not liable on this policy. But Lord Kenton said, the case was too clear to admit of argument ; this was clearly a loss by capture, for had the ship been driven on any other coast but that of an enemy, she would have been in perfect safety. Verdict for the plaintiffs. New Yoke. Court of Appeals, 1874. BROWN v. ST. NICHOLAS INS. CO. (61 N. Y. 332.) Proximate cause. Conjunction of two causes, one covered by policy, namely, stress of weather ; the other excepted by policy, namely, ice. This action was brought to recover the amount of a policy of marine insurance issued in December, 1863, by the defend- ant upon a cargo of hay laden on the canal-boat George B. Bale, on a voyage from New York to the city of Washington. The policy contained a clause known as an " ice clause," in the following terms : " It is understood and agreed that if any boats, the cargo of which is covered by this policy, are prevented or detained by ice, or the closing of navigation, from terminating the trip, then in such case the policy shall cease to attach upon said cargo, and this company shall return the pre- mium for the unexpired portion of said trip." There was also 550 Insubance : Fiee, Life, Maeine. o. xx. a clause that the insured vessel " could touch and stay at any ports or places if thereunto obliged by stress of weather, or other unavoidable accident, without prejudice to this insurance." The canal-boat with her cargo left New York in December, 1863, and proceeded by way of the canals with a tow of other boats to Philadelphia. She left Philadelphia January 1, 1864, in a tow of about twenty-five boats, towed by four or five steam-tugs. They proceeded down the Delaware Kiver, on their way to the Chesapeake and Delaware canals. In the afternoon the wind began to blow, increasing to a heavy gale; during the gale, the tugs were separated from the canal-boats, and the latter were drifted ashore on the same night, at a place called " Church's Landing." This was on the New Jersey side of the river, about fifteen miles from Philadelphia. "When she went ashore there was some ice in the river, but not enough to interfere with navigation. During the night it formed around the boats to such an extent that the tugs could not reach them the next morning, though an effort to do so was made. The boat Hale continued frozen in until a thaw occurred, January j'.8th or 19th. After the thaw, on the morning of the 20th, the wind and ice forced the boat upon another canal-boat in jiuch a way that when the tide went down she broke in two ;ind sank. Four or five days afterwards the remaining canal- boats proceeded under tow by way of the canals to "Washing- ton, where they arrived safely with their cargoes. The channel of the river was open during the time that the boats lay ashore, though encumbered by floating ice. There was nothing but the action of the gale to prevent the boats from reaching the canal at Delaware city, on the morning of January 2d. After the wreck, the plaintiffs abandoned the cargo to the insurers (defendants), and elaimed a total loss. The cargo was injured by contact with the water to more than one-half its value. On the trial, the judge charged the jury that the stress of weather, by driving the vessel ashore, must be regarded as the primary cause of the loss of the cargo. To this proposition exception was taken by the defendants. Dwight, C. — The sole question in this case concerns the proper construction of a clause in a marine insurance policy, commonly termed an " ice clause." It will be observed that a xx. Brown v. St. Nicholas Ins. Co. 551 this is not the ordinary case of a warranty operating as a condition precedent to the attaching of the policy. It°rather assumes that the policy has attached and provides for its cessa- tion. It is rather in the nature of a condition subsequent. It recognizes the validity of the policy, and the liability of the insurers up to the time when their responsibility terminates, on the happening of the prescribed events — prevention or deten- tion by ice, or the closing of navigation, from terminating the voyage. Until these events happen, the insurers are clearly liable for all losses occurring from the ordinary perils of the sea. When they transpire, the policy ceases to have binding effect. The only point to be considered is, whether the boat, in the present case, was prevented or detained by ice from terminat- ing the voyage. "Was the true cause of detention, etc., the ice or the stress of weather ? If the latter, the insurers are still liable, as the main clauses of the policy are applicable ; if the former, the insurers are discharged. The true construction of these words is to be sought in the ordinary rules which control the interpretation of written instruments. They are not ambiguous, and need no aid from the testimony of experts. Their signification is purely a ques- tion of law. St. Luke's Home v. Asso. for Ind. Females, 52 K T. 191. It will be observed that there are two general modes in which it is anticipated the boat may be precluded from accom- plishing its voyage — ice or the closing of navigation. These causes may operate either temporarily or permanently. Whether there was a delay by the presence of ice, or a termi- nation of the voyage by the closing of navigation, the insurers were, in either case, to be discharged. It is plain that either of these causes must operate in the same general manner ; that is, as the efficient cause of detention or breaking up of the voyage. The facts of the present case showed that there was no closing of navigation, and no detention of boats by ice along the usual channels of navigation. A heavy gale drove the boat, on which the cargo in question was carried, on to the shore, so that she was stranded. The detention caused by her being driven out of her course was due, beyond all question, to the gale. Her detention on the shore until the ice formed 552 Insubance : Fire, Life, Makine. c. xx. around her was due to a consequence of the gale — stranding. Did that cause cease to operate because ice formed in front of •the boat and between her and the channel ? . Is it not, rather, the true view, that the presence of the ice prevented the removal of the cause which created detention, and was slowly working the destruction of the cargo ? "What is the proximate cause of the loss ? This is always a difficult question to determine in the case of a conjunction of causes. The policy must have, in settling this question, a rea- sonable interpretation, with a view to effectuate the intention of the parties. The words " detained or prevented by ice " must mean detention in. the ordinary course of navigation." The contract contemplated that the canal-boat should be moved by a tug. This motive-power was carried away by a storm, and ice subsequently formed so as to prevent it from returning. The efficient cause of the detention war the loss of the motive- power through the stress of the storm, and the ice acted only as an obstacle to its restoration. Suppose that the tug, after separation, had been captured by an enemy ? Would the loss of the canal-boat have been due to the capture of the tug? Would not the true cause of its loss have been the storm which drove the two vessels asunder, and left the canal-boat at the mercy of the elements ? A well-known writer on the law of marine insurance has laid down two rules applicable to this subject, which appear to be sound, and which were approved by the Supreme Court of the United States in Insurance Co. v. Transportation Co., 12 Wallace, 196. These rules are as follows : "1. In case of the concurrence of two causes of loss, one at the risk of the insured and the other insured against, or one insured against by A and the other by B, if the damage by the perils, respectively, can be discriminated, each party must bear his proportion. 2. Where different parties, whether the insured and the under- writers or different underwriters, are responsible for different causes of loss, and the damage by each cannot be distinguished, the party responsible for the predominating efficient cause, or that by which the operation of the other is directly -occasioned as being merely incidental to it, is liable to bear the loss." 1 Phil, on Ins., §§ 1136, 1137. The present case falls under the second of these rules. The predominating efficient cause c. xx. Bkown v. St. Nicholas Ins. Co. 553 is the storm. It is well settled that an insurer is liable for all the consequences directly resulting from a peril insured against, as where a boat is lost after a storm has ceased, in consequence of damage done during a storm. 2 Pars, on Mar. Law, 261. Suppose that in the present case a general of an army had laid down a bridge between the canal-boat as she lay on shore, and the tug in the channel, would the detention have been due to the bridge or the stranding ? If a man's house were besieged by burglars, and his friends were prevented from relieving him by the sudden closing of a gate by some distinct act of persons unconnected with the burglary, would his deten- tion in his house be due to -the closing of the gate, or rather to the act of the burglars as " the predominating efficient cause" ? Such an inquiry was, to some extent, involved in lonides v. Universal Marine Ins. Co., 14 C. B. N. S. 259. The ship insured against the perils of the sea went ashore. The light at Cape Hatteras, North Carolina, existing there for many years, and visible for twenty-fire miles at sea, had been extinguished by the Confederate authorities to harass the United States shipping. The question was whether the cause of the loss was the peril of the sea, or the absence of the light. Btles, J., in giving his opinion, said : " The original meritorious cause, and in popular language the cause of the loss, was the captain's being out of his reckoning. He was some fifty miles to the westward of his course, without knowing it. The absence of the light was merely the absence of an extrinsic saving power. Could that be said to be the cause of the ship's destruction ? Suppose a man throws himself into the Serpentine, and the means of rescuing him are not at hand, and he is drowned, could it be said that the man is drowned because of the absence of the saving power ? " In the case at bar, the detention com- menced with the stranding. That detention and its concom- itants never ceased until the boat was destroyed. That was the only detention existing ; and the failure of the tugs to reach the boat was, in the words of Btles, J., the " absence of an extrinsic saving power." Any other view would lead to mere speculative considerations. Suppose that the intervening ice had not formed, what certainty is there that the canal-boat could have been got off from the shore so as to have pursued her voyage ? The detention occasioned by the stranding never 554 Iksukance : Fiee, Life, Marine. o. xx. ceased until the dangers of the thaw came on, which, in com- bination with the existing causes growing out of the stranding, led to her destruction. This test has been suggested in one of the cases : Suppose that an insurance had been made in another company against the very cause of loss excluded in this — for example, the boat is insured "against detention by ice" — could there have been a recovery on the facts proved at the trial ? "Would it not have been successfully objected, that the loss was occasioned by the stranding, and that the detention by the ice was merely incidental to that ? Another view of the case may be suggested. The voyage terminated with the stranding. There was never a moment after that occurrence in which it was resumed. Accordingly the formation of the ice could not properly be said to detain a boat whose voyage before that formation had already come to an end. In JBondrett v. Sentigg, Holt N. P. C, 149, the facts were, that, of the goods insured against a peril of the sea, a part were lost and a part got on shore. This last portion was plundered and destroyed, by the inhabitants of the coast, so that no part of it ever got to the possession of the insured. Gibbs, C. J., held this to be a case of total loss. The reason given is, that the portion of the goods saved from the wreck, though got on shore, never came again into the hands of the owners. The total loss was the proximate result of the wreck. This case was approved in Ionides v. Univ. Mar. Ins. Co. supra. In Hahn v. Corbett, 2 Bing. 205, goods were insured " free from capture and seizure." The vessel was stranded off Maracaibo, and part of the cargo damaged, and both vessel and cargo seized by royalists, then in possession of the coast, as prize. There was held to be a total loss, both of the damaged and undamaged goods, by a peril of the sea. The loss was deemed to take place at the time of the stranding as to all the goods. Best, C. J., in delivering his opinion, said it was clear that the goods would never have moved, as the ship never moved. It was as if they had been cast on a rock and were completely out of reach. To the same effect is the language of the court in Magoun v. N. E. Mar. Ins. Co. (1 Story, 164, 165,) where it is laid down, that if there be a capture, and before the vessel is delivered from that peril she is afterward lost by fire or accident, the whole loss is attributable to the capture. c. xx. Bbown v. St. Nicholas Ins. Co. 555 The vessel was never delivered from that peril until she was virtually destroyed and unable to perform the voyage. In such a case the insurers are liable, though the loss is followed by the operation of a peril excepted from the policv. Phil on Ins., §1161. It is not claimed that stranding is ipso facto a total loss. It may and often does prove the destruction of the voyage, by the ship afterward becoming a wreck before she shall be put afloat. Wood v. Lin. and Ken. Ins. Co., 6 Mass. 479 ; Manning v. Newnham, 3 Douglas, 130; 2 Phill. on Ins., § 1526. Whether it is to be regarded as a total loss or not, depends on all the circumstances of the case, as they ultimately turn out, which may relate back to the time of stranding and characterize it. It is closely analogous to submersion, and is prima facie evi- dence of total loss. Sewall v. U. S. Ins. Co., 11 Pick. 90, 94. If the ship remains stranded and is subsequently lost, and it is claimed by the insurers that such loss is occasioned by a peril excepted from the policy, it must appear that it is owing to the direct effect of the excepted peril. 1 Phill. on Ins. §§ 1129, 1131. The burden of proof is thus cast on the defendant. Per Bayley, J., in Levi v. Attnutt, 15 East, 269. It is now proper to consider the authorities cited on behalf of the defendant. The case of Hadkinson v. Robinson ( 3 B. & P., 388, a. d. 1803,) was an insurance against capture on a cargo from an Eng- lish port to Naples, with leave to join a convoy. In the course of the voyage, information was received by the master that the port of Naples was closed against English ships. The ship ac- cordingly proceeded to another port where the cargo was sold for a small sum, whereupon the assured abandoned as for a total loss. The court held that the fear or prospect of capture in a hostile port was not equivalent to capture itself, or in its own language, that the peril must act directly and not collater- ally upon the thing insured. If the principle of this case be sound, of which there is great doubt (3 Kent's Com. 293, 294), it has no application to the case at bar, where a sea peril did act directly upon the boat, and occasioned its stranding. Forster v. Christie (11 East, 205) is to the same general effect, Lord Ellenbobough remarking that the risks insured against must be the effective .cause of the loss. Speyer v. New York 550 Insurance : Fibe, Life, Marine*. o. xx. Insurance Company, (3 J. R. 88,) simply holds, that if the event happens on which the insurers are warranted free from liability, it is equivalent to an actual termination of the risk by the land- ing of the goods. This, of course, is not disputed. Livie v. Janson (12 East, 647) is much relied on by the de- fendants. In that case, an English ship endeavored to elude, by night, an embargo, in passing out of the port of New York ; a body of ice, propelled by the tide and wind, drove her upon Governor's Island, where she was stranded. In the morning she was taken possession of by the custom-house officers, and, finally, condemned for a breach of the embargo. In an action on a policy of insurance, the court held that the loss was not occasioned by the stranding, but by the seizure, which was deemed to be the proximate cause of the loss. Two observa- tions are to be made upon this case : One is, that the ship was engaged in the violation of law, and on account of that the seizure was made. The loss was, virtually, occasioned by the act of breaking the embargo. The other observation is, that the peril which was held to occasion the loss acted directly upon the property insured. In that aspect of the case, it. falls within the rule laid down by Lord Alvanley, in the case of Hadhinson v. Robinson, already referred to, that the peril must act directly, and not collaterally, upon the thing insured. ' This was not the case in the facts now under discussion, as to the action of the ice. It acted only indirectly in preventing the tugs from going to the rescue of the boat. If it had reached the canal, and the storm had caused its banks to burst, and the boat had been swept out into the open fields, and ice had been formed between it and the canal — thus preventing the use of appliances for returning it to the canal — would the ice have acted directly in causing the detention ? If so, and there had been no ice, would the earth that was washed out of the canal bank, and whose absence prevented the filling of the level, he a cause of detention? Or, if laborers could not be got to shovel the earth back, would the absence of them be such a cause i All these are obstacles or hindrances to the prosecu- tion of the voyage, but none of them act directly, as causes, within the rule, either in Hadhinson v. Robinson, or Livie v. Janson. It should be added, that there is grea.t reason to doubt the o. xx. Beown v. St. Nicholas Ins. Co. 557 soundness of each of these cases. The former of them has already been remarked upon. Livie v. Janson has been severely- criticised by text writers, and doubted in decisions. Mr. Phillips says it is surely wrong, as well as the nisi prius case of Green v. Elmslie, 1 Peake's N. P. Cases, p. 212. Pie adds, that these decisions need support themselves rather than suffice for the support of others. The only other case necessary to be noticed is Patrick v. Com. Ins. Co., 11 J. R. 14. In this case a cargo was insured from New York to Cadiz, and there was a clause in the policy that the insurers took no risks in port but sea risk. The ship was forced from her moorings in a violent gale, and driven on shore, where she lay above high-water mark. After the gale abated, she was forcibly taken possession of by French troops, then holding the port, and burnt with the cargo. The cargo was not injured by the stranding. The court held that the cargo was not lost through the stranding, but through the forcible act of the French. The decision is rested solely on these doubtful cases of Idvie v. Janson and Green v. Elmslie, already considered, and can, of course, be of no higher authority. It is also quite difficult to reconcile with the decision immediately preceding it in the same volume, Where the court held that, on the same state of facts, the ship was lost by means of the stranding. It seems impossible to deny that the cargo, under the circumstances, was identified with the ship, and that, within the principle in Hahn v. Corbett, supra, the goods were as completely lost at the moment of stranding as if they had been cast on an inac- cessible rock. The judgment of the court below must be affirmed. All concur. Judgment affirmed. 558 Insurance : Fibe, Life, Maeine. o. xx. English Court op Common Pleas, 1852. MAGNUS v. BUTTEMER. (11 C. B. 875.) Whether lots by perils of the sea, or wear and tear. Action of assumpsit on a policy of assurance on the ship Elizabeth, for twelve calendar months, in port or at sea, in all services, in the coast and coasting trade of the United Kingdom. The Elizabeth sailed from Rochester to Sunderland. On her arrival at Sunderland, the vessel went up the river abreast of Laing's ship-yard. She had to wait four or five days before she could go in to discharge. She was moored head and stern, and floated when the tide was in, and was aground, but not dry, at low water. She took three days to discharge. The beach was hard, shingly, and steep. When the vessel took ground, she listed towards the beach about two planks. When the first tide was ebbing, a creaking noise was heard as she took the ground, and it occurred when she floated again. This hap- pened every tide, and sounded as if something was breaking. The cabin door, which would open and shut freely when the vessel was afloat, would not do so when she was aground, After first lying on the beach the vessel made more water than usual. The mate saw that she was "hogged," after having taken the ground. He observed that some of the trenails had . started, and that some of the planks had left the trenails. The question for the opinion of the court was, whether, under these circumstances, there was a loss by perils of the seas. Jeevis, C. J. — I am of opinion that the loss in this case was not a loss by perils of the sea, but a damage falling within the description of ordinary wear and tear. No doubt, the question is one of importance ; but I think it has been very unneces- sarily brought before the court ; for the matter seems to have been perfectly understood and settled by all the text writers upon this branch of the law. To make the underwriters liable, the injury must be the result of something fortuitous or acci- dental occurring in the course of the voyage. Here the vessel, upon her arrival at Sunderland, goes up the river, and, in con- c - xx - , Magnus v. Buttemek. 559 sequence of the rising and falling of the tide, rests upon the river's bed, and receives damages. There was nothing unusual, no peril, no accident. To hold that the assured were covered^ in such a case, would be virtually making the policy a warranty against the wear and tear and ordinary repairs of the vessel. I think the defendant is entitled to judgment. Maule, J. — I am of the same opinion, and I concur with the lord chief justice in thinking that this is a very clear case. Stevens, and the other text writers referred to, express no sort of doubt, but are evidently well acquainted with the distinction between wear and tear, for which the underwriters are not liable, and accidents, the occurrence of something out of the ordinary course of the voyage, for which they are liable. This distinction has been well understood for many years. To hold the underwriters liable in such a case as this would be tanta- mount to holding that the ordinary repairs of a vessel are to be comprehended within the perils insured against. The case of Fletcher v. Inglis was sufficiently distinguished in the course of the argument; the statement of damage there is this : " Between 9 and 10 at night, the tide having then left the vessel, a cracking noise was heard in the ship, proceeding, as the witness believed, from something break- ing. Some time after this, on the return of the tide, there was a considerable swell in the harbor, and the ship struck the ground hard several times ; in the morning eighteen of her knees were found to be broken." There were in that case some circumstances which also occur here ; but there was another circumstance there which is wanting here to make the cases parallel. There was casus fortuitus, the swell that set in, after which the ship's knees were found to be broken. That, I apprehend, was the ground of the decision in that case ; and that is quite consistent with the argument of Mr. Scarlett, who was not likely to lay down a general doctrine which did not meet the assent of the court, so familiar as they were at that time with insurance law. The case evidently proceeded upon the extraordinary and accidental circumstance of the great swell setting in the harbor. Suppose, instead of the swell, the case had stated, or the evidence shown, that a violent storm had arisen, and that the vessel was dashed 560 Insurance : Fire, Life, Mabine. c. xx. against a rock arid injured, nobody could have doubted that that was a loss by perils of the sea. That only differs in degree from the actual case of Fletcher v. Inglis ; but it differs very materially from the present case, which shows a mere subsiding of the ship upon the shore or beach on the receding of the tide in the usual and expected course. According to sound law and common sense, the assured was entitled to recover in that case, whereas here nothing has happened which the assured could have wished or anticipated to happen other- wise than it did happen. They intended the ship to take the ground as she did. There was no accident. "We are asked, therefore, to assume a loss by perils of the sea when the facts disclosed to us absolutely negative the existence of sea peril. No instance is to be found of underwriters being liable where the voyage has been conducted to its termination without any- thing happening but what was expected and intended, and where the sole cause of the damage was the insufficiency of the ship to bear the ordinary stress of the voyage to which she is exposed. Authority and common sense concur in showing that this is not a liability which ought to be cast upon the underwriters. Judgment for the defendant. United States Supreme Court, 1873. GEEAT WESTERN" INS. CO. v. FOGAETY. (19 Wall. 640.) Total loss; warranted free of particular average. Error to the Circuit Court for the Southern District of New York. Fogarty sued the Great "Western Insurance Company on a policy of marine insurance, and recovered a judgment for $2,611.95 and costs. The policy was an open one, and the indorsement procured by the plaintiff on it was of insurance for $2,250 on machinery on board the bark Mia Adele, at and from New York to Havana, free from particular average. The memorandum clause of the policy provided that machines and machinery of every description were warranted by the assured free from average unless general. The machinery insured con- c. xx. Great "Westekn Ins. Co. v. Fogarty. 561 sisted of the various parts necessary for a complete sugar-pack- ing machine, including, as part of it, three sets of truck-irons, and also other extra truck-irons. It was described in the bill of lading and invoice as eight pieces and eight boxes, composing one sugar-packer and three trucks. The vessel on which these articles were being transported, from New York to Havana, just before reaching the latter city, was driven on rocks in a violent gale, was filled with water, and finally became a total wreck, and was abandoned to the underwriters. Their agent at Havana took possession, and was engaged about a month in raising the cargo. A large number of the pieces composing the plaintiff's machinery was recovered and tendered to him at Havana, which he refused to receive, on the ground that the insurance company was liable to him as for a total loss. They denied that under the circum- stances of the case there was a total loss within the meaning, of the policy ; and the soundness of the instruction to the jury on • that point, given and refused by the circuit court on the trial, was the only question now before this court. There was very little conflict of testimony as to what was recovered, and what was its condition when tendered to plain- tiff. It was all of iron. About half of it in weight was saved, and the remainder left at the bottom of the sea. That which was saved was entirely useless as machinery, and was of no value except as old iron, for which purpose it would sell for about $50. The machinery in working order was worth $2,250. That which *was saved was much broken and rusted, so that it would cost more to repair it, polish it, and put it in order for use than to buy a new machine. Upon the testimony offered by the plaintiff the counsel for the defendant moved the court to instruct the jury that the action could not be sustained, because it showed that there was not a total loss. The court declined to do this, and the request was renewed at the conclusion of the defendant's evidence, and again declined. Several prayers for instruction were then pre- sented by the defendant, based upon the leading proposition, that if any of the pieces of the machinery insured was recov- ered and tendered in specie to the assured, there was no total loss. These were refused and exceptions taken to all these refusals, on which error is assigned here. An exception was 36 562 Insurance : Fibe, Life, Marine, c. xx. also taken as to the charge of the court laying down the law by which the jury were to decide the question of total loss sub- mitted to them. That charge was in the following words : " The meaning of the term ' free from particular average,' used in the policy, was that the defendants should be liable only for a total loss of the subject insured ; that the subject insured was not machines but machinery, by which is generally understood the several parts or portions of machines, adapted and fitted to be put together so as to constitute a machine (in this case a sugar-packing machine), and, applying the rule of law as to what constitutes a total loss to this particular subject insured, the jury will find whether any piece or portion of the machinery insured arrived at its destination in a perfect condi- tion, so that it could have been used with its corresponding or connecting pieces had they also arrived in good condition ; in that case the plaintiffs could not recover, as the loss would not be total ; but that if every piece of the machinery was so damaged by the perils insured against as to be entirely unfit for use on being supplied with its corresponding or connecting pieces, then there was a total loss of the subject insured as machinery, although the material itself might still exist ; and if they so found, they would find a verdict for the plaintiff for the sum named in the policy, with interest from the tenth day of Septem- ber, 1868." Verdict and judgment having gone for the plaintiff, the insurance company brought the case here. Mr. Justice Miller delivered the opinion of the court. The question presented in this case for consideration has been often in the courts, and the discriminations between what is total loss and what is not are frequently very nice and delicate. The authorities are by no means uniform or consist- ent with each other, when, as in the presenjt case, the line of distinction is very narrow. Several cases bearing upon the one before us have been decided in this court, and perhaps a short review of them may aid us here better than a more ex- tended examination of the numerous other authorities on the subject. In the case of Biays v. Chesapeake Ins. Co. (7 Cranch, 415), the plaintiff was insured upon hides, the whole number of c. xx. Great Western Ins. Co. v. Fogarty. 563 which was 14,565. Of these, 789 were totally lost by the sink- ing of a lighter, and 2,491 of those sunk were fished up in a damaged condition and sold. The hides were memorandum articles, and this court held that inasmuch as less than 800 hides insured as part of a much larger number of the same kind was lost, it could not be a total loss, and overruled the argument that it was a total loss as to the 789 hides. In the case of Marcardier v. Chesapeake Ins. Go. (8 Id. 47), it is said that " it seems to be the settled doctrine that nothing short of a total extinction either physical or in value of memorandum articles at an intermediate port would entitle the insured to term, the case a total loss, where the voy- age is capable of being performed. And perhaps even as to an extinction in value, where the commodity specifically remains, it may yet be deemed not quite settled whether, under like circumstances, it would authorize an abandonment for a total In the case of Mbrean v. The United States Ins. Go. (1 Wheaton, 219), more than half of a cargo of corn was thrown overboard and lost. The remainder was saved in a damaged condition, and sold at about one-fourth the market value of sound corn. This was held not to be a total loss, because part of the corn was saved, and though damaged was of some value. It was therefore, only a partial loss. The next case is that of Hugg v. The Augusta Insurance Go., 7 Howard, 595. The question there arose on an insurance of jerked beef of four hundred tons, part of which was thrown into the sea and part of the remainder so seriously damaged that the authorities of the cit}^ of Nassau refused to allow more than 150 of it to be landed. This was wet and heated, and not in a con- dition for reshipment. In answer to a question on this subject, certified to this court by the judges of the circuit court, it was replied, "that if the jury found that the jerked beef was a per- ishable article within the meaning of the policy, the defendant is not liable as for a total loss of the freight, unless it appears that there was a destruction in specie of the entire cargo so that it had lost its original character at Nassau, or that a total destruction would have been inevitable from the damage re- ceived if it had been reshipped before it could have arrived at Matanzas, the port of destination." And though there are 561 Insurance : Fike, Life, Mabine. c. xx. some very strong expressions of the judge who delivered the opinion as to the necessity of the total destruction of the thing insured to establish a total loss in memorandum articles, no doubt the language here certified is the true expression of the court's opinion. And it will be observed that in this case, as in *the case of Marcardier v. Chesapeake Insurance Co., the destruction spoken of is destruction as to species, and not mere physical extinction. Indeed, philosophically speaking, there can be no such thing as absolute extinction. That of which the thing insured was composed must remain in its parts, though destroyed as to its specific identity. In the case of the jerked beef, for instance, it might remain as a viscid mass of putrid flesh, but it would no longer be either beef or jerked beef. And when the case went back for trial in the circuit, the charge of Taney, C. J., to the jury places this point in a very clear light. Taney's Decisions, 168. He says there was not a total loss at Nassau, because a part of the jerked beef remained in specie, and had not been destroyed by the disaster. And if • there was reasonable ground for believing that a por- tion of this beef could, by repairing the vessel, have been transported to Matanzas, although it might arrive there in a damaged condition, but yet retaining the character of jerked, beef, there was no total loss. The jury found there was a total loss. The case of Judah v. Randal (2 Caine's Cases, 324), where a carriage was insured, and all was lost but the wheels, is 'another illustration of the principle. A part of the carriage —namely, the wheels — a very important part, was saved ; but the court held that the thing insured — to wit, the carriage — was lost ; that it was a total loss. Its specific character as a earriage was gone. . In the case of Wallerstein v. The Columbian Insurance Co. (44 N". Y. 204), the whole doctrine is ably reviewed with a very full reference to previous decisions ; and it is there shown that there is far from unanimity in the language in which the rule is expressed, and the extreme doctrine of an absolute extinction or destruction of the thing insured is not the true doctrine, or, at least, is not applicable in all cases as a criterion of total loss. The circuit court was right in holding that what was in- sured was machinery— pieces or parts of a machine— pieces made and shaped to unite at points with other pieces so as to c. xx. Geeat Western Ins. Co. v. Fogarty. 565 make a sugar-packing machine. If parts of them were abso- lutely lost, and every piece recovered had lost its adaptability to be used as part of the machine — had lost it so entirely that it would cost as much to buy a new piece just like it as to re- pair or adapt that one to the purpose — then there was a total loss of the machinery. If no piece recovered was of any use, or could be applied to any use connected with the machine of which it was a part, without more expense on it than its orig- inal cost, then there was no part of the machinery saved, how- ever much of rusty iron may have been taken from the wreck. The court went quite as far in behalf of the defendant as the law justified, when it told the jury that the plaintiff could not recover if any piece or portion of the machinery insured arrived at its destination in a condition so perfect that it could have been used with its corresponding or connecting pieces, had they also arrived in good condition. "We are of the opinion that the charge of the court put the case very fairly to the jury, as we understand the law, and the judgment is, therefore, Affirmed. APPENDIX. STATUTES AND FORMS. APPENDIX. STATUTES AND FORMS. CHAPTER I. STATUTES GOVERNING THE CONTRACT. 1 I. Civil Codes. The following States have adopted civil codes which treat of the subject of insurance law with some detail. California, Deering's Codes and Stat- Idaho, Rev. Stat. 1887. utes, 1885. North Dakota. See Dakota. Dakota, Compiled Laws, 1887. Oklahoma, Com. Stat. 1891. Georgia, Code, 1882. South Dakota. See Dakota. n. Agency. The following States have adopted laws providing that the soliciting agent shall be deemed the agent of the insurer. The Connecticut statute is given as a specimen : " Whoever solicits, procures, or receives in, or transmits from, the State any application other than his own for membership or insurance in any corporation or association embraced by section 2892, shall be deemed and held to be an agent of such corporation or association within the meaning of this chapter." Arizona, R. S. 1887, § 260. Iowa, McClain's Code, 1888, § 1732 Connecticut, Gen. Stat. 1888, §§ (L. 1880, ch. 211, § 1). 2898, 2923. Kentucky, Pub. Acts, 1885-86, ch. Delaware, Laws, 1875, ch. 179. 697, § 1 ; Pub. Acts, 1883-4, ch. Georgia, Laws, 1887, p. 121, § 9. 871, § 7 (Foreign Co.'s). Illinois, R. S. 1891 (Cothran), p. 840, Maine, R. S. 1883, p. 445, § 19. § 58. 1 In addition to the tables of statutes relat- for convenience, appended lists of references ing to the contract ef insurance, I have also, to retaliatory and anti-compact laws. 570 Appendix. c. I. Massachusetts, Acts, 1887, eta. 214, Pennsylvania, Brightly's Purdon's § 87. Digest, 1883, vol. 1, p. 919, Mississippi, Code, 1880, § 1085. § 82. Missouri, R. S. 1889, § 5915. Rhode Island, Pub. Laws, Jan. 1884, Nebraska, Comp. Stat. 1891, ch. 16, p. 55, § 7. Pub. Laws, Jan. 1885, § 8. p. 63, § 1. New Hampshire, Laws, 1889, ch. 94, South Carolina, Laws, 1883, p. 460, §2. §6. New Mexico, Comp. Laws, 1884, § Tennessee, Acts, 1887, ch. 187, § 6. 1479. Texas, Sayle's Civil Stat. 1888, vol. North Dakota, Laws, 1891, p. 203, 2, § 2943a. § 28. Vermont, Rev. Laws, 1880, § 3620. Ohio, R. S. 1890 (Smith & Ben.), Virginia, Acts, 1887, ch. 271, § 5. § 3644. Wisconsin, Sanborn & B.'s Annot. Oklahoma, Stat. 1890, p. 637, § 23. Stat. 1889, vol. 1, § 1977. m. Annexation of Application to Policy. The following States have adopted laws requiring the annexation of applications to policies. The Ohio statute is given as a specimen : "Every company doing business in this State shall return with and as part of any policy issued by it, to any person taking such policy, a full and complete copy of each application or other document held by it which is intended in any manner to affect the force or validity of such policy, and any company which neglects so to do shall, so long as it is in default for such copy, be estopped from denying the truth of any such application or other document ; and in case such company neglect, for thirty days after demand made therefor, to furnish such copies, it shall be forever barred from setting up, as a defense to any suit on such policy, any incorrectness or want of truth of such application or other document." California. See Deering's Civil Code, Ohio, R. S. 1890, vol. 1, §3623. § 2605. Iowa, McClain's Stat. 1888, § 1733. Kansas, Gen. Stat. 1889, vol. 1, § 3437. Massachusetts, Acts, 1890, ch. 421, §21. Oklahoma, Stat. 1890, § 3155. Pennsylvania, Brightly's Purdon's Digest, vol. 1, p. 924, § 108. Wisconsin, Sanborn & B.'s Annot. Stat. 1889, vol. 1, § 1945a. rv. Provisions of Application or By-Lams to be set forth in Policy. The following States have adopted laws providing that conditions are not valid or provisions of application or by-laws are not binding unless set forth in the policy. c i. Appendix. 571 The Pennsylvania statute is given as a specimen : "All life and fire insurance policies upon the lives or property of per- sons within this commonwealth, whether issued by companies organized under the laws of this State, or by foreign corporations doing business therein, which contain any reference to the application of the insured, or the constitution, by-laws or other rules of the company, either as forming part of the policy or contract between the parties thereto, or having any bearing on said contract, shall contain, or have attached to said policies, correct copies of the application, as signed by the applicant, and the by- laws referred to ; and unless so attached and accompanying the policy, no such application, constitution or by-laws shall be received in evidence, in any controversy between the parties to, or interested in, the said policy, nor shall such application or by-laws be considered a part of the policy or contract between such parties, 'i Connecticut, Gen. Stat. 1888, § 2826. Massachusetts, Acts, 1887, ch. 214, Kansas, Gea. Stat. 1889, vol. 1, § § 59. 3437. Pennsylvania, Brightly's Purdon's Maine, R. S. 1883, ch. 49, § 24. Digest, 1883, vol. 1, p. 924, § 108. V. Technical Forfeitures. The following States have adopted laws providing that misrepresenta- tions and other breaches of policy shall not avoid unless in matters mate- rial to the risk. The Massachusetts statute is given as a specimen : "No oral or written misrepresentation made in the negotiation of a contract or policy of insurance, by the assured or in his behalf, shall be deemed material or defeat or avoid the policy or prevent its attaching, un- less such misrepresentation is made with actual intent to deceive, or unless the matter misrepresented increased the risk of loss." Georgia. -See Code, 1882, §§ 2803- Missouri, R. S. 1889, § 5849. 2804. New Hampshire, Laws, 1885, ch. Kentucky, Gen. Stat. 1887, p. 308. 73. Maine, R. S. 1883, p. 445, § 20. Ohio, R. S. 1890, § 3625. Massachusetts, Acts, 1887, ch. 214, Pennsylvania, Laws, 1885, p. 134, § 21. § 1. VI. By-Laws to Govern, Claims under Policies. Dakota has enacted : "The corporation shall in and by its by-laws provide for the manner in which such insurance shall be effected and the terms and conditions 572 Appendix. o. l thereof, the time and manner in which losses by it sustained under its policy of insurance shall be determined, proved, adjusted and paid, the time and manner in which assessments shall be made upon its members for their respective pro rata share of such losses, and the time, manner and place in which and the person to whom such assessment shall be paid ; it shall also in and by its by-laws provide such other regulations, terms and condi- tions as may be necessary for effectively and fully carrying out its scheme of insurance ; and the said by-laws in force at the time of the date of any policy of insurance issued by the corporation shall have the force and effect of law in the determination of all questions and claims arising under such policy between the holder thereof and the said corporation." Laws of Dakota, 1889, ch. 69, Art. 10. VII. Corporate Seal not Required on Policy. The following States have adopted laws providing that policies of in- surance not executed over the corporate seal of the company are never- theless binding. The Pennsylvania statute is given as a specimen : "Policies of insurance made or entered into by the company may be made either with or without the seal thereof, and they shall be subscribed by the president or such other officer as may be designated by the direct- ors for that purpose, and attested by the secretary ; and when so subscribed and attested, shall be obligatory on the company." Arizona, E. S. 1887, § 253. New Mexico, Comp. Laws, 1884, § Colorado, 1 Mills Stat. 1891, § 2227. 1465. Idaho, R. S. 1887, § 2742. Ohio, R. S. 1890, vol. 1, § 3645. Kansas, Gen. Stat. 1889, vol. 1, § 3347. Pennsylvania, Brightly's Purdon's Maine, R. S. 1883, ch. 49, § 12. Digest, 1883, vol. 1, p. 913, § Montana, R. S. 1887, p. 772, § 575. 46. Nebraska, Comp. Stat. 1891, ch. 43, Washington, Code, 1891, § 2739. § 12. Wyoming, R. S. 1887, § 614. VIII. limitation of Time for Suit. i The following States have adopted laws forbidding certain limitations of time for bringing suit. The Massachusetts statute is given as a specimen : "No such company shall make any condition or stipulation in its in- surance contracts concerning the court or jurisdiction wherein any suit thereon may be brought, nor shall limit the time within which such suit 0. I- Appendix. 573 may be commenced to less than two years after the cause of action accrues, and any such condition or stipulation shall be void." Connecticut, Gen. Stat. 1888, §2912. Massachusetts, Acts, 1887, ch 214 Indiana, R. S. 1888, vol. 2, § 3770. § 26. Kentucky, Public Acts, 1873-4, ch. North Carolina, Code, 1883 vol 3 186, § 1 (Gen. St. 1887, p. 308). § 3076. Laws, 1883, ch. 57, § 16 Maine, R. S. 1883, ch. 49, § 87. Vermont, Rev. Laws, 1880, § 3626 Fire Insurance. IX. Standard Policy. The following States have passed statutes for the adoption of a stand- ard form of Are policy : Massachusetts, Acts, 1887, ch. 214, 93, § 3. (Standard form not yet § 60. adopted.) Michigan, Pub. Stat. 1882, §§ 4344- New York, 3 R. S. 8th ed., p. 1663. 4353. Amended by Pub. Acts, Laws, 1886, ch. 488. 1889, ch. 39, § Q. North Dakota, Laws, 1890, p. 253, Minnesota, Stat. 1891, vol. 1, §§ ch. 74. 2973-2977. Also Gen. Laws, 1889, Pennsylvania, Laws,. 1891, p. 22, § 1. ch. 217. (To go into effect May 1, 1892.) New Hampshire, Laws, 1885, ch. Wisconsin, Laws, 1891, vol. l,ch. 195. Valued Policy. The following States have adopted valued policy laws. The Wisconsin statute is given as a specimen : "Whenever any policy of insurance shall be written to insure real property, and the property insured shall be wholly destroyed, without criminal fault on the part of the insured or his assigns, the amount of the insurance written in such policy shall be taken conclusively to be the true value of the property when insured, and the true amount of loss and measure of damages when destroyed." Arkansas, Laws, 1889, p. 57, ch. 42. Missouri, R. S. 1889, vol. 2, § 5897, Dakota. See Comp. Laws, J887, § 5898. 4151, 4243. Nebraska, Comp. Stat. 1891, ch. 43, Delaware, Laws, 1889, ch. 695. § 43 (Laws, 1889, ch. 48, § 1). Iowa, McClain's Stat. 1888, § 1734 New Hampshire, Laws, 1885, ch. 93, (L. 1880, ch. 211, § 3). § 2, 574 Appendix. c. i. North Dakota. See Dakota. South Dakota. See Dakota. Ohio, R. S. 1890, § 3643. Texas, Sayles' Civil Stat. 1888, vol. Oklahoma, Stat.1890, p. 631, §§4 and 2, § 2971. 32. Wisconsin, Sanborn & B. Annot. Pennsylvania, Laws, 1887, p. 186 Stat. 1889, vol. 1, § 1943. (Boiler Ins.). XI. Notice of Loss. The following States have adopted laws forbidding the insertion of conditions requiring notice of loss within less than five days and the presentation of certificates of nearest magistrate. The Indiana statute is given as a specimen : ' ' No such insurance company shall insert any condition, in any policy hereafter issued, requiring the insured to give notice forthwith, or within the period of time less than five days, of the loss of the insured property; nor shall any condition be inserted in such policy, requiring the insured to procure the certificate of the nearest Justice of the Peace, Mayor, Judge, clergyman, or other official, or person, of such loss, or the amount of such loss; and any provision or condition contrary to the provisions of this section, or any condition in said policy, inserted to avoid the provisions of this section, shall be void, and no condition or agreement, not to sue for a period of less than three years, shall be valid." Indiana, R. S. 1888, vol. 2, § 3770. Maine, R. S. 1883, p. 446, § 21. XII. Cancellation of Policy. The following States have adopted laws providing that no company shall cancel a fire insurance policy without notice first given and unearned part of premium returned. , The Connecticut statute is given as a specimen : "No insurance company or association shall cancel a policy issued against loss by fire on property in this State, without giving the party insured at least five days' notice, in writing, of such intention, and a return of the ratable proportion of the premium for the unexpired term of the policy." • Connecticut, Gen. Stat. 1888, § 2852. Michigan, Public Acts, 1887, ch. 305, Dakota, Compiled Laws, 1887, §3104. § 17.- Kansas, Gen. Stat. 1889, vol. 1, § North Dakota. See Dakota. 3435. South Dakota. See Dakota. o. I. Appendix. 575 xni. Privilege of Insured to Cancel Policy. The following States have adopted laws providing that the insured shall have the privilege of insisting on the cancellation of the policy at any time. The New York statute is given as a specimen : "Any person, company, association or corporation transacting the business of fire, or fire and inland navigation insurance in this State, shall cancel any policy of insurance hereafter issued or renewed at any time, by request of the party insured or his legal representatives, and shall return to said party or his representatives as aforesaid the amount of premium paid, less the customary short-rate premium for the expired time of the full term for which said policy has been issued or renewed, any- thing in the policy to the contrary notwithstanding ; provided, however, that, where the laws of any State permit companies organized under its laws to cancel policies of insurance upon different terms than above set forth, companies organized under the laws of this State may cancel policies upon risks in any such State upon the same terms as are provided for com- panies organized under its laws." California, Deering's Civil Code, Nebraska, Coinp. Stat. 1891, ch. 43, § 2617, et seq. § 42. Colorado, 1 Mill's Stat. 1891, §2234. New York, R. S., 8th ed., vol. 3, p. Dakota, Compiled Laws, 1887, § 1661, § 3. 3103 North Dakota. See Dakota. Iowa, McClain's Stat. 1888, §§ 1724, Ohio, R. S. 1890, vol. 1, § 3664, et 1731. seq. Kansas, Gen. Stat. 1889, vol. 1, Oklahoma. See Stat. 1890, § 3112. §3435. South Dakota. See Dakota. Michigan, Public Acts, 1887, ch. 305, "Wisconsin, Sanborn & B. Annot. 5 17. Stat. 1889, vol. 1, § 1946, d. XTV. Beturn of Unearned Premiums. The following States have adopted laws providing that fire insurance companies in case of total loss shall return the unearned premium where the loss is less than the amount of the policy. The Washington statute is given as a specimen : "In the event of the total destruction of any insured building, on which the amount of the appraised or agreed loss shall be less than the total amount insured thereon, the insurance company or companies shall return to the insured the unearned premium for the excess of insurance 576 Appendix, o. I. over the appraised or agreed loss, to be paid at the same time and in the same manner as the loss shall be paid." Idaho, R. S. 1887, § 2759. Louisiana, Acts, 1888, No. 149. Nevada, Gen. Stat. 1885, § 993. Oregon, Hill's Annot. Stat. 1887, vol. 2, § 3585. Washington, Hill's Stat. 1891, vol. 1, § 2740. Life Insurance. XV. Protection of Wife and Children. The following States have adopted laws protecting beneficiaries, if wife and children, against creditors and acts of the insured. The New York statute is given as a specimen : " It shall be lawful for any married woman, by herself and in her name, or in the name of any third person, with his assent, as her trustee, to cause to be insured, for her sole use, the life of her husband, for any definite period, or for the term of his natural life; and, in case of her surviving such period or term, the sum or net amount of the insurance becoming due and payable, by the terms of the insurance, shall be payable to her to and for her own use, free from the claims of the representatives of the husband, or of any pf his creditors, or any party or parties claiming by, through or under him. But when the premium paid in any year out of the property or funds of the husband shall exceed five hundred dollars, • such exemption from such claims shall not apply to so much of said pre- mium so paid as shall be in excess of five hundred dollars, but such excess, with the interest thereon, shall inure to the benefit of his creditors." Alabama, Code, 1886, vol. 1, § 2356. Connecticut, Gen. Stat. 1888, § 2799. Delaware, Rev. Code, 1874, ch. 76, §3. Florida, McClellan's Digest, 1881, p. 534, § 22. Illinois, R. S." 1891, p. 839, § 54. Kansas, Gen. Stat. 1889, vol. 1, § 3401. Kentucky, Public Acts, 1869-70, ch. 645, §§ 30-31. Maryland, Code, Pub. Gen. Laws, 1888, vol. 1, p. 321, § 117, and p. 803. §§ 8-10. Michigan, Gen. Stat. 1882, §§ 4238, 6300, 6301. Missouri, R. S. 1889, §§ 5851-5854. New Hampshire, Gen. Laws, 1878, ch. 175, § 1. New York, R. S., 8th ed., vol. 4, pp. 2602-3. Ohio, R. S. 1890, vol. 1, §§ 3628- 3829. Oklahoma, Stat. 1890, p. 636, § 19. Pennsylvania, Brightly's Purdon's Digest, 1883, vol. 1, p. 914, § 54. Rhode Island, Pub. Stat. 1882, chap. 166, § 21. C. I. Appendix. 577 South Carolina, Gen. Stat. 1882, § 1358. South Dakota, Laws, 1890, ch. 86, M- Tennessee, Code, 1884, §§3335, 3336. Vermont, Rev. Laws, 1880, §§ 2340- 2343. "West Virginia, Code, 1887, ch. 66, §§ 5-6 as amended by Acts, 1891, p. 825 (ch. 109). "Wisconsin, Sanborn & B. Annot. Stat. 1889, vol. 1, §2347. Amend- ed by Laws, 1891, vol. 1, ch. 376. XVI. Protection of all Beneficiaries. The following States have adopted laws securing to the beneficia- ries in certain cases the proceeds of life insurance free from creditors, etc. The New York statute is given as a specimen : • " The money or other benefit, charity, relief or aid to be paid, provided or rendered by any corporation, association or society authorized to do business under this act shall be exempt from execution, and shall not be liable to be seized, taken or appropriated by any legal or equitable process, to pay any debt or liability of a member." California, Laws, 1891, ch. 116, § 8. Colorado, 1 Mills' St. 1891, § 2246. Iowa, McClain's Stat. 1888, § 1756 [1182] ; § 3576 [2372]. Kentucky, Public Acts, 1869-70, ch. 645, § 32. Maine, R. S. 1883, ch. 75, § 10; ch. 49, § 94. Massachusetts, Acts, 1887, ch. 214, § 73; Acts, 1888, ch. 429, § 15; Acts, 1890, ch. 421, § 23 (assess- ment ins.). Michigan, Public Acts, 1887, ch. 187, §29. Minnesota, Stat. 1891, v. 1, § 3047. Also Gen. L. 1885, ch. 184, § 17. Mississippi, Code, 1880, § 1261. Missouri, R. S. 1889, § 5867. Nevada, Laws, 1891, ch. 98, § 9. New Hampshire, Gen. L. 1878, ch. 175, § 2. New York, 3 R. S., 8th ed., p. 1709, § 19 and p. 1711. North Dakota, Laws, 1891, ch. 73, § 18 and ch. 74, § 15. Pennsylvania, Brightly's Purdon's Dig. 1883, v. 1, p. 924, § 106. Rhode Island, Pnb. Laws, Jan., 1889, p. 24, § 8. South Dakota, Laws, 1890, p. 130; § 22. Tennessee, Code, 1884, §§1813,3135. Vermont, Rev. L. 1880, § 2345. xvn. Change of Beneficiary. The following States have adopted laws providing that a member of certain life insurance societies may make a change of beneficiary without consent of former beneficiary. 37 •578 Appendix. C. i. The New York statute is given as a specimen : "Membership in any corporation, association or society transacting the business of life or casualty insurance, or both, upon the co-operative, or assessment plan, shall give to any member thereof the right, at any time, with the consent of such corporation, association or society, to make a change in his payee or payees, beneficiary or beneficiaries without, requiring the consent of such payee or beneficiaries.'' Iowa, McClain's Code, 1888, §1767 Michigan, Public Acts, 1887, ch. 187, (L. 1886, ch. 65, § 7). § 16. Kansas, Gen. Stat. 1889, § 3464. New York, 3 R. S., 8th _ed., p. 1709, §18. XVIII. Incriminations. The following States have adopted laws prohibiting discriminations in rates by life insurance companies. The New York statute is given as a specimen : " Life insurance companies doing business in this State shall not make any discrimination in favor, of individuals of the same class and of the same expectation of life, either in the amount of premium charged or auy return of premium, dividends or other advantages, and no agent of any such insurance company shall make any contract ■ for insurance, or agree- ment as to such contract of insurance, other than that which is plainly expressed in the policy issued, nor shall any such company or agent pay or allow, or offer to pay or allow, as inducement to any person to insure, any rebates of. premium or any special favor or advantage whatever, in the div- idends to accrue thereon, or any inducement whatever, not specified in the policy. Whenever it shall appear to the satisfaction of the superintendent of the insurance department, after a hearing held by him upon due notice, that any company is issuing policies or making contracts that are either directly or indirectly a violation of this act, he shall thereupon, with the approval of the attorney-general, in writing, require said company and its officers and agenis tr if any change, other than by the death of an insured, take place in the 1 interest, title, or possession of the subject of insurance (except change of i occupants without increase of hazard), whether by legal process or judg- \ment or by voluntary act of the insured, or otherwise; or if this policy be ^assigned before a loss; or if illuminating gas or vapor be generated in the /described building (or adjacent thereto) for use therein; or if (any usage or custom of trade or manufacture to the contrary notwithstanding) there be kept, used, or allowed on the above described premises, benzine, ben- zole, dynamite, ether, fireworks, gasoline, greek fire, gunpowder exceeding twenty-five pounds in quantity, naphtha, nitro-glycerine or other explo- sives, phosphorus, or petroleum or any of its products of greater inflamma- bility than kerosene oil of the United States standard (which last may be used for lights and kept for sale according to law, but in quantities not , exceeding five barrels, provided it be drawn and lamps filled by daylight \or at a distance not less than ten feet from artificial light) ; or if a building /herein described, whether intended for occupancy by owner or tenant, be \or become vacant or unoccupied and so remain for ten days. / This company shall not be liable for loss caused directly or indirectly by invasion, insurrection, riot, civil war or commotion, or military or usurped power, or by order of any civil authority; or by theft; or by neg- lect of the insured to use all reasonable means to save and preserve the property at and after a fire, or when the property is endangered by fire in neighboring premises; or (unless fire ensues, and, in that event, for the damage by fire only) by explosion of any kind, or lightning ; but liability for direct damage by lightning may be assumed by specific agreement hereon. If a building or any part thereof fall, except as the result of fire, all insurance by this policy on such building or its contents shall immediately vjcease. This company shall not be liable for loss to accounts, bills, currency, deeds, evidences of debt, money, notes, or securities; nor, unless liability is specifically assumed hereon, for loss to awnings, bullion, casts, curiosi- : 586 Appendix. c. ii ties, drawings, dies, implements, jewels, manuscripts, medals, models patterns, pictures, scientific apparatus, signs, store or office furniture oi fixtures, sculpture, tools, or property held on storage or for repairs; nor be yond the actual value destroyed by fire, for loss occasioned by ordinance or law regulating construction or repair of buildings, or by interruptior of business, manufacturing processes, or otherwise; nor for any greatei proportion of the value of plate glass, frescoes, and decorations than thai which this policy shall bear to the whole insurance on the building de scribed. ^ If an application, survey, plan, or description of property be referred to in this policy, it shall be a part of this contract and a warranty by tin insured. ' In any matter relating to this insurance, no person, unless duly author Jzed in writing, shall be deemed the agent of this company. I This policy may by a renewal be continued under the original stipula- tions, in consideration of premium for the renewed term, provided thai any increase of hazard must be made known to this company at the time ^of renewal or this policy shall be void. / This policy shall bo canceled at any time at the Tequest of the insured or by the company by giving five days' notice of such cancellation. Ii this policy shall be canceled as hereinbefore provided, or become void oi cease, the premium having been actually paid, the unearned portion shal be returned on surrender of this policy or last renewal, this company re- taining the customary short rate ; except that when this policy is canceled by this company by giving notice it shall retain only the pro rata pre miuui. y If, with the consent of this company, an interest under this policy shal exist in favor of a mortgagee or of any person or corporation having ar interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance re- lating to such interest as shall be written upon, attached, or appended hereto. ~T If property covered by this policy is so endangered by fire as to require 'removal to a place of safety, and is so removed, that part of this policj in excess of its proportion of any loss and of the value of property remain- ing in the original location, shall, for the ensuing five days only, covei the property so removed in the new location; if removed to more than out location, such excess of this policy shall cover therein for such five dayi in the proportion that the value in any one such new location bears to th( value in all such new locations; but this company shall not, in any case oi removal, whether to one or more locations, be liable beyond the proportioi that the amount hereby insured shall bear to the total insurance on th« whole property at the time of fire, whether the same cover in new locatioi or not. If fire occur the insured shall give immediate notice of any loss therebi in writing to this company, protect the property from further damage c - n - Appendix. 587 fort h with separate the damaged and undamaged personal property, put it id the best possible order, make a complete inventory of the same, stating the quantity and cost of each article and the amount claimed thereon- and, within sixty days after the fire, unless such time is extended in writing by this company, shall render a statement to this company signed and sworn to by said insured, stating the knowledge and belief of the in- sured as to the time and oiigin of the fire ; the interest of the insured and of all others in the property; the cash value of each item thereof and the amount of loss thereon; all incumbrances thereon; all other insurance whether valid or not, covering any of said property; and a copy of all the descriptions and schedules in all policies; any changes in the title, use, occupation, location, possession, or exposures of said property since the issuing of this policy; by whom and for what purpose any building herein described and the several parts thereof were occupied at the time of fire; and shall furnish, if required, verified plans and specifications of any building, fixtures, or machinery destioyed or damaged; and shall also, if required, furnish a certificate of the magistrate or notary public (not interested in the claim as a creditor or otherwise, nor related to the in- sured) living nearest the place of fire, stating that he has examined the circumstances and believes the insured has honestly sustained loss to the amount that such magistrate or notary public shall certify. ~p~ The insured, as often as required, shall exhibit to anyperson desig- nated by this company all that remains of any property herein described, and submit to examinations under oath by any person named by this com- pany, and subscribe the same; and, as often as required, shall produce for I examination all books of account, bills, invoices, and other vouchers, or (certified copies thereof if originals be lost, at such reasonable place as may Ibe designated by this company or its representative, and shall permit ex- jtracts and copies thereof to be made. / In the event of disagreement as to the amount of loss the same shall, as above provided, be ascertained by two competent and disinterested appraisers, the insured and this company each selecting one, and the two so chosen shall first select a competent and disinterested umpire; the appraisers together shall then estimate and appraise the loss; stating separately sound value and damage, and, failing to agree, shall submit their differences to the umpire; and the award in writing of any two shall determine the amount of such loss; the parties thereto shall pay the appraiser respectively selected by them, and shall bear equally the expenses _of the appraisal and umpire. This company shall not be held to have waived any provision or con- dition of this policy or any forfeiture thereof by any requirement, act, or proceeding on its part relating to the appraisal or to any examination herein provided for; and the loss shall not become payable until sixty days after the notice, ascertainment, estimate, and satisfactory proof of the loss herein required have been received by this company, including an award by appraisers when appraisal has been required. This company shall not be liable under this policy for a greater propor- Q, 588 Appendix. c. n tion of any loss on the described property, or for loss by and expense o removal from premises endangered by fire, than the amount hereby insurei shall bear to the whole insurance, whether valid or not, or by solvent o insolvent insurers, covering such property, and the extent of the applies tion of the insurance under this policy or of the contribution to be mad by this company in case of loss, may be provided for by agreement o l^cpndition written hereon or attached or appended hereto. Liability fo reinsurance shall be as specifically agreed hereon. , If this company Shall claim that the fire was caused by the act or neglec of any person or corporation, private or municipal, this company shall, oi payment of the loss, be subrogated to the extent of such payment to al right of recovery by the insured for the loss resulting therefrom, and sucl right shall be assigned to this company by the insured on receiving sucl payment. §/(,•] tn<_ "wicwafe \jtruC-. t* No suit or action on this policy, for the recovery of any claim, shall b sustainable in any court of law or equity until after full compliance by thi insured with all the foregoing requirements, nor unless commenced withii itwelve months next after the fire. Wherever in this policy the word "insured" occurs, it shall be held t< include the legal representative of the insured; and wherever the won "loss" occurs, it shall be deemed the equivalent of "loss or damage." f If this policy be made by a mutual or other company having specia regulations lawfully applicable to its organization, membership, policies or contracts of insurance, such regulation shall apply to and form a par of this policy as the same may be written or printed upon, attached, o appended hereto. This policy is made and accepted subject to the foregoing stipulations am conditions, together with such other provisions, agreements, or condition as may be indorsed hereon or added hereto, and no officer, agent, or othe representative of this company shall have power to waive any provision o condition of this policy except such as by the terms of this policy may b the subject of agreement indorsed hereon or added hereto, and as to sucl provisons and conditions no officer, agent, or representative shall have sucl power or be deemed or held to have waived such provisions or condition unless such waiver, if any, shall be written upon or attached hereto, no shall any privilege or permission affecting the insurance under this polic; lexist or be claimed by the insured unless so written or attached. In Witness Whereof, this company has executed and attested thes presents, this day of 189. .. n. A Form of Mortgagee Clause. Loss or damage, if any, under this policy, shall be payable to as mortgagee [or trustee], as interest may appear, and this insurance, a to the interest of the mortgagee [or trustee] only therein, shall not b L c - 1X - Appendix. ggg invalidated by any act or neglect of the mortgagor or owner of the within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or owner- ship of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy; Pkoyided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee [or trustee] shall, on demand,, pay the same. Provided also, that the mortgagee [or trustee] -shall notify this com- pany of any change of ownership or occupancy or^increase of hazard which shall come to the knowledge of said mortgagee [or trustee] and, unless permitted by this policy, it shall be noted thereon, and the mort- gagee [or trustee] shall, on demand, pay the premium for such increased hazard for the term of the use thereof ; otherwise this policy shall be null and void. t This company reserves the right to cancel this policy at any time as provided by its terms, but in such case this policy shall continue in force for the benefit only of the mortgagee [or trustee] for ten days after notice to the mortgagee [or trustee] of such cancellation and shall then cease and this company shall have the right, on like notice, to cancel this agree- ment. Whenever this company shall pay the mortgagee [or trustee] any sum for loss or damage under this policy, and shall claim that, as to the mort- gagor or owner, no liability therefor existed, this company shall, to the extent of such payment, be thereupon legally subrogated to all the rights of the party to whom such payment shall be made, under all securities held as collaterals the mortgage debt, or may, at its option, pay to the , mortgagee [or trustee] the whole principal due or to grow due on the mortgage with interest, and shall thereupon receive a full assignment and transfer of the mortgage and of all such other securities ; but no subroga- tion shall impair the right of the mortgagee [or trustee] to recover the full amount of his claim. m. A Form of Co-Insurance Clause. If at the time of fire the whole amount of insurance on the property covered by this policy shall be less than the actual cash value thereof, this company shall, in case of loss or damage, be liable for such portion only of the loss or damage as the amount insured by this policy shall bear to the actual cash value of such property. IV. A form of Percentage Go-Insurance and Limitation Clause. If at the time of fire the whole amount of insurance on the property covered by this policy shall be less than per cent, of the actual cash value thereof, this company' shall in case of loss or damage be liable 590 Appendix. c. ii. for such portion only of the loss or damage as the amount insured by this policy shall bear to the said per cent, of the actual cash value of such property; Provided, that in case the whole insurance shall exceed per cent, of the actual cash value of the property covered by this policy, this company shall not be liable to pay more than its pro rata share of said per cent, of the actual cash value of such property; and should the whole insurance at the time of fire exceed the said per cent., a pro rata return of premium on such excess of insurance from the time of the fire to the expiration of this policy shall be made on surrender of the policy. V. A Form of Average Clause. It is understood and agreed, that the amount insured by this policy shall attach in each of the above named premises, in that proportion of the amount hereby insured, that the value of property covered by this policy, contained in each of said places, shall bear to the value of such property contained in all of above named premises. VI. A Form of Open Policy. The Insurance Company, in consideration of the stipulation herein named and of the several sums to be specified and indorsed hereon, does insure for such time as may be specified hereon from the day of commencement, at noon, to the day of termination, at noon, against all direct loss or damages by fire, except as hereinafter provided, to an amount not exceeding the sum or sums insured, as specified and indorsed hereon, to the following described property while located and contained as described herein, and not elsewhere, to wit : On goods, wares, merchandise, produce, or other property, hazardous, not hazardous, or extra hazardous (according to the classification of the New York Board of Fire Underwriters) his own, or held by him in trust, or on commission, or sold, but not delivered, as shall be specified and in- dorsed hereon by this company and for such amounts, in such storehouses and places, and at such rates of premium as shall be approved and so in- dorsed hereon, or in a book attached" hereto, by one of the officers of this company, or by the duly authorized agent at (The conditions are those of the standard form.) vn. Floating Policy. (Form of description of property insured) : A On merchandise, hazardous, not hazardous, and extra hazardous, his °- n - Appendix. 591 own, or held by him in trust or on commission, or on joint account with others, or sold, but not delivered, in all or any of the brick or stone ware- houses, and while in transitu, in or on any of the streets, yards or wharves in the cities of New York, Brooklyn, Jersey City and Hoboken, and unless under the protection of a marine policy in any ship or vessel in the ports of said cities — subject to the following conditions of average. It is hereby declared and agreed that in case the property aforesaid in all the buildings, places, or limits, included in this insurance, shall, at the breaking out of any fire or fires, be collectively of greater value than the sum insured, then this company shall pay and make good such a portion only of the loss or damage as the sum insured shall bear to the whole value of the property aforesaid, at the time when such fire or fires shall first happen. But it is at the same time declared and agreed, that if any specific parcel of goods included in the terms of this policy, or such goods in any specified building or buildings, place or places, within the limits of this insurance, shall at the time of any fire be insured in this or any other office, this policy shall not extend to cover the same, excepting only as far as relates to any excess of value beyond. the amount of such specific insur- ance or insurances, and shall not be liable for any loss unless the amount of such loss shall exceed the amount of such specific insurance or insur- ances, which said excess only is declared to be under the protection of this policy and subject to average as aforesaid. It being the true intent and meaning of this agreement, that this com- pany shall not be liable for any loss, unless the amount of such loss shall exceed the amount of the specific insurance or insurances, and then only for such excess, which said excess shall be subject to average as above. This policy does not cover in Hudson River Railroad stores, in any tobacco inspection or other tobacco warehouse, or in any grain elevator or elevator store in New York City, Brooklyn, Jersey City or Hoboken. (Another form of description) : B On merchandise, hazardous, not hazardous, and extra hazardous, his own, or held by him in trust or on commission, or on joint account with others, or sold but not delivered, in all or any of the brick or stone ware- houses, and while in transitu, in or on any of the streets, yards or wharves, in the cities of New York, Brooklyn, Jersey City and Hoboken, and unless under the protection of a marine policy in any ship or vessel in the ports of said cities — subject to the following conditions of average. It is hereby declared and agreed that in case the property aforesaid in all the buildings, places, or limits, included in this insurance, shall, at the breaking out of any fire or fires, be collectively of greater value than the sum insured, then this company shall pay and make good such a portion only of the loss or damage as the sum insured shall bear to the whole value of the property aforesaid, at the time when such fire or fires shall first happen. 592 Appendix. o. ii. It is further declared and agreed, that goods in stores, warehouses, and other places, in which the assured lias specific insurance or insurances, are not covered in whole or in part by this policy ; and that the same is not intended to attach to such goods in whole or in part. This policy does not cover in Hudson River Railroad Stores, in any tobacco inspection or other tobacco warehouse, or in any grain elevator or elevator store in New York City, Brooklyn, Jersey City or Hoboken. vm. Form of Clause for Insurance of Bent. $ , the rents of the story roofed building, while occupied as and situate Subject to the following conditions : It is understood and agreed, that in case the above-named building or any part thereof being occupied shall be rendered untenantable by fire, so as to cause to the assured an actual loss of rents, this company shall be liable for such loss of rent ensuing therefrom, not exceeding the sum insured. The assured hereby agrees to rebuild or repair the premises in as short a time as the nature of the case will admit ; but if for any reason this shall not be done, the limit of time required for the purpose to be determined, if necessary, by estimates of competent builders obtained by the company and by the assured. Loss to be computed from the date of the occurrence of said fire, not being limited by day of expiration named in policy, as to fire occurring before such expiration, and cease on said building being rendered tenantable. And the sum insured will be taken as the yearly rent of the premises, and this company shall be liable only for such pro- portion of any loss as the sum hereby insured bears to the actual annual rent of the building. It is understood that the rental value of that portion of the above de- scribed premises occupied by the assured or employees is covered by this policy. IX. Form of Clause for Insurance of Use and Occupancy. On the use and occupancy of his mill buildings, situate at It is a condition of this contract of insurance that, if the said buildings or machinery therein, or either of them, or any part thereof, shall be de- stroyed, or so damaged by fire occurring during the continuance of this policy that the mill is entirely prevented from producing goods, this com- pany shall be liable at the rate of dollars per day for each work- ing day of such prevention, and in case the buildings, or machinery, or any part thereof, are so damaged as to prevent the making of a full daily average production of goods, this company is to be liable per day c. ii. Appendix. 593 for that proportion of dollars which the product so prevented from being made bears to the average daily yield previous to the Are, ■which, for the purpose of this insurance is agreed to be the average daily production of goods based upon the time said mill was running for one year previous to the fire, not exceeding in either case the amount in- sured. Loss to be computed from the day of the occurrence of any fire to the time when the mill could with ordinary diligence and dispatch be repaired or rebuilt, and machinery be replaced therein, and not to be lim- ited by the day of expiration named in the policy. ::}■ x. Form of Proofs of Loss. State op County op . . Be it known, That on this day of , 189.., before me, , a Notary Public duly commissioned and sworn, and residing. in the County and State aforesaid, personally appeared , who, being duly sworn, says that the following statement and the papers therein* referred to and signed with his own hand contain » particular, just and true account of his loss in the words and figures following, to wit : I. That on the day of , 189. ., the Insurance Company by their Policy of Insurance, numbered , did insure the party herein and therein named against loss or damage by fire to the amount of dollars on (description of property insured from the policy) for the term of from the day of , 189. ., to the day of , 189. ., at noon. II. That in addition to the amount covered by said policy of said com- pany, there was other insurance made thereon to the amount of dollars, as specified in the following schedule, besides which there was no other insurance thereon. (List of policies covering any of the property, showing as to each policy its date, term, and amount, the name of the company, and a copy of the description and schedule of property insured contained in such policy.) HI. That the property insured belonged to (statement of interest of insured and of all others in the property and of all incum- brances thereon and changes of title, etc., since the issuing of the policy). IV. That the building insured or containing the property destroyed or damaged, was occupied at the time of fire in its several parts by the parties hereinafter named, and for the following purposes, to wit : (List of tenants.) V. That the actual cash value of the property so insured amounted to the sum of dollars at the time immediately preceding the fire, as set forth in the following schedule : That on the day of , 189. ., a fire occurred by which the property insured was injured or destroyed to the amount of 38 594 Appendix. c. dollars, as set forth in the following schedule which the deponent decla to be a just, true and faithful account of "his loss as far as he has been a to ascertain the same : (Schedule of property damaged or destroyed, showing the cash va of each item thereof and the amount of loss thereon.) And the insu claims of the Insurance Company the sum of dollars. (If there are subdivisions in policy, also a statement of the amoi claimed under each subdivision.) VI. That the Are originated (statement of knowledge and belief of insured as to the time and origin of the fire), and the said depon further declares that the said fire did not originate by any act, desigi procurement on his part, or in consequence of any fraud or evil pracl done or suffered by him, and that nothing has been done by or with privity or consent to violate the conditions of insurance or render void Policy aforesaid. (insured.) Sworn to before me this ) day of , 188... S > Notary Public. XI. Form of Application for Life Insurance. I hereby apply for an assurance of $ on the p premiums payable with the Life Insurance Company, the life of , born at , on ,18 . ., at present for years resident of I hereby warrant that he is intemperate in the use of stimulants or narcotics. I agree that the ans-* given herewith to the questions of the Agent and Examiner, which I dec and warrant to be true, shall be the basis of my contract with the compi and that such contract shall at all times and places be held and const) to have been made in the City of I also agree that if within years from this date, the Insured shall, without the written consent of company, reside or travel elsewhere than in or to the United St! Canada, or Europe ; or shall within such period and without such cons be personally engaged in blasting, mining, submarine operations, or in making of explosives, or in service on any railway train, or on a steal sailing vessel, or in naval or army service in times of war; the policy he: applied for shall thereupon cease and determine. Dated at this day of , 189... Witness Signature Questions to be asked by the Agent, and answered by the person < insured : 1. A What is your full name? b Are you married? C. II. Appendix. 595 4. you? 5. 6. 7. 2. What is your occupation ? (Give kind of business and position held.) 3. Are you in good health ? a For whose benefit is the proposed insurance? b How related to What is the total insurance now on your life ? In what companies and for what amounts! Have you any application for insurance now pending? In what companies? 8. A Have you ever applied to any agent or sought insurance in anjy company which either postponed or refused to issue a Policy? b State companies and cause. 9. Are you engaged in or connected with the manufacture or sale of Malt or Spirituous Liquors? The answers to the following questions must be written by one of the Company's Examiners : 10. Have you now any disease or disorder? If s<5, what? 11. a For what have you sought medical advice during the past seven years? b Dates? c Duration? d Physicians consulted ? 12. a Have you had any personal injury or accident ? BWhat? cWhen? d Result? 13. a Have you had Rheumatism ? b Number of attacks ? c Dates ? D Duration? e Severity? 14. a Are you or have you been subject to Dyspepsia ? b Dates '< c Duration ? d Severity ? 15. Have you ever had any of the following ? Calculus or gravel, Difficulty in urinating, Swelling of feet or face, Dropsy, Palpitation, Disease of heart or brain, Loss of consciousness, Habitual or chronic cough, Consumption, .... Bronchitis, Asthma, Spitting of blood, . . . Bleeding piles, .... Pleurisy, Varicose veins, .... Paralysis or palsy, . . . Apoplexy, Nervous exhaustion, . . Fits, Sunstroke, Dizziness or short breath, Pneumonia, . . Diabetes, . . . Delirium Tremens, Vertigo, . . . Insanity, . . . Liver complaint, Jaundice, . . Colic, . . ._ . Dysentery, . . Diarrhoea (chronic), Disease of spine, Gout, .... Tumors of any kind, Swelling of glands, Ulcers or open sores, Fistula, .... Discharge from the ear, Rupture, Difficulty, in swallowing, 596 Appendix. o. II. 16. Family record. Age. Condition of Health. Is your father living ? . Is your mother living ? How many brothers living ?. (If none, so state.) How many sisters living ?. . (If none, so state.) Father's father living ? . . . . Father's mother living ? . . . Mother's father living ? Mother's mother living ? . . . Age. Disease which Caused Death. Duration. Previous Health. { How many brothers dead ? ■< (If none, so state.) { i How many sisters dead ? . < (If none, so state.) { Father's father dead ? Father's mother dead ? Mother's father dead ? Mother's mother dead ? . . . . 17. Have any two members of the family, grandparents included, had consumption, cancer, paralysis or apoplexy, disease of heart, disease of kidneys ? Signed this day of , 189. .. (Party to ie insured sign here) XII. A Form of Policy of Life Insurance. This policy witnesseth that the Life Insurance Company, in consideration of the statements and agreements-in the application for this c. n. Appendix. 597 Policy, which are hereby made a part of this contract and of the sum of dollars to it in hand paid by and of the annual premium «'f dollars to be paid at or before twelve o'clock, m., on the day of in every year during the continuance of this policy, does insure the life of in the amount of dollars, for the term of life, payable to , his executors, administrators or assigns, at its office in the City of , upon due and satisfactory proof of interest and of the death of the said insured, deducting therefrom all indebtedness of the party to the company, together with the balance, if any, of the then current year's premium. Provided, that in case the said premiums shall not be paid on or before the several days hereinbefore mentioned for the payment thereof, at the office of the company in the City of , or to agents when they produce receipts signed by the President or Treasurer, then, and in every such case, this policy shall cease and determine, subject to the provisions of the company's non-forfeiture system as indorsed hereon, with accom- panying table. This policy does not take effect until the first premium shall have been actually paid ; nor are agents authorized to make, alter or discharge this or any other contract in relation to the mattej; of this insurance, or to waive any forfeiture hereof, or to grant permits, or to receive fur the cash due for premiums anything but cash. Any error made in understating the age of the insured will be adjusted by paying such amount as the premiums paid would purchase at the table rate. No assignment of this policy shall take effect until written notice thereof shall be given to the company. This policy, after two years, wiU be incontestable, except for fraud or nonpayment of premium. In "Witness "Whereof, the said Life Insurance Company has, by its President and Secretary, signed and delivered this contract, at the City of , this day of , one thousand eight hundred and , Secretary. , President. Non-forfeiture Provisions. When after two full annual premiums shall have been paid on this policy it shall cease or become void solely by the non-payment of any pre- mium when due, its entire net reserve by the American Experience Mortality and interest at four per cent, yearly, less any indebtedness to the company on this policy, shall be applied by the company as a single premium at the company's rates published and in force at this date, either, first, to the purchase of nou-participating term insurance for the full amount insured by this policy, or, second, upon the written application by the owner of this policy and the surrender thereof to the company at within three months from such non-payment of premium, to the purchase of a non- participating paid-up policy payable at the time this policy would be pay- 598 Appendix. c. n. able if continued in force. Both kinds of insurance aforesaid will be subject to the same conditions, except as to payment of premiums, as those of this policy. No part, however, of such term insurance shall be due or payable unless satisfactory proofs of death be furnished to the company within one year after death ; and if death shall occur within three years after such non-payment of premium, and during such term of insurance, there shall be deducted from the amount payable the sum of all the pre- miums that would have become due on this policy if it had continued in force. The following table shows the amount that the company agrees to loan (being one-half of the reserve) upon a satisfactory assignment of the policy as collateral security; also the additional time for which the insurance will be continued in full force after lapse by non-payment of premium ; or the value of the policy in paid-up insurance upon surrender within three months from date of lapse. The figures given are based upon the assumption that the premiums (less current dividends) have been fully paid in cash. If there be any indebtedness upon the policy, the values as stated in the table would have to be reduced proportionally upon the principles stated in the policy. The indebtedness, if any, may be paid off in cash, in which case the figures in the table will apply: Company will Loan. In Case of Lapse of Policy. Number of Tears' Premiums Paid. Extended Insurance. Paid-up Policy. Tears. Days. $ $ xin. A Form of Policy of Accident Insurance. The Insurance Company, in consideration of the warranties in the application for this policy and of dollars, does hereby insure under classification (being a ........ by occupation) for the term of months from noon of , 189. ., in the suin of dollars per week against loss of time not exceeding con- secutive weeks, resulting from bodily injuries effected during the term of this insurance, through external, violent, and accidental means, which shall, independently of all other causes, immediately and wholly disable him from transacting any and every kind of business pertaining to his occu- o. ii. Appendix. 599 pation above stated. Or if loss by severance of one entire hand or foot results from such injuries alone within ninety days, will pay insured one- third the principal sum herein named, in lieu of said weekly indemnity, and on such payment this policy shall cease and be surrendered to said company, or in event of loss by severance of two entire hands or feet, or one entire hand and one entire foot, or loss of entire sight of both eyes, solely through injuries aforesaid within ninety days, will pay insured the full principal sum aforesaid, provided he survives said ninety days. Or if death results from such injuries alone within ninety days, will pay dollars to if surviving; in event of his prior death, to the legal representatives or assigns of insured, provided — 1. If insured is injured in any occupation or exposure classed by this company as more hazardous than that here given, his insurance shall be only for such sums as the premium paid by him will purchase at the rates fixed for such increased hazard. 2. This policy shall not take effect unless the premium is paid previous to any accident under which claim is made ; and the company may cancel It at any time by refunding said premium, less a pro rata share for the time it has been in force. 3. The company's total liability hereon in any policy year shall not exceed the principal sum hereby insured ; therefore, in case of claim for full principal sum, any sums paid as indemnity within such policy year shall be deducted therefrom. 4. Immediate written notice, with full particulars and full name and address of insured, is to be given said company at of any accident aud injury for which claim is made. Unless affirmative proof of death, loss of limb or sight, or duration of disability, and of their being the proximate result of external, violent and accidental means, is so furnished within seven months from time of such accident, all claims based thereon shall he forfeited to the company. No legal proceedings for recovery hereunder shall be brought within three months after receipt of proof at this office, nor at all, unless begun within one year from date of alleged accident. 5. This insurance does not cover disappearances; nor suicide, sane or insane; nor injuries of which there is no visible mark on the body (the body itself in case of death not being deemed such mark) ; nor accident, nor death, nor loss of limb or sight, nor disability, resulting wholly or partly, directly or indirectly from any of the following causes, or while so engaged or affected: Disease or bodily infirmity, hernia, fits, vertigo, sleep-walking; medical or surgical treatment, except amputations necessi- tated solely by injuries and made within ninety days after accident; in- toxication or narcotics ; voluntary or involuntary taking of poison or con- tact with poisonous substances or inhaling of any gas or vapor ; sunstroke or freezing; dueling or fighting, war or riot; intentional injuries (inflicted by the insured or any other person) ; voluntary over-exertion ; violating law; violating rules of a corporation; voluntary exposure to unnecessary danger; expeditions into wild or uncivilized countries; entering or trying 600 Appendix. c. ii. to enter or leave a moving conveyance using steam as a motive power (except cable cars), riding in or on any such conveyance not provided for transportation of passengers, walking or being on a railway bridge or road- bed (railway employees excepted). 6. No claim shall be valid in excess of $10,000 with $50 weekly in- demnity under accident policies, nor for indemnity in excess of money value of insured's'time. All premiums paid for such excess shall be re- turned, on demand, to insured or his legal representative. 7. Anv medical adviser of the company shall be allowed, as often as he requires, to examine the person or body of insured in respect to alleged injury or cause of death. 8. Any claim hereunder shall be subject to proof of interest. A copy of any assignment shall be given within thirty days to the company, which shall not be responsible for its validity. The company may cancel this policy at any time by refunding the unearned premium thereon. No agent has power to waive any condition of this policy. In witness whereof, etc. XIV. A Form of Policy of Marine Insurance Ca/rgo. By the Insurance Company on account of In case of loss, to be paid in funds current in the United States, or in the City of New York, to , do make insurance, and cause to be insured, lost or not lost, at and from upon laden or to be laden on board the good , whereof is master for this present voyage , or whoever else shall go for master in said vessel, or by whatever other name or names the said vessel, or the master thereof, is or shall be named or called. Beginning the adventure upon the said goods and merchandises, from and immediately following the loading thereof on board of the said vessel, at as aforesaid, and so shall continue and endure until the said goods and merchandises shall be safely landed at as aforesaid. And it shall and may be lawful for the said vessel, in her voyage, to pro- ceed and sail to, touch and stay at, any ports or places, if thereunto obliged by stress of weather, or other unavoidable accident, without prejudice to this insurance. The said goods and merchandises, hereby insured, are valued (premium included) at dollars. Touching the adventures and perils which the said Insurance Company is contented to bear, and takes upon itself in this voyage, they are of the seas, men-of-war,, fires, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, reprisals, takings at sea, arrests, restraints and detnmments of all kings, princes or people, of what nation, condition or quality soever, oarratry of the master and mariners, and all other perils,: losses and misfortunes that have or shall come to the hurt, detriment or damage of the said goods and merchandises, or any part thereof. And in case of any c. ii. Appendix. 601 loss or misfortune, it shall be lawful and necessary to and for the assured, his factors, servants and assigns, to sue, labor, and travel for, in and about the defense, safeguard and recovery of the said goods and merchandises, or any part thereof, -without prejudice to this insurance; nor shall the acts of the insured or insurers, in recovering, saving and preserving the property insured, in case of disaster, be considered a waiver or an accept- ance of an abandonment ; to the charges whereof the said Insurance Company will contribute according to the rate and quantity of the sum • herein insured ; having been paid the consideration for this insurance, by the assured, or his assigns, at and after the rate of per cent. And in case of loss, such loss to be paid in thirty days after proof of loss, and proof of interest in the said (the amount of the note given for the premium, if unpaid, being first deducted), but no partial loss or particular average shall in any case be paid, unless amounting to five per cent. Provided always, and it is hereby further agreed, That if the said assured shall have made any other assurance upon the premises afore- said, prior in day of date to this policy, then the said Insurance Company shall be answerable only for so much as the amount of such prior assurance may be deficient towards fully covering the premises hereby assured •, and the said Insurance Company shall return premium upon so much of the sum by them assured, as they shall be by such prior assurance exonerated from. And in case of any assurance upon the said premises, subsequent in day of date to this policy, the said Insur- ance Company shall nevertheless be answerable for the full extent of the sum by them subscribed hereto, without right to claim contribution from such subsequent assurers, and shall accordingly be entitled to retain the premium by them received, in the same manner as if no such subsequent assurance had been made. Other assurance upon the premises aforesaid, of date the same day as this policy, shall be deemed simultaneous here- with; and the said Insurance Company shall not be liable for more than a ratable contribution in the proportion of the sum by them insured to the aggregate of such simultaneous assurance. It is also agreed, that the property be warranted by the assured free from any charge, damage or loss, which may arise in consequence of a seizure or detention, for or on account of any illicit or prohibited trade or any trade in articles contraband of war. Warranted not to abandon in case of capture, seizure, or detention, until after condemnation of the property insured ; nor until ninety days after notice of said condemnation is given to this company. Also warranted not to abandon in case of blockade, and free from any expense in consequence of capture, seizure, detention or blockade, but in the event of blockade, to be at liberty to proceed to an open port and there end the voyage. In Witness Whereof, the President or Vice-President of the said Insurance Company hath hereunto subscribed his name, and the sum insured, and caused the same to be attested by their Secretary, in , the day of — , 189... 602 Appendix. o. n. Memorandum. It is also agreed, that bar, bundle, rod, hoop and sheet iron, wire of all kinds, tin plates, steel, madder, sumac, wicker-ware and willow (manufactured or otherwise), salt, grain of all kinds, tobacco, indian meal, fruits (whether preserved or otherwise), cheese, dry fish, hay, vegetables and roots, rags, hempen yarn, bags, cotton bagging, and other ar- ticles used for bags or bagging, pleasure carriages, household furniture, skins and hides, musical instruments, looking-glasses, and all other articles that are perishable in their own nature, are warranted by the assured free from average, unless general ; liemp, tobacco stems, matting and cassia, except, in boxes, free from average under twenty per cent, unless general; and sugar, flax, flax-seed and bread, are warranted by the assured free from average under seven per cent, unless general ; and coffee, in bags or bulk, pepper in bags or bulk, and rice, free from average under ten per cent unless general. Warranted by the insured free from damage or injury, from dampness, change of flavor, or being spotted, discolored, musty or mouldy, except caused by actual contact of sea water with the articles damaged, occasioned by sea perils. In case of partial loss by sea damage to dry goods, cutlery or other hardware, the loss shall be ascertained by a separation and sale of the portion only of the contents of the packages so damaged and not oth- erwise, and the same practice shall obtain as to all other merchandise as far as practicable. Not liable for leakage on molasses or other liquids, unless occasioned by stranding or collision with another vessel. If the voyage aforesaid shall have been begun and shall have termi- nated before the date of this policy, then there shall be no return of. pre- mium on account of such termination of the voyage. In all cases of return of premium, in whole or in part, one-half per cent, upon the sum insured is to be retained by the assurers. $ , dollars. , Secretary. , President. XV. A Form of Collision Clause. And it is further agreed, that if the vessel hereby insured shall come in collision with another vessel, and the assured become liable to pay, and shall pay, any sum or sums for damages resulting therefrom to said other vessel, her freight or her cargo, in such case this company will contribute towards the payment of three-fourths part of the total amount of said damages, in the proportion that the sum insured under this policy bears to the total valuation of the vessel as stated herein, provided, that this company shall not in any event be held liable under this agreement for a greater sum than three-fourths part of the amount insured under this policy. And it is also agreed that this insurance company will bear a like propor- o. n. Appendix. 603 tionate share of any costs and expenses that may be incurred in contesting the liability resulting from said collision, provided, the written consent of the company to such contest be first obtained. But under no circumstances shall this company be held liable for any contribution in respect of any sum that the insured may be held liable to pay by reason of loss of life or personal injury to individuals from any cause whatsoever, nor for any claim for demurrage or loss of the use of any vessel, nor for wages or provisions or expenses of master, officers or crews. It is further agreed to, that in no event sljall this insurance company be liable under this policy for more than the sum insured in any case, either for claims for loss and damage a ^ charges to hull of the vessel hereby insured ""* for claims of any and all kinds arising under this col- lision clause, or the policy to which it is attached, and all payments made under this policy shall reduce this policy by the amounts so paid, unless restored by a new premium. Date Due ~^ Library Bureau Cat. No. 1137 KF 116U R51 Author Richards, George Tide a treatise on the law of insurance, fire, life, ...